Home Inspectors' Rotting Frames

A potentially significant ruling in the BC courts was released last week that could have some significant implications for home inspectors. The ruling is not long by legal standards but still pretty dry. Don't read it if you have a life. I read it twice. You can read the briefer press coverage here.

The suit was between a home owner (the plaintiff) who made an offer on a property in North Vancouver subject to inspection and hired an inspector (the defendant) for $450 to inspect the home, and write and present a report on his findings. This is pretty standard practice, especially with older homes, and especially especially with older homes with significant structural and leaking issues, which this particular property had, and was evident even by a cursory walk-through.

Long story short, the home inspector lost the case and was ordered to pay over 192 fat ones to the owners, covering the the majority of repair costs to the house. The house had significant structural deficiencies that cost significant money to fix. The fixes included compacting soil holding the foundation, rebuilding two decks, and reinstalling supporting post and beam members that had significant rot.

A few things were made clear by this case -- and it may still be appealed, not necessarily on the bill of the home inspector -- and I'll highlight a few points that we all should take seriously when buying a property.

1. The inspector was recommended by the Realtor

The first thing to note was that the inspector was recommended to the buyers by their Realtor. Certainly the Realtor purports to have his clients' best interests at heart yet the Realtor only gets paid if the sale completes. The inspector undoubtedly was recommended by this Realtor in other transactions so there is potential for conflict of interest. The judge did not us this fact in issuing the final decision. Still, ensuring the chances of a conflict of interest are minimized could have saved this case from happening at all.

2. Seeing what you want to see

While the blame was put solely on the inspector, I am suspicious the judge ruled against him partly because of his conflicting testimony under oath. The judge made, in my opinion, a slightly bizarre determination that the buyers put significant faith in the inspector's report, enough to believe the repair costs were on the order of $20K, not the eventual $200K. I'm not a lawyer so cannot comment on how the buyers' state of mind would influence whether negligence occurred.

If we think back to 2006 and the overall sentiment of the market, prices were increasing at close to 20% year-over-year. The house was purchased in the late spring, a typically strong month for sales. In those heady days, it was not uncommon for buyers to attend scores of viewings, make several offers on several properties, and if they're lucky have one accepted. With that as the backdrop to this particular purchase, I am suspicious the buyers put significant pressure on themselves to complete. Often we put blame on Realtors, inspectors, lawyers, and others in the industry, claiming they influence buyers to complete so the food chain gets paid. Well sure, but there still needs to be the obvious precondition to influence: the buyers allow it to happen, and some buyers' emotional states make influence all the simpler.

3. Will this change anything

I don't want to over hype this particular case -- it may have been a case of negligence without further implications. In the extreme we could imagine home inspectors, now wary of the chance of successful litigation against them, start hedging on the side of caution when writing a report. It could mean fewer sales as buyers get cold feet.

There is little in the way of standards for the home inspection industry. There are some standards and codes of conduct, however there does not seem to be wide acceptance they are adequate for all inspection scenarios. In this case, an "expert" home inspector testified how the baseline guidelines of one such association are considered inadequate for a proper inspection. To properly set up home inspection standards is a huge effort and, given the variance in homes across the country, it would be difficult to write down in standards form that completely encapsulates common sense and competence. I would expect such a standard is years off.

In the meantime we as potential buyers are stuck relying on ourselves to make a call on whether a house inspection makes sense. From what I've read in this case, it did not. In the heat of buying frenzies -- and we are in the midst of one now -- it is important to be extra cautious when we know our emotions are involved. It also highlights the risks involved in home purchases and why carrying costs, on average, should have a healthy margin of error.

Construction Quality - a 1970's Landmark Building

The following is excerpted from an email I sent to a relative a few months ago when she was searching for a condo in East Van. My "preliminary inspection" was really just a quick walkaround the building to see if it was worth a second look. I figured I'd to my relative a favour and try to save her from her unscrupulous realtor and her lack of basic construction knowledge. I have to apologize for the weak photos-- they were taken on my cell phone. As to my qualifications: I'm a mechanical engineer with experience in mobile equipment and marine construction, and minimal knowledge of residential construction.

Hi A-,

I stopped at #### Wall St quickly to have a look at the building. The condition of the walls raises questions. Two of four walls have been replaced, probably in different years by different contractors. At a quick glance, the building has been painted recently, had a new fence, and looks in good shape, but questions were raised as I walked around the building. Here are my notes:

The North wall looks decent, and looks like the balconies still have the original stucco.

The East wall was replaced with a rainscreened wall at some point, probably within the last 10 years. The rainscreen is evident by the gap at the bottom of the wall, and by the flashings at each floor level. Curiously (I've never seen this before), it looks like the gap at the flashing at each floor level is sealed, which entirely defeats the purpose of a rainscreen-- air is supposed to be able to flow into the wall cavity to dry it out, and water should be able to drain out, but this is only possible for the bottom floor. I would recommend that somebody more experienced than myself look at the construction of this wall.





The South wall looks decent, and looks like the balconies still have the original stucco.



The West wall had the stucco replaced with an Exterior Insulated Face Sealed (EIFS) wall, the same type as the building was built with, and which is generally implicated in leaky-condo problems. This was probably done 5-15 years ago. EIFS wall assemblies have to be tightly sealed, because if water gets in, it can't drain out, and air doesn't pass through the wall quickly enough to dry it out. Since it's impossible to seal rain out completely, water gets in, stays in, and causes rot. This replaced stucco looks to be of a poor quality, as can be seen by the cracks radiating out of a window (which have since been caulked). There's lots of caulking around the door, which implies that the wall has had water problems. Also, where the fence meets the wall, there's a line of old caulking from where the old fence used to sit. From this, I infer that they had water problems with the wall, but were unsure where the water was coming in, or if there were cracks behind the fence, so they caulked the fence to the wall. This is evidence that water problems existed in that wall, even after they replaced it.







Sooo... Two of four original wall assemblies were so poorly built that they had to be replaced. One of the replaced assemblies shows evidence of continued problems. The other assembly was built in an unusual manner, which raises questions. The two original walls, built by the same contruction workers that originally built the two failed walls, have not been addressed. The building may not necessarily be leaking right now, but there's a considerable risk of future problems due to deficiently built original walls and the deficiently-built West wall.

I'll have to retract anything that I may have previously said about Landmark buildings-- I've looked at a couple before, which were decent, but evidently not all their work was done to a high standard.

Regards,
M-