April, 2002
Feature
Inspection News and Views from the American Society of Home Inspectors



ASHI Publishes Responses to Requests for Interpretation of Standards and Ethics

EDITED BY ASHI STAFF

One of the tasks of the ASHI Standards of Practice Committee is to provide responses to questions on how to interpret the Standards of Practice (SoP) or the Code of Ethics (CoE) submitted by ASHI Members, Candidates, or staff on the Request For Interpretation (RFI) form.  

Request forms are available from the Web site (ashi.org) in the Document section; in the 2001 Membership Directory; and from ASHI HQ by email (HQ@ashi.org). To be considered, requests must be made on the official form and signed, and the completed form faxed or mailed to HQ. Only requests from ASHI Mem-bership or staff will be considered, and ASHI retains the right to edit questions and to decline requests.  

In the past, each response was sent only to the requestor. It has now been decided to also publish responses beginning with those the Committee thought would be of greatest interest, and would illustrate the similarity of many of the questions. In addition, it was thought some responses might place the ASHI Membership in an advantageous or disadvantageous position relative to the requestor’s knowledge. Also other home inspectors and the public may benefit from knowing how to interpret the SoP and CoE.

Selected requests and responses will continue to be published here. The full library will be available on the ASHI Web site in the Members Only section, and will also be made available in print.

Requests for Interpretations of the Standards of Practice

RFI ID: s991109
RFI Question:
Does the requirement to report when a system or component is unsafe due to a change in residential construction standards require the inspector to report code violations?  If so, isn’t this in conflict with Section 13.2.B.8?  If not, please explain.

Response by ASHI Standards of Practice Committee:
Section 2.2.B requires inspectors to report on systems and components inspected which, in the professional opinion of the inspector, are significantly deficient, or near the end of their service lives. Significantly deficient is defined as unsafe or not functioning. Unsafe is defined as: “A condition in a readily accessible, installed system or component which is judged to be a significant risk of personal injury during normal, day-to-day use. The risk may be due to damage, deterioration, improper installation or a change in accepted residential construction standards.”
Section 13.2.B.8 is a General Exclusion that states “inspectors are NOT required to determine compliance with regulatory requirements (codes, regulation, laws, ordinances, etc.).”  This exclusion recognizes that home inspectors cannot be expected to inspect an existing home using building codes. Code violations need not be reported.

Section 2.2.B does not require the identification of code violations.  It does require the inspector, using his professional judgment, to report observations of significantly deficient conditions.  Some of these conditions might be code violations, others may not. The issue of code compliance is not germane. Codes are government regulations that carry the force of law when adopted by a jurisdiction. Home inspectors are not code enforcement agents.

The phrase “The risk may be due to . . . a change in accepted residential construction standards” is intended to make clear that observations of significant safety issues should be reported, even if the observed conditions may have been considered acceptable at some point in the past, either by building code, or by accepted practice.

The code need never be mentioned. It is irrelevant to the issue of safety.
ASHI Standards require reporting to your client an observed significantly deficient condition, why the condition is judged significantly deficient (unsafe or not functioning), if not self evident, and a recommendation for a course of action regarding the significantly deficient condition.

RFI ID: s000531
RFI Question:
Explain the apparent conflict between 2.2.B.2, requiring reporting of a reason why a system is deficient, and 13.2.B.4, excluding an inspector from determining the cause of any condition or deficiency.

Response by ASHI Standards of Practice Committee:
Section 2.2.B.2 states: “The inspector shall report a reason why, if not self-evident, the system or component is significantly deficient or near the end of its service life.”
The inspector is required to report an observed condition in a system or component that is judged to be significantly deficient and to report a system or component that is judged to be near the end of its useful life. The inspector is also required to report the reason such a judgment was made.  According to Section 13.2.4, there is no obligation to make a determination as to the cause of the reported condition. The distinction that needs to be made is between the cause of the deficiency (not required) and the reason for the judgment of deficiency (required).

The intent of the requirement is to encourage the inspector to report:
     1) that a significant deficiency exists, in the judgment of the inspector, and
     2) possible implications of the deficiency, again, in the judgment of the inspector.

At times the implications of a given defect is self-evident.  For some defects, the implications may be more subtle. In these instances a reason is needed to explain why a system or component was judged to be deficient. The type of reason given can be, at a minimum, a comment using such terms as “unsafe” or “not functioning”. 

Often the reason will include a description of the physical state of the system or component that has been judged significantly deficient.  This reporting item does not require explaining every possible consequence or describing in detail what might happen.  It requires only a simple explanation sufficient to indicate that the reported condition is a defect and to provide enough information to adequately cover safety risks or potentially costly repairs.

