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Role of the Inspection Agreement and Addenda

In this blog post we’re going to cover the role of the inspection agreement and addenda.
 

Inspection Agreement (Contract)

 
The most important item to understand in the report 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 and Omissions insurance and the insurance provider will likely 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
  • Exclusions
  • Additional services being performed
  • Exclusivity
  • Notice of claims
  • Limit of liability
  • Disclaimer of warranties; guarantees; insurability; habitability, etc.

Another important role of the Inspection Agreement 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.”

Make sure that you carefully read ALL this information (Agreements/Addenda/Inspection findings), have a clear understanding of each, and when in doubt, ask for clarification.

Addenda & other information might include items 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 to but are not required as part of the inspection report.
 

Additional Information Provided by the Inspector

 
“INFORMATION INCLUDED UNDER “ADDITIONAL INFORMATION PROVIDED BY INSPECTOR”, OR PROVIDED AS AN ATTACHMENT WITH THE STANDARD FORM, IS NOT REQUIRED BY THE COMMISSION AND MAY CONTAIN CONTRACTUAL TERMS BETWEEN THE INSPECTOR AND YOU, AS THE CLIENT. THE COMMISSION DOES NOT REGULATE CONTRACTUAL TERMS BETWEEN PARTIES. IF YOU DO NOT UNDERSTAND THE EFFECT OF ANY CONTRACTUAL TERM CONTAINED IN THIS SECTION OR ANY ATTACHMENTS, CONSULT AN ATTORNEY.”

Let’s look at the last part of the Preamble. Any information provided in this section is solely at the discretion of the individual inspector or inspection company and is not a requirement of the TREC. It may be included in this section or as an attachment to the property inspection report form. Some common examples of what might be found here are:

  • Inspection Agreement
  • Safety information regarding Corrugated Stainless-Steel Tubing (CSST)
  • Occupancy/property information/age of home/weather conditions/property orientation/temperature
  • Scope of inspection/General Limitations
  • Disclaimers regarding mold or pests
  • Terminology/Definitions
  • Information regarding inaccessible or obstructed areas

As you can see from the examples above, most of these are informational in nature and further aid in setting the expectations of the inspection. However, if any these contain contract terms and the effects of these terms are not understood, the TREC recommends consulting with an attorney as the TREC does not regulate contractual terms between the parties of the inspection.

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