What Is a Pre-Inspection Agreement and Why Does It Matter?

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When you are called upon to inspect a home, it’s a good idea to have the potential buyer sign a pre-inspection agreement. It would be nice if contracts were unnecessary and business dealings always went smoothly, but this is unrealistic.

A pre-inspection agreement protects you from unreasonable or just incorrect expectations from clients. It also helps ensure you will get paid for the work you do for them.

An article in the American Society of Home Inspectors Reporter outlines what’s wrong with many pre-inspection agreements and how you can craft a good one. One tip they give is to make sure it’s readable. What does this mean?

Readability issues include misspellings, contradictions, fonts that are too small, and documents that are too long. While you should definitely pay attention to these aspects of your agreement, what’s even more important is that you get the technical details right so you are protected in case of a lawsuit.

What Can/Can’t You Put in a Pre-Inspection Agreement?

You must include in your pre-inspection agreement what is included in your service. Although you can also say what is not included and what you are not responsible for, merely writing this doesn’t make it so.

For instance, if you miss an important defect during your inspection that ends up costing the buyer a lot of money, the buyer will likely be angry. Merely including “not responsible for errors …” in your pre-inspection agreement is not likely to get you off the hook in situations like this.

When you draft a pre-inspection agreement, you must consider the laws in your state that apply to home inspections and incorporate the correct language accordingly. If you belong to any professional associations, you can likely find some templates online to get started.

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Legal Details in a Pre-Inspection Agreement

Regardless, it’s a good idea to have a lawyer look over your final draft to see if they have any additions or suggestions. It’s well worth the money spent once up front to ensure that your pre-inspection agreement covers you legally in case of client issues down the road.

Consider adding an arbitration clause to your pre-inspection agreement. This will keep any claims against you out of court and force the other party to arbitrate the matter. The advantage to this option is that arbitration is much less costly than litigation.

Check with your insurance company as well. They may not find it necessary to read your agreement, but it is wise to have a conversation with them about what they recommend or expect. The Foundation of Real Estate Associates underscores the need for getting a signed pre-inspection agreement in your hands before every job without exception.

Especially in states in which no standards are outlined, you want to make clear what your clients should expect. If for some reason an agreement is not signed, the buyer is free to claim any number of expectations, which may or may not be found valid in a court of law.

It’s your business insurance carrier that will have to pay the claim, so they want to be sure they are protected as well.

Your home inspection training set you up to be the best home inspector you can be. But no one is immune from the challenges of dealing with errors and unreasonable clients, so prepare your pre-inspection agreement carefully, and ensure it is always signed before you start work.

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