Finally, recommendations are required. Recommendations
may be for:
   Monitoring
   Correction
   Further evaluation

Remember, the purpose of a home inspection is “to provide the client with information regarding the sys-tems and components of the home…”

RFI ID: s010220
RFI Question:
In order to do a thorough comprehensive inspection of the roof, drainage system, flashings, skylights, chimneys, and roof penetrations, do you
recommend whenever possible to do the inspection from the roof? What do you say about ASHI members who state openly “I never have, nor will I ever go
on a roof to do an inspection?”

Response by ASHI Standards of Practice Committee:
1: Yes.  Normally, walking on the roof is strongly recommended and is required if both (a) the roof is readily accessible and (b) walking the roof is the only way to inspect all exterior surfaces of roof coverings, flashings, skylights, chimneys, and other roof penetrations.  If all such exterior surfaces can be inspected without walking on the roof or if the roof is not readily accessible (i.e. too high, too slippery, too steep, too fragile, etc.), then walking on the roof is not required.
In either case, the method of inspecting the roof must be reported per SoP section 5.1.B and, in addition, if there are any exterior surfaces of roof coverings, flashings, skylights, chimneys, or other roof penetrations that were not visible, they must be reported, per SoP section 2.2.B.4, as not inspected and the reason they were not inspected.

See the definition of Inspect in the SoP, repeated below.

2:  The second question is not a request for interpretation of the Standards.
Inspect: To examine readily accessible systems and components of a building in accordance with these Standards of Practice, using normal operating controls and opening readily openable access panels.

Requests for Interpretations of the Code of Ethics


RFI ID: e010112
RFI Question:
1. Is it inappropriate or unethical for an inspector to pay a fee back to a realty company for work referred by that company?

2. Is it inappropriate or unethical for an inspector to pay a real-estate company to advertise as a marketing partner/preferred vendor?

Response by ASHI Standards of Practice Committee:
1.Yes. Paying a real estate company for referrals generally deceives or misleads clients who would assume a referral is based on competence, not on hidden payment. Participating in such deception is inconsistent with acting in good faith toward each client as required by CoE paragraph #2.  The client is best served when the inspector’s relationship with the real estate company handling the transaction is at arm’s length.

Any agreement or understanding between the inspector and real estate company restricting open disclosure to the consumer about hidden referral fees or other pertinent financial arrangements is on its face unethical since it compromises the consumers legitimate interests to know the circumstances behind the referral that could impact on the integrity of the inspection.

2. Yes.  Paying for endorsements or paying to be on an “approved” or “preferred” (or similar) listing is generally similar to paying for referrals and inconsistent with CoE for reasons described above even when called “advertising”, “marketing”, etc.  Furthermore, an “up front” payment to a realty company for endorsement or listing is inconsistent with CoE fourth sentence calling for impartiality.  Inspectors fidelity to their clients and the interests of their clients are paramount; actual or potential conflicts of interest created by such arrangements should be avoided.

Paying to advertise as a partner or other special relationship with a real estate company or paying to use logos, trademarks, or other property of the real estate company is (a) inconsistent with CoE fourth sentence because it shifts the inspector’s allegiance away from serving only the client and (b) inconsistent with acting in good faith toward each client as required by CoE paragraph #2.  Further, such advertising has the appearance of an interest in a business that may affect clients, which is required to be disclosed by CoE paragraph #6.

The impartiality of the inspector and his absolute duty of loyalty to the client would have the appearance if not an actual conflict of interest from such arrangement.  Such an arrangement could also mislead and confuse the client about the distinction between the inspector and the real estate company handling a transaction.

3. And finally, any undisclosed understanding which is hidden or disguised from consumers involving referrals, endorsements, etc. from real estate companies that is quid pro quo for any action or appearance which would compromise full and honest inspection and reporting is inconsistent with CoE second paragraph and paragraphs #1, #2, and #7.  The separation and independence of the home inspector from the real estate company handling the transaction is a cornerstone principle intended to protect consumers.

RFI ID: e010212
RFI Question:
  Is it ethical to pay a real estate organization an up-front fee and a per transaction fee to get business referred?

Response by ASHI Standards of Practice Committee: 
No, it is not ethical for a home inspector to pay a real estate organization an up-front fee OR a per transaction fee to get business referred. 

This question is similar to a previous Request for Interpretation, RFI e010112, dealing with home inspector payments to real estate companies (not real estate organizations) which appeared in the Members Only/Breaking News section of ASHI’s Web site on March 7 and is partially reprinted on page 13 of the April ASHI Reporter. 

