This is the second episode in our video series covering the use of a home inspection report to mitigate risks of misrepresentation in the preparation of a seller’s Transfer Disclosure Statement (TDS). For the prior episode, click here.
Hiring a home inspector
Any individual who holds themselves out as being in the business of conducting a home inspection and preparing a home inspection report on a one-to-four unit residential property is a home inspector. No licensing scheme exists to set the minimum standard of competency or qualifications necessary to enter the home inspection profession. [Calif. Business and Professions Code §7195(d)]
However, some real estate service providers typically conduct home inspections, such as:
- general contractors;
- structural pest control operators;
- architects; and
- registered engineers.
Home inspectors occasionally do not hold any type of license relating to construction, such as a person who is a construction worker or building department employee. However, they are required to conduct an inspection of a property with the same “degree of care” a reasonably prudent home inspector would exercise to locate material defects during their physical examination of the property and report their findings. [Bus & P C §7196]
Sellers and seller’s agents are encouraged by legislative policy to obtain and rely on the content of an HIR to prepare their Transfer Disclosure Statement (TDS) for delivery to prospective buyers. [See RPI Form 304]
The buyer’s reliance on a home inspection report (HIR) at the time a purchase agreement is entered into relieves the seller and their agent of any liability for property defects they did not know about or were not observable during the mandatory visual inspection conducted by the seller’s agent.
However, for the seller’s agent to avoid liability in the preparation the TDS by relying on an HIR, the seller’s agent needs to select a competent home inspector to inspect and prepare the HIR. Thus, the seller’s agent needs to exercise ordinary care when selecting the home inspector. [See RPI e-book Real Estate Principles Chapter 21]
Want to learn more about this topic? Click the image below to download the RPI book cited in this article.
