Should I disclose what I know from a previous inspection?
I inspected a home in the past and was made aware of a fire that had occurred in the home. Am I obligated to or forbidden to disclose this information to a new client? My past client (the current seller) did not disclose the past fire in the current disclosure statement. The current listing agent for this home was also the listing and the buyers’ agent at the time of the previous transaction. This agent also knew that a fire had occurred.
If I don’t disclose what I know about the home (and should the current buyers find out in the future that I knew about the fire and didn’t tell them), do I open myself up to added liability for not disclosing information that I knew? Or, am I required to protect the original inspection findings for my past client (the current seller)?
Interpretations by the ASHI Code of Ethics Committee
For information on potential liability, state laws take precedence over ASHI Standards and given the wide variations between individual states laws concerning these matters, ASHI recommends that members consult an attorney in their state of practice to determine the legal responsibility that an inspector has to the various parties involved in a transaction.
With that said, the ASHI Code of Ethics Committee’s position is that an inspector is required to fully inform a current client of all information he or she has or knows about the property that may be germane to the client’s purchase decision. An inspector who assists a purchaser in performing due diligence must disclose any information obtained about the property regardless of the source of that information.
To properly navigate this situation, the inspector should first inform the current client (the purchaser) of the previous inspection he or she has done for the current owner (now the seller) and have the current owner (the seller) sign a release, allowing the inspector to reveal any information obtained during the first inspection. After the release is signed, the inspector should then disclose all results from the first inspection. Refer to ASHI Code of Ethics, Section 2: “Inspectors shall act in good faith toward each client and other interested parties” (http://www.homeinspector.org/Code-of-Ethics).
Does having two companies violate the ASHI Code of Ethics?
I have been a homebuilder for 33 years. I get referrals on remolding and bank foreclosure cleanups. I also get real estate inspection items to correct. I have a separate company for remodeling and inspections. I know I never will do any work from any inspection that I might perform, but I wanted to make certain that I’m not violating anything in the Code of Ethics by having two separate companies. Again, I know that I cannot be involved in any compensation from any inspection I might do.
Interpretation by the ASHI Code of Ethics Committee
The situation as described does not violate the ASHI Code of Ethics. Refer to Section 1.F: “Inspectors shall not repair, replace, or upgrade, for compensation, systems or components covered by ASHI Standard of Practice, for one year after the inspection” (http://www.homeinspector.org/Code-of-Ethics).
Jamison Brown is the owner of Home Inspections by Jamison & Company, Poquoson, VA. Before becoming an ASHI member in 1988, Jamison was a project manager, and supervised the construction and remodeling of more than 10,000 housing units for the U.S. Department of Defense (DoD) and the U.S. Department of Housing and Urban Development (HUD). Jamison is a former member of the Carpenters and Joiners of America and a former licensed plumber in the state of Virginia. He is a member of the International Code Council, International Association of Electrical Inspectors (IAEI) and a certified member of the American Society of Home Inspectors (ASHI). He has been a member of ASHI’s Technical and Membership Committees and was chair of the CEPP Committee. Currently, he chairs the ASHI Code of Ethics Committee. Jamison has personally inspected more than 18,000 residential and commercial properties. Contact him at firstname.lastname@example.org.