As mentioned in last week’s blog, it’s time to start making sense of the Preamble of the Inspection Report Form. As a reminder, the Preamble is written by the Texas Real Estate Commission (TREC) and sets expectations as to the purpose, limitations, and inspector/client responsibilities of the inspection report.
This week we’re going to look at the first, and shortest, paragraph of the Preamble. It states:
“This property inspection report may include an inspection agreement (contract), addenda, and other information related to property conditions. If any item or comment is unclear, you should ask the inspector to clarify the findings. It is important that you carefully read ALL of this information.”
It’s pretty straightforward and easy to understand. Addenda & other information might include items such as Form OP-I which is now included in the contents of the Preamble or it might pertain to other information that the Inspector would like to bring to your attention, i.e. information regarding Corrugated Stainless Steel Tubing (CSST) or other items that may be related but are not included as part of the inspection report.
The most important item to understand is going to be the Inspection Agreement. In many cases, it will be a separate document that is not included in the body of the report. While choosing whether to require an Inspection Agreement is up to each individual Inspector or company, TREC rules require every licensed Inspector to carry a minimum of $100,000 worth of Errors & Omissions insurance and the insurance provider may require the use of an agreement. It is a good business practice as this is the contract that will define the relationship between the parties, will often mirror the sentiments of the Preamble, and may include the following:
- Fees being charged
- Cancellation policy
- Scope of inspection
- Additional services being performed
- Notice of claims
- Limit of liability
- Disclaimer of warranties; guarantees; insurability; habitability, etc.
Another important role of the Inspection Agreement, at least in Texas, is that it can be used to obtain the clients permission to share the inspection findings with the clients’ agent. TREC rules specifically state:
“Inspectors shall not disclose inspection results or client information without prior approval from the client.”
The only exception to this rule is that, “Inspectors, at their discretion, may disclose observed immediate safety hazards to occupants exposed to such hazards when feasible.”
In closing, make sure that you carefully read ALL of this information (Agreements/Addenda/Inspection findings), have a clear understanding of each, and when in doubt, ask for clarification.