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How Much to Disclose?


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My first instinct is TELL ALL. Responsibility to the client, etc.

It's like knowing traits common to a certain builder in your area, or knowing that one block in the neighborhood always floods. You have even more to offer your client.

Legally, I don't know for sure. But down the road, if it was determined that you were aware of major defects and did not share them with your client, I think you'd find yourself up poop creek.

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What if it is a flip house and defects that you saw in your previous inspection were no longer visible (because they are covered over) or their locations are no longer readily accessible? Do you say anything based on your prior knowledge of the home and if so what do you put in your current report about it?

Example: One year ago you inspect a home with an unfinished basement and you find one of the foundation walls has a horizontal crack and is bowing inward. You recognize this as a serious structural issue and you recommend repairs by an SE or foundation contractor. You come back a year later and the basement is now finished with a cheap stud wall in front of the foundation wall. There's no way for you to see behind the new wall without tearing a hole in it.

Now to complicate things a bit further, in my state our HI licensing law specifies our duty of care is to the client and says "Every such written report and the information contained therein shall be deemed confidential and shall not be disclosed without the express consent of the client." My knowledge of the problem with the foundation was obtained when I was under contract with the person who is now the seller. My current client is the buyer.

I'm inclined to break this dilemma by disclosing my knowledge of the previous problem to my current client. If it has been fixed then the old client (seller) should have no problem with providing the proof it was fixed. If it hasn't been fixed and I don't say anything, and the new owner decides to remodel that room and finds the bad foundation, he's gonna sue everybody involved in the transaction. At that point you can bet that both of my reports would make it into evidence and me and the seller would be up a creek without a paddle. If it has not been fixed and I disclose my prior knowledge, the only person harmed is the seller (my old client). If he comes after me legally, who's gonna side with him when he says my disclosure prevented him from committing fraud?

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Hi Brandon,

I think that's a good analysis. Notwithstanding what I said above, if I knew there had been issues but could not visually verify that they'd been corrected, I'd probably do exactly the same as you and say something in the report to the effect of:

"You should be aware that I inspected this home for the seller when he bought the house a little more than a year ago. At that time, there was a large horizontal foundation crack in the back wall of the foundation and it was bowing inward. I'd recommended then that a licensed engineer, in concert with a competent foundation contractor, design and supervise a fix to that wall. During today's inspection, I could not verify whether that work has been done and there's no way to know, without physically cutting through the wall to examine the foundation behind.

Ask the homeowner whether he ever made those repairs. If he says that he has, ask to see the repair documentation, obtain the name of the contractor and the engineer, and then call to verify the work was done. If you can't confirm that the work was actually done, or that the repairs were done under the supervision of an engineer, it's my opinion that you should insist that the homeowner have the wall opened up, so that you can have it examined by an engineer and competent contractor, with an aim toward determining what it will take in terms of work and cost to effectively repair it."

It'd probably piss off the former client but I think at heart he would have known the second I walked into the home what to expect from me.

ONE TEAM - ONE FIGHT!!!

Mike

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I'm new here so I apologize if I'm sticking my nose where it doesn't belong. However it seems to me that if you did this inspection one year ago the present seller was the prospective buyer one year ago. What this means is according to full disclosure laws it's up to the seller to disclose any problems not corrected. If home inspection is a visual profession and you do not presently see a problem, then why not assume the seller took care of the problem based on the inspection report you had given him previously. It has just been covered over like a pig with perfume and I feel it should be the seller's liability not yours.[:-graduat

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I did not include my findings from one year ago in this current report. I was honestly pretty baffled about the right thing to do.

I ended up adding a custom written disclaimer / disclosure statement at the end of the report. Wrote it from scratch and needed to have an attorney review it but didn't have time. The report had to get completed and issued. I stated what I believed to be the correct and legal thing to do; ultimately, it is the responsibility of the sellers to disclose hidden defects. If they repaired significant issues then the onus is on them.

