Home inspections are conducted by professional home inspectors, typically in association with a residential property purchase. These inspections are intended to detect and identify any repairs that need to be made before the home can be sold. Home inspections are usually required by local municipal boards in order to ensure that the home meets safety and zoning standards. However, they are often privately requested by people who are wanting to purchase or sell a home.
Most mortgage lenders require that the buyer obtain a professional home inspection before the lender will agree to finance the purchase of the property. If the home fails the inspection, or if the home inspection report uncovers glaring property issues, the lender will likely refuse to provide home financing.
Home inspections may also be used for:
- Assessing home value after an accident causes damage to the home (such as an earthquake or flood);
- Assessing home value for sale or refinancing;
- Determining whether the home was originally constructed according to code; and/or
- Assessing property value for property tax purposes.
Home inspections take note of any additions or improvements that could increase the home’s value. Inspections mainly focus on:
- Structural and safety aspects of the home;
- Roofing, windows, and doors;
- The condition of appliances as well as heating and ventilation systems; and/or
- Carpets and flooring.
As previously mentioned, a home inspection is generally required for any home sale transaction or when the title of the home is being passed to a new owner. Inspections may also be requested if the owner is wanting to obtain a home repair loan, or if the owner is wanting to renovate the property. An example of this would be if the homeowner would like to have a patio installed. A home inspection would be required in order to determine whether the new structure is allowed by housing laws and would meet safety standards.
What Are Some Examples of Home Inspection Fraud?
Home inspector liability laws vary from state to state. Home inspectors may be held liable for broken or breached contract provisions, or for failing to detect a defect. Home inspection fraud most commonly occurs when an inspector makes a false report. Such a report typically states that a specific repair must be made when it may not be necessary at all. This often happens when the inspector advertises their own repair services alongside their inspection services.
As such, it is advisable to be wary of any inspector who offers repair services as a package with their inspection services. In order to avoid this specific type of home inspection fraud, many states do not actually allow inspectors to make repairs on a home until a specific waiting period has passed, generally one year post inspection.
Another type of home inspection scam involves the sale and purchase of a home. The home inspector may conspire with the buyer to create a false report. This false report could state that the seller must make certain repairs or installations before the buyer would consider purchasing the home. However, it is later discovered that the repairs were not necessary. Essentially, the buyer has received free repairs or installations while the inspector is paid for their extra work.
Sometimes, the inspector works with the seller in order to force the buyer into paying for false repairs. These are especially dangerous types of home inspection fraud due to the fact that home inspection reports are not often communicated between the buyer and the seller; and, many parties fail to verify that a home inspection report is actually true and accurate.
How Can Home Inspection Fraud Be Prevented?
If you dispute something included in a home inspection report, whether you are the buyer or the seller, you can sue the home inspector for fraud. If the inspector’s report has caused you to lose ownership of your home, or other significant financial damages, you may be able to seek out:
- An injunction to help prevent a sale;
- Economic damages equivalent to the amount lost due to the inspector’s fraud; and/or
- Punitive damages, such as the inspector losing their certification and/or their job as an inspector.
The best way to prevent a home inspection fraud dispute is to prevent it in the first place. Fraud may be prevented by having any repairs completed by someone other than the person who inspected the home. Always check that the inspector has a valid license, as well as no history of fraud. You may consider hiring your own inspector, so you can compare the results of various inspections.
You should take note of any figures or claims that seem suspicious and get a second opinion if possible. No matter the case, you should always request a copy of the inspection report in order to verify that it is not fraudulent. An additional safeguard is to present your inspection requests in the form of a bid. Inform any potential inspectors that you are considering hiring other inspectors; this could keep the inspector from committing fraud as they may be afraid of being exposed.
Do I Need an Attorney for Home Inspection Fraud?
If you are facing home inspection fraud, you should consult with a skilled and knowledgeable real estate attorney. An experienced real estate attorney can inform you of your options as well as any state specific information you need to know.
The attorney can also represent you in court as needed. If you are in the process of buying or selling a home, a real estate attorney can also help negotiate the inspection contract, as well as review all transactions.