Can a Home Inspector Limit Their Liability?
When would-be homeowners obtain home inspections, they place a great deal of reliance on the inspection report they receive. Purchasers often presume that if a home inspector doesn’t discover an issue, it doesn’t exist. Similarly, they might presume that if a home inspector fails to discover an issue, there is legal recourse for that. Whether or not a home inspector might bear any liability and whether the exposure for any liability is contractually limited can be complex to tease out.
The starting point for understanding what a home inspector may or may not be responsible to inspect is to look at the scope of the contract. Home inspectors are unlikely to be found responsible for failing to discover issues that are not within the scope of their inspection. The thoroughness of a home inspection and how invasive investigative efforts might be is something to be negotiated amount purchasers, vendors and home inspectors. Purchasers ought to be aware that a home inspection is no guarantee that all issues with a property have been uncovered.
S. 12 of the Home Inspector Licensing Regulation, B.C. Reg. 12/2009 (the “Regulation”) provides that, among other things, the following must be included in a home inspection contract:
- specifics of what will be covered by the inspection;
- whether or not the inspection will inspect for mould;
- whether or not the inspection will inspect for asbestos;
- whether the inspection will be non-invasive or specify the invasive procedures that will be used, and
- include inspection of any a garage or carport, whether or not the garage or carport is attached to a dwelling.
S. 13 of Regulation also provides that, among other things, the following must be included in the home inspection contract:
- the report must be in writing; and
- opinions on the condition of each of the things that the home inspection contract requires the inspector to inspect and anything that the inspector recommends that the would-be purchaser obtain expert advice on.
- 12 of the Regulation also states that home inspection contracts cannot purport to limit the liability, or the amount of the liability of the inspector or purport to limit the time for making a claim against the licensee.
Until ss. 12 and 13 of the Regulation was adopted in September 2016, home inspectors in British Columbia were permitted to attempt to limit their liability to the cost of their inspection and such clauses could be upheld. The analysis concerning whether a limitation of liability clause for home inspections would be upheld is summarized in Ferrer v. 589557 B.C. Ltd., 2020 BCCA 83 (CanLII). Citing the lower court’s review of Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) 2010 SCC 4 the court held that the analysis of whether a limitation clause could limit liability of a home inspection could be summarized as follows:
- first the court must consider whether the clause applied to the circumstances in question;
- if the clause does not apply, the analysis ends;
- if the clause does apply, the court would consider whether the limitation clause as unconscionable at the time the contract was formed such that the limitation clause could not be said to form a part of the contract;
- even if the clause applied and was not found to be unconscionable, a part seeking to exclude the clause could still attempt to establish that there was overriding public policy concerns that could override the application of the clause.
There has been no reported judicial consideration of ss. 12 and 13 of the Regulation cited on the Canadian Legal Information Institute website at the time of writing. There are likely many home inspection contracts that did not properly incorporate the requirements of ss. 12 and 13 of the Regulation as soon as those sections came into force. Further, issues in a home may take several years to discover by home owners and, as such, there are large number of potential issues that could concern home inspection contracts prior to September, 2016 which purport to limit liability of the home inspector to the value of the contract.
In short, there are many circumstances in which a home inspection contract could potentially limit or in which a contract could purport to limit the liability of a home inspector but fail to do so. Careful consideration is always required to consider whether issues that might arise in a purchased home relate to the scope of a home inspection contract, especially since ss. 12 and 13 of the Regulation came into force and required specific items to be included in the scope of a home inspection contract.
If you discover issues in a home you purchased which potentially ought to have been discovered by a home inspector, careful consideration should be given to the scope of the home inspection contract and any clauses that purport to limit the liability of the inspector. Legal advice should be considered before threatening or commencing a claim against a home inspector or the vendor(s).