Home Inspection Contracts for InterNACHI Member Use

InterNACHI's standard home inspection agreement is a form many InterNACHI® members use as the basis for their own contracts with clients.  This version offers inspectors greater legal protection.  It is designed to work hand-in-hand with InterNACHI's Standards of Practice and InterNACHI's Online Inspection Agreement System. The updated version is available to InterNACHI® members free of charge.

 

The following Agreements are FOR MEMBERS' USE ONLY:

 

Download Word.docx versions of state-specific Pre-Inspection Agreements for the following states at www.nachi.org/documents.htm:

• California
• Massachusetts
• New Jersey
• New York State
• Virginia
• Wisconsin

The updated form contains important additions, but still consists of only a single page (English version).  InterNACHI® understands that a prospective client may become wary if an inspector asks them to sign a lengthy legal document.

 

There are several important issues that home inspectors should consider in drafting their standard inspection contract. 

 

These include:           

1. defining the scope of the inspection (and including a link to InterNACHI's Standards of Practice or the state’s mandatory SOPs);
2. the fee for the inspection;
3. when payment is due;
4. a disclaimer of warranties;
5. ownership of report and permission to discuss findings;
6. procedure for asserting claims (notice to inspector and opportunity to inspect, time limits);
7. a limitation on liability and a liquidated damages provision;
8. a provision for payment of costs and attorney’s fees;
9. dispute resolution (mediation, arbitration, litigation, etc);
10. a “merger clause” stating there are no promises other than those set forth in the agreement, and that all prior discussions are merged into the agreement;
11. a clause stating that any modification of the agreement must be in writing;
12. a forum selection clause so that any lawsuit must be filed in the county or district where the inspector has his/her principal place of business;
13. a waiver of the right to trial by jury; and
14. a personal guaranty of payment if the client is a corporation or similar entity.

 

Laws vary from state to state, but the updated InterNACHI form provides a good starting point in any jurisdiction. 

In addition to always using a written contract, home inspectors who have not incorporated should form a limited liability company (LLC) or subchapter S corporation because forming a separate entity offers some additional liability protection.  Inspectors may also be able to reduce their self-employment taxes by doing business as an LLC or corporation.

 

Inspectors should review their advertising and marketing materials with a critical eye to make sure they do not contain unfounded statements or claims that could provide the basis for a lawsuit by an unhappy client.