Home inspector sued
This is about a home inspector who was sued for failing to report defects in a house that was purchased by a dissatisfied buyer. The home inspection contract signed by the lawyer-buyer said any lawsuits must be brought within one year of the inspection.
A suit was filed 18 months after the home inspection. Realtors and home inspectors ought to read this case.
Moreno visited a 49-year old house he and his wife wanted to buy. They inspected the property thoroughly and made an offer, which the seller accepted, then rejected because Moreno was an attorney and real estate broker.
The Morenos threatened suit (surprise!). A purchase contract for the house was finally signed.
Home inspection contract
Moreno hired Sanchez, a home inspector, to inspect the property before the purchase. The home inspection contract required that any lawsuits be brought within one year of the inspection. It also exempted soil conditions and asbestos from the inspection report as well as “inaccessible” areas and areas “not exposed to view.”
Sanchez’s report identified asbestos materials as being commonly used in heating systems, but he did not find asbestos. Ultimately asbestos was discovered in the heating and air conditioning ducts covered with another material. Moreno and his wife allegedly became sick after they purchased the property. Nose bleeds.
Moreno sued more than one year after the inspection report. The trial court threw out the suit, given the one-year deadline in the inspection contract.
Statute of limitations
The statute of limitations, the deadline for suing, for breach of a written agreement is four years from the breach. Courts allow the parties to shorten that time period – as Sanchez and Moreno agreed in the home inspection contract. The shortened period must be “reasonable,” which in this case means it must provide sufficient time for Moreno to effectively file a lawsuit.
The Court of Appeals noted that the deadlines for suing professionals and skilled crafts people like Sanchez generally begin to run after discovery of something they did improperly. In other words the one-year time period does not run from the date of the inspection report, but from when Moreno discovered Sanchez failed to report the asbestos in the ducting system.
The court ultimately allowed Moreno to proceed to court to try to prove Sanchez should have discovered the asbestos, upholding the one-year statute of limitations in the home inspection contract, but ruling the deadline to sue commences one year after Moreno discovered or should have discovered Sanchez missed the asbestos.
The court also ruled the home inspector might be liable for negligence – not only breach of contract – which may effectively make the contractual limitations in Sanchez’s inspection contract invalid. That is significant.
One of the three Court of Appeals justices disagreed with the majority.
I agree with him.
The courts routinely allow the parties to shorten statutes of limitations, and if the legislature had wanted to make the deadline to sue home inspectors run from discovery, they could have done so.
When Moreno and his wife return to the trial court, they will have to prove that Sanchez should have discovered the hidden asbestos, which may be difficult.
Jim Porter is an attorney with Porter-Simon, with offices in Truckee, South Lake Tahoe and Reno. He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at firstname.lastname@example.org or at the firm’s web site http://www.portersimon.com.
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