Question: should agents avoid liability by having their prospective homebuyer order the home inspection reports (HIR) on the purchase of a property?
Anwer: The home inspection report (HIR) should be requested by the listing agent (on behalf of the seller), so he can retain control throughout the process of marketing, selling and transferring ownership of the listed property. Otherwise, claims for disclosures first made after going under contract arises. To do otherwise, the agent will lose control over who discloses the deficiencies and worse, when these disclosures are made.
An agent, be he broker or sales agent, is never responsible for any aspect of an HIR if he has authority from the seller (client) to order it, as is typically the case.
In regards to liability, the listing broker and agent expose themselves to claims of misrepresentation when, after an offer has been accepted, the buyer or the buyer’s agent is the one who first orders the HIR.
Important for the seller’s broker and listing agent is the rule allowing them to rely on the content of an HIR when they prepare the TDS if the listing agent has previously conducted his competent visual inspection (which should occur at the time of listing or soon afterward that before marketing the property) . Their reliance on an HIR prepared by an inspector when filling out the TDS relieves the seller and the listing broker from liability for errors which are unknown to them to exist and were missed by the home inspector. [Calif. Civil Code §1102.4]
However, to rely on the HIR, they must be free of simple negligence in the selection of the home inspector who inspects and prepares the HIR. Thus, the seller’s broker can control all this activity, and with the report attached to the TDS, the broker controls the competency of his listing agent’s inspection and preparation of the TDS which reduces his risk of claims by the buyer. The same condition exists for the Natural Hazard Disclosure (NHD) preparation.
Early preparation of the HIR has additional errors and omissions advantages. If the listing agent by authority of the seller under a listing agreement were to order out a home inspection report before marketing the property, they will be made aware of any existing defects on the listed property and the seller will have the opportunity to correct them before marketing the property. Conversely, if the seller chooses not to correct the deficiencies, he can contract to sell the property in an “as disclosed” condition (never “as is”) and pass the defects on to the buyer at the price the buyer, knowing the defects, is willing to pay.