The previous response to the similar Request for Interpretation (RFI e010112) stated that payments by home inspectors to real estate companies for referrals, endorsements, “approved” or “preferred” listings, marketing partnerships, special relationships, usage of another’s logo or trademark, or similar benefits are inconsistent with the Code of Ethics even if the payments are called advertising, marketing, etc. As specifically stated in the response to RFI e010212 “up front” payments for such purposes are inconsistent with the Code of Ethics. And, as indicated by the response to the first question of RFI e010112, “per transaction” payments for such purposes are also described as inconsistent with the Code of Ethics.

For the same reasons as in the response to RFI e010112, similar payments for such purposes by home inspectors to real estate organizations (or to others working for or on behalf of real estate companies) are also inconsistent with the ASHI Code of Ethics.   Also see e010112.

RFI ID: e010814
RFI Question:
Can I offer a discount of $5 or $10 for a $20 service I can provide to buyers that I inspect a house for, if they are clients of specific Realtors®? These are Realtors® that prefer my more thorough home inspection than most other inspectors in the area that do less on their inspections for their clients.

Response by ASHI Standards of Practice Committee:
Offering discounts to clients is not necessarily unethical. Examples of some discount strategies that should be acceptable include introductory discount, first inspection discount, and slow season discount.

Offering discounts only to clients referred by specific Realtors® is a financial transaction made in return for the expectation of future referrals from those Realtors®, and therefore, could be considered unethical.

Based in part on consideration of “RFI e010112 – payments to Realtors®” (provided by ASHI Staff), such payments could be unethical in accordance with ASHI Code of Ethics Paragraph 5 and could be unethical in accordance with Paragraphs 6 And 7.

RFI ID:  e010911
RFI Question:
A company in my state has offered my company the opportunity to perform home inspections for its customers for subcontracted fees. The company’s role in this program would include advertising, contracting, dispatching, invoicing, and customer service. As a subcontractor, my company’s obligation to the company would not include payment of any fees to the company. Is this business arrangement unethical?

Response by ASHI Standards of Practice Committee: 
Performing home inspections as a subcontractor for an independent firm is not, in general, in violation of the ASHI Code of Ethics.

However, if the contracting firm is engaged in the sale of real estate or in performing certain services such as construction repairs which might be recommended by the inspector, such subcontracting to perform home inspections would be in violation of the Code of Ethics as the inspector would be employed by a firm having a
financial interest in the real estate transaction.

As the questioner has not provided information regarding the business activity of the contracting firm the answer given here is only a generalization.

RFI ID: e010925f
RFI Question:
1. Is a program, set up by a real estate company, which offers free home inspections paid for by the real estate company a conflict with section 5 of the CoE . . .

2. …if, on the application to participate in the program, the inspector is asked to give discounted fees based on the number of referrals they receive to perform inspections for the program? 

3. Also, is it a conflict if the real estate company [or other entity] only pays for the inspection if the deal goes through, otherwise the buyer pays?

Response by ASHI Standards of Practice Committee: 

1. It does not necessarily conflict with section 5 as long as the real estate company reimburses the client after the client pays the inspector or the inspector’s client is the real estate company.  Under this later arrangement, the inspector would typically be responsible to the real estate company as the client, not to another party such as a buyer, and the inspector should be mindful of second paragraph of CoE and section #1 to avoid slanted reporting.  However, if the real estate company is not the client and the real estate company is dealing with the inspector’s client, then accepting payment from the real estate company would conflict with section 5. 

2. Discounting fees paid by a real estate company based on referrals would conflict with section 2 because such discounts would be de facto payments for referrals to clients (other than the real estate company).  Such de facto payments are a deception of the consumers who would expect referrals to be based on competence, not on hidden benefit to the real estate company.  However, if the real estate company is always the client and pays the fees, then such discounts would not conflict with section 2.

3. See answer to question 1 above.  It is not a conflict if the buyer is the client and the buyer pays the inspector regardless of whether or not the real estate company reimburses the buyer.  Similarly, it is not a conflict if the real estate company is the client and pays the inspector regardless of whether or not the buyer reimburses the real estate company.  However, it is a conflict with section 5 if the buyer is the client and the real estate company pays the inspector or if the real estate company is the client and the buyer pays the inspector.

Additionally, having any inspector compensation directly or indirectly contingent on the inspection results, such as whether or not “the deal goes through”, is contrary to second paragraph of CoE to avoid conflicts of interest and contrary to section #1 against slanted reporting.