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Brian Madigan LL.B., Broker

RE/MAX West Realty Inc.,
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 

Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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Home Inspector Decides to Practice Law and Real Estate

March 12, 2016 - Updated: May 30, 2016

Home Inspector Decides to Practice Law and Real Estate


It’s not just real estate agents who make mistakes. It’s other professions too.


We were looking at a recent case considered by the RECO Discipline Panel involving the zoning violations, building code violations, and fire code violations of a rooming house. If you want to read more about that case, follow the link at the bottom of the page.


However, just to change things up, let’s have a look at the role of the home inspector.


Here are some references in the RECO decision:


On or about August 25, 2010, to satisfy the home inspection condition, the Buyer and Wilma attended the Property with a Home Inspector with a Company.


The Home Inspector conducted an inspection of the Property.


In his written report, the Home Inspector recommended that the Buyer ask the Sellers for “any permits regarding addition(s)/renovation(s).”


The Home Inspector also recommended that the Buyer obtain from the Sellers a receipt for recent roof work for warranty purposes.


The report did not reveal any structural deficiencies, nor did it note any potential Building Code violations.


Overall, the Home Inspector gave the house a “typical” rating compared to other homes similar in age, construction and/or neighbourhood.


Now, you might think that was very “nice”. What a good home inspector, not only “home inspecting” but throwing in some “legal advice” and some “real estate advice” too, at the same time.


Here are the two issues which are problematic:


1)     Recommending that the Buyer ask the Sellers for “any permits regarding addition(s)/renovation(s).”


2)    Recommending that the Buyer obtain from the Sellers a receipt for recent roof work for warranty purposes.


You will appreciate that neither the permits nor the receipts have anything to do with the physical home inspection which was conducted for the purposes of determining the physical condition of the building. The contract and the relationship between the Sellers and the Buyers is outside of the expertise of the home inspector.


Depending upon the transaction both matters could have already been well covered off in the agreement of purchase and sale. Obtaining possession of these two documents could compromise the buyer’s legal rights under the contract.


The answer to that is: sometimes “yes” and sometimes “no”. And, the Home Inspector was hired by the Buyer.


A lawyer would have to look at the transaction carefully to come up with a legal opinion on that (usually, after the fact). The real estate agent should know what they are doing, and what items require attention in the agreement. The sad part, of course, is that on occasion, they don’t. So, these “tips” from an experienced home inspector might actually have been helpful.


I should point out that at the moment, the entire field of “home inspection” is unregulated. That will change in Ontario because the Province has introduced legislation to regulate that industry.


Insurance is available to home inspectors, but would not extend coverage outside of their actual business. So, once they decide to leave their role and start providing “legal advice” or “real estate advice”, they may be facing a denial of coverage.


As a side issue, in most cases, both the permits and the receipts should be obtained (but, not always).


I should also mention that some Home Inspectors are qualified and experienced and can conduct a “building code” inspection. Most are not qualified to do so. That was the case, in the matter under review.


So, if you are a home inspector, it would be very wise to stick to the business at hand, as tempting as it may be, to do otherwise:


1)    Don’t put extra stuff in your report,


2)    The disclaimer won’t protect you from that extra stuff, and


3)    You might not have insurance coverage for that extra stuff.


Let’s have a look at your Homeowner’s Insurance Policy. There is no coverage for anything related to a business. You charged a fee and that took it outside of the protection offered by your policy. That means you have two policies of insurance and you are not covered under either.


What insurer would cover the answer to these two issues?


That’s simple:


1)    The RECO Liability Insurance for real estate registrants, and


2)    The Law Society of Upper Canada’s Liability Insurance for lawyers and paralegals.


If you are a home inspector and absolutely desperate to answer those two questions, then you should become a real estate agent or a lawyer.


Here is the link to the case commentary:


Brian Madigan LL.B., Broker

Tagged with: home inspector legal advice real estate advice insurance coverage ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

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