Home inspections provide buyers with critical information needed to make an informed decision when purchasing a home. Buyers often rely on the recommendation of their broker when choosing a home inspector. This article will address considerations that should be made when brokers are recommending a home inspector.
In North Carolina, individuals who perform home inspections for compensation or hold themselves out as licensed home inspectors must be licensed by the North Carolina Home Inspector Licensure Board (HILB). The HILB licenses individual home inspectors but does not regulate or license home inspection companies. The individual completing the inspection on site must be licensed. The HILB maintains a searchable directory of active licensees on its website.
Licensed home inspectors must provide a written contract to the client that states the home inspection will be performed in accordance with the North Carolina Home Inspector Licensure Board Standard of Practice (SOP). The contract must contain the inspector’s name, license number, and may include limitations on liability for errors and omissions, including those that lead to property damage or injury, or for not meeting the standard of care expected of a license home inspector. Understanding the scope and limits of the inspection at the outset is critical to managing expectations and protecting the client’s interests.
During a home inspection, systems and components required to be inspected by the SOP will be inspected for defects. For each system inspected, the inspector will:
This is known as the “DDID” framework which ensures consumers understand not only what is wrong, but why it matters and what they should do about it. However, inspection reports that include repair estimates or offers to make repairs are not allowed as they may create a conflict of interest.
Following the inspection, customers are provided with a written home inspection report. The report will include a summary page, but the entire report should be reviewed to identify all systems and components that may not be functioning as intended or appear not to be functioning as intended based upon tangible evidence. The summary and report may also include safety concerns identified during the home inspection.
Under Home Inspector Licensure Law, a person who is not licensed as a home inspector cannot inspect two or more systems or components for a fee. There is an exception for licensed general contractors who are preparing bid specifications and estimates for construction work. Similarly, licensed plumbing contractors may inspect plumbing systems and licensed electrical contractors may inspect electrical systems. However, these professionals cannot inspect additional systems unless they are also licensed by the HILB. Typically, these tradespeople are brought in as follow-up specialists when a licensed home inspector identifies a concern that requires repair or further evaluation by a specialist.
Critically, brokers must not rely on a home inspection report that they know or reasonably should know was prepared by an unlicensed individual. Even if an unlicensed individual performed the inspection at no charge, claims that their company employs a licensed home inspector, or claims that licensure is not required, the broker may still be subject to disciplinary action under N.C. Gen. Stat. § 93A-6(a)(8) and (10) for unreasonably relying on an inspection report by an unlicensed individual.
For example, a listing broker provides a buyer’s agent with a copy of a pre-listing inspection report prepared by an unlicensed individual. The buyer’s agent is unfamiliar with the inspector and makes no inquiry into their credentials but counsels the buyer client that they can rely on the report when moving forward with the purchase. After closing, defects are discovered that were not contained in the report. The buyers may then seek recourse against the unlicensed individual and the brokers who recommended the inspector.
To summarize, brokers should exercise due diligence in connection with recommending home inspections as follows: