Professional Services Network, Alabama, Legal

Alabama Home Inspectors Registration Act, Ala. Code § 34-14B-1 et seq. (West, 2005).
Alabama Home Inspectors Code of Ethics and Standards of Practice
Brushwitz v. Ezell, 757 So. 2d 423 (Ala. 2000).
Ex parte Hill v. Metrospec, 730 So. 2d 214 (Ala. 1998)
Hill v. Metrospec, 730 So. 2d 209 (Ala. Civ. App. 1997)

Alabama state law has required its Home Inspectors to be licensed since 1996.  Alabama Home Inspectors Registration Act, Ala. Code § 34-14B-1 et seq. (West, 2005).  Licensure requires several things including payment of a license fee, evidence of a certain amount of professional insurance, evidence of professional qualification such as membership in InterNACHI, certification by H.U.D. to inspect homes, licensure as a home builder, among others, and passing scores on both the “National Home Inspector Exam” and the A.S.H.I. “Standards and Ethics” exam. 2005 Alabama Building Commission Home Inspector Application form.

 

Conducting home inspections without a license is an Alabama class A misdemeanor. Id.. Additionally, contracts for home inspection are not enforceable without a license. Id..

 

All advertising or any other document prepared by the Home Inspector must note his or her license number.

Alabama home inspectors are held by law to the “Alabama Home Inspectors Code of Ethics” and the “Alabama Home Inspectors Standards of Practice” Id. at § 14B-9. These codes are promulgated by the Alabama Building Commission. Id..  The Building Commission’s website (http://www.bc.state.al.us/) has a special section for Home Inspectors, with links to forms and to the Code of Ethics and Standards of Practice. http://www.bc.state.al.us/chapter170x25.htm.

The genesis of Alabama’s Home Inspectors Registration Act is not recorded. [???] However the year before the act was passed the Alabama Supreme Court decided several cases in one day that arose as a result of a single incident that could be construed as a result of a negligent home inspection.  In 1992 a 20 foot high attached wooden deck collapsed under the weight of approximately 20 party goers, “causing severe injury to many of the guests.”  Peek v. State Auto Mut. Ins. Co., 661 So. 2d 737, 738 (Ala. 1995). See also Christian v. Chandler Construction Co., 658 So. 2d 408 (Ala. 1995) and Rouse v. Chandler, 658 So. 2d 405 (Ala. 1995).  All of the cases went in favor of the defendant homeowner and his insurers because the homeowner was able to show that his only notice of a potential problem with the deck was a home inspector’s review two months before the accident that did not indicate “that the deck was dangerous to use or that it needed significant repair” and instead indicated only that “two boards and a handrail needed to be replaced and . . . the deck had a remaining life span of up to five years.” Peek, 661 So. 2d at 738.

Causes of Action:

• negligence / wonton inspection
• suppression
• reckless misrepresentation
• willful misrepresentation
• fraudulent misrepresentation

Defenses:

• reliance not reasonable (summary judgment)

Brushwitz is about the legal effect of confusion in the mind of a home buyer with regard to the differing roles of appraisers, home inspectors, and termite inspectors. Mr. and Mrs. Brushwitz discovered termite infestation and wood mold soon after purchasing their home.  They sued the real estate appraiser, the home inspector, and the termite inspector for with regard to these defects.  Brushwitz v. Ezell, 757 So. 2d 423, 425-26 (Ala. 2000).  The Brushwitzes claimed that they relied on the various reports of the three types of professionals listed above in deciding to purchase the home, and that the reports negligently or fraudulently misrepresented the condition of the house. 

The Alabama Supreme Court upheld the appraiser’s motion for summary judgment because (a) the purpose of the appraisal report was to provide valuation information for the mortgage company, not to detect termites or mold, (b) the appraiser’s report included disclaimers to that effect, and (c) the “reasonable reliance” standard for the fraud claim was not met.  Importantly, in crafting its decision the Alabama Supreme Court focused closely on Mrs. Brushwitz’ sophistication in the area of real estate: she had been a realtor in Illinois for five years.  In light of her sophistication, the Court found that her reliance on the absence of termite or mold information in the appraiser’s report was not reasonable.  The Brushwitzes’ claims against their home inspector and their termite inspector were not dismissed, presumably because the Brushwitzes’ reliance on the home inspector’s and the termite inspector’s reports was reasonable even though the court found the Brushwitzes to be sophisticated buyers.

It is unknown whether the Brushwitzes succeeded in their claims against the remaining two professionals.

Brushwitz implies that, where a relatively unsophisticated home buyer might confuse the roles of appraiser and inspector, these professionals are well advised to provide appropriate disclaimers and reinforce them with their clients.

Causes of Action:

• breach of contract
• negligence
• negligent misrepresentation
• fraudulent suppression
• fraudulent misrepresentation
• fraudulent concealment
• conspiracy
• outrage

Defenses:

• absence of contract
• reasonable efforts
• insufficient pleading / claim not supported by the evidence (summary judgment)
• attorney’s fees under the Alabama Litigation Accountability Act (“ALAA”)

Hill is about the presumption of a home inspector’s duty to a third party beneficiary to a contract for home inspection.

Mr. and Mrs. Hill made a contract to purchase a “pine-log home.” Ex Parte Hill v. Metrospec, 730 So. 2d 214, 215 (Ala. 1998).  The sellers were required by the contract to obtain a “pest inspection report” for the Veteran’s Administration, “which was insuring the Hill’s loan.” Id. at 216.  The pest inspector found “severe infestation of wood-boring beetles” and noted the problem areas with three “X’s” on a pre-printed diagram.  Id..  The pest inspector meant the “X’s” to denote areas in the walls of the home.  Id. at 217.  The seller’s real estate agent responded to this report by hiring the defendant home inspectors to assess whether there was structural damage as a result of the infestation.  Id..  The home inspectors examined areas of the crawlspace they thought were denoted by the “X’s” on the diagram, and they found no structural damage there.  Id. at 217, 216.  The Hills were told of the infestation at the closing, but were shown the home inspectors’ report and proceeded with the closing in reliance on it.  Id..
 Mr. and Mrs. Hill soon after discovered “serious structural damage” to their new home from “wood-boring insects.”  Ex parte Hill v. Metrospec, 730 So. 2d 214 (Ala. 1998).  In addition to the home inspector and his employer, the Hills sued: the sellers, the appraiser, the real estate agent, the real estate company, the “principal” of the real estate company, the closing attorney, the termite inspector, and the termite inspection company. Hill v. Metrospec, 730 So. 2d 209 (Ala. Civ. App. 1997).

At the trial court the home inspector and his employer were granted summary judgment because the court felt the Hill’s evidence was insufficient to support their claim.  Id. at 211.  It dismissed the breach of contract claim because it found the home inspector had no contract with the Hills, having been hired by the seller through their real estate agent and not by the Hills.  It dismissed the other claims because it found the Hill’s claim did not meet the elements of negligence: (1) duty, (2) breach, and (3) resulting loss. Id. at 211, citing John R. Cowley & Bros., Inc. v. Brown, 569 So. 2d 375 (Ala. 1990). The trial court found that the Hills offered no substantial evidence that the home inspectors knew or should have known where to look for the structural damage that had previously been found by the termite inspector.

After the trial court granted summary judgment the remaining defendants settled the case for $125,000 and a “stipulation for dismissal . . . with prejudice.”  Id. at 211.  The trial court awarded the home inspector and his employer attorney’s fees under ALAA because it found the Hill’s case to have been filed “without substantial justification.”  Id. at 214 (quoting the trial court’s judgment and order of April 4, 1997). The Court of Civil Appeals reversed the award of attorney’s fees, arguing that a court’s determination of the absence of “substantial justification” under ALAA is presumed correct only where it rests on the absence of factual evidence, not on the absence of legal grounds.  Id..

The Alabama Supreme Court then reversed the summary judgment decision and remanded the question of the home inspector’s breach of contract, negligent misrepresentation, and negligence back to the trial court.  Ex Parte Hill v. Metrospec, 730 So. 2d at 216.  It ruled that “a jury could reasonably conclude that when [the home inspector] did not find evidence of an infestation in the crawl space or in the flooring system, he was put on notice that either the diagram was inaccurate or he had misinterpreted the diagram, and that [the inspector] should have either expanded his inspection or contacted [the pest inspector] to determine the true areas of infestation.  A jury could find that [the home inspector’s] failure to do either of these things constituted a breach of a duty [he] owed to [the buyers] to use reasonable care in inspecting the home for structural damage.”  Id.. at 217.

 

In reversing the summary judgment decision the Supreme Court mooted the home inspectors’ claim for attorney’s fees under ALAA but noted that fees were not awardable in any case where a party could not show it was a party to the trial level settlement agreement that dismissed the case “with prejudice.”  Id. at 215, FN1. 

 

The Hill case means that a complaint against a home inspector for negligence, breach of contract, or negligent misrepresentation will survive a motion for summary judgment if there is sufficient evidence that the inspector had written notice of a problem that he then failed to detect.  Ex Parte Hill, 730 So. 2d at 216-17.  In addition, the Supreme Court’s description of the facts of the case prominently included the term “pine-log home” while the lower court’s description did not mention the type of construction.  This suggests that the type of construction might indicate to a court whether a heightened duty exists sufficient to defeat a home inspector’s motion for summary judgment.  Mere written notice to a home inspector of a possible problem, however, is not sufficient to avoid the inspector’s summary judgment motion on claims for “outrage,” conspiracy, suppression, or intentional misrepresentation.  Id. at 217. 

 

In Alabama, even if a home inspector is not acquainted with the eventual buyer, as in the Hill case, he may still be liable to the buyer if the inspection is performed negligently. Ex Parte Hill, 730 So. 2d at 217.  For example, where a home inspector is aware of a specific concern or the specific purpose of a home inspection and is retained by the seller or an agent, (s)he may have a heightened duty to the foreseeable recipient of the information, such as the buyer, to use “reasonable care” in the inspection. Ex parte Hill, 730 So. 2d at 217.

 

Hill establishes that for the purposes of contract law a home buyer can be seen as a third-party beneficiary to an inspection agreement between a seller or real estate agent and a home inspector where (1) the buyer can show that the inspector knew the purpose of the inspection, (2) knew that his report was for the “benefit” of the eventual buyer and (3) that his report would be “presented to” the eventual buyer.  Ex parte Hill, 730 So. 2d at 217, citing Rumford v. Valley Pest Control, Inc., 629 So. 2d 623, 631 (Ala. 1993), quoting Savage v. Wright, 439 So. 2d 120, 123 (Ala. 1983).  In the Savage case, a termite inspector’s motion for summary judgment on the home buyer’s claims of fraud and negligence was successfully opposed because the plaintiff provided sufficient evidence that the “termite inspection was part of the loan requirements, that it was to be made in [the plaintiff’s] behalf, that the ‘letter of clearance’ was furnished by [the termite inspector], and that the plaintiff relied upon it to his detriment.”  Savage v. Wright, 439 So. 2d 120, 123 (Ala. 1983).  The Hill case therefore also establishes that, where precedent or other authority is lacking, the legal duties of a home inspector can be extrapolated from those of a pest inspector, where appropriate. Ex parte Hill, 730 So. 2d at 217, applying the rationale in Savage v. Wright, 439 So. 2d 120, 123 (Ala. 1983).

-ss