TWIST - I discovered the current sellers are NOT my clients of a year ago - I don't know what happened. But wait. . . many of the defects from a year ago were addressed?! Of course I understand that a different inspector can certainly discover the same things, but I have a very strong suspicion that my inspection report was offered to the current occupants. This runs against the 'proprietary document' clause in my inspection contract AND crosses ethical boundaries in my opinion. I also stated this in the disclaimer.

It'll definitely be interesting if there's any fallout.

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Originally posted by chicago

I'm new here so I apologize if I'm sticking my nose where it doesn't belong. However it seems to me that if you did this inspection one year ago the present seller was the prospective buyer one year ago. What this means is according to full disclosure laws it's up to the seller to disclose any problems not corrected. If home inspection is a visual profession and you do not presently see a problem, then why not assume the seller took care of the problem based on the inspection report you had given him previously. It has just been covered over like a pig with perfume and I feel it should be the seller's liability not yours.[:-graduat

My reply to your post assumes the case where you find a serious defect on your first inspection, but on your subsequent inspection of the same house for a different client, you are silent about it because it falls into the standard disclaimer of no longer being visible or readily accessible. The buyer after taking possession of the home discovers the defect.

Once the lawyers get involved, even if you are not initially named in the suit, the fact that you performed both inspections is going to come out and your reports will be provided during the discovery process. When the lawyers compare the two reports at that point you are going to become a party to the suit. If I'm going to appear in court, I'd much rather be an expert witness than a defendent.

Thanks everyone for the input. It really helps me to think through these situations before I find myself caught in the middle of one. I think it will be easy for me to keep my head straight if I continue to focus all of my energy into doing the best possible job I can do for my current client. Unless someone can come up with a down side that's bigger than pissing off a former client who is trying to hide something, I think I'll handle it in a way that is very similar to what Mike posted.

I too am interested in hearing how this plays out for you Randy, and I wish for the best.

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In my state the seller is required to disclose all known problems or defects. I also feel that the report I write is a confidential report for the intended party. With that said, my knowledge of a previous defect may not be confidential if the intent to conceal that knowledge is a violation of law. I think the best approach would be to consult a real estate attorney when a conflict arises such as one that Brandon describes.

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Did a home inspection awhile back. A month later a different client called me to inspect the same house. I informed Him up front that I had recently inspected the home and was familiar with it's condition. He said he would call me back but but never did, don't know why. I had much rather disclose my position up front to the client and let Him/Her make up their own mind regarding previous inspection than wind up with a problem anytime. Who needs it. We all know that the only one that wins in a lawsuit is the Lawyer. An ounce of prevention is worth a pound of cure.

Just my humble opinion which sometimes may not be worth much.

Paul B.

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About 3 weeks ago I did a house I did 18 months ago. I did not remember inspecting the house until I see it. I remember things about the inspection. The mold behind the basement bathroom That the roof had homeowner repairs and the high moisture reading and stains on the basement walls. The agents had told me last year that the septic lines had back up in the house and had cause the damage. The paneling in the basement had been replaced the area the mold was, was now paneling. It use to be Sheetrock. I ask my client if they had told him about the basement and they had told him. The city had to clean the tree roots out of the lines.

Someone had did a lot of remodeling of the place. I found in the attic some areas that the insulation was missing and after I review my report from the first inspection I had not noted any missing insulation.

It turn out that my first client did not by the house the owners had took the house off the market and took my report which that was not suppose to have and had did repairs.

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If I interpret our Oregon standard right, in theory if you end up inspecting the same house year after year our findings are supposed to be based on the visual evidence present at the time of the inspection. In other words were not supposed to base an opinion upon evidence not in existance at the time of the inspection. Now that being said if you can find any evidence of a prior condition that reasonably implies a material defect that opens the door to bringing up past relavent supporting information.

That being said if I strongly suspect a material defect hidden from view you bet I will bring it up!

As far as disclosing if I inspected the sme house before which happens once or twice a year and is more likely to happen if your inspecting in smaller communities I generally will disclose verbally to the client after which a discussion usuualy arises but I don't remember if I have ever purposely disclosed it in a report unless there was some kind of evidence that opened the door to do it.

Chris, Oregon

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