Issues Exist With Use of Inspection Reports

            You be the judge.  Here’s a real-life case that was recently decided by one of the California Courts of Appeal.

A daughter inherited a property from her mother.  Her mother lived in the property for over forty years. Before inheriting the property, the daughter had the property inspected by a licensed home inspector.  The home inspector’s report noted that there was evidence of “wood destroying insects, organisms and/or rot observed at posts, doors, and trim.”  The inspector also noted loose flashing at a balcony deck, which could lead to water intrusion (and damage).  The inspector recommended a further inspection by a termite inspector.

The daughter thereafter hired a termite inspector.  The termite inspector found drywood termites throughout the main house and also found damage to a support post.  The termite inspector recommended fumigation and that a licensed contractor be hired to repair the termite damage.  The termite inspector didn’t find or report any damage to the balcony railing at the elevated deck.

The daughter paid to have the house fumigated.  But the daughter didn’t have any repairs made to the wood that had been damaged by the termites or other wood-destroying pests. A few months later, the daughter’s son and daughter-in-law purchased a one-half interest in the property, and they moved into the property.

Some time later, the daughter’s son and daughter-in-law invited a guest to their new home.  This guest leaned against a balcony railing.  Due to the unrepaired wood damage, the balcony gave way and the guest fell approximately ten feet to the ground below.

The falling guest filed suit.  Who is at fault?

The Court of Appeal decision noted that the daughter who had arranged for the inspections knew about the wood damage at the deck. She chose to have the house fumigated, but she didn’t repair the damaged wood.  However, Court didn’t discuss the daughter’s liability and it appears that the daughter was not part of the lawsuit filed by the falling guest.  It’s not clear whether the falling guest didn’t sue the daughter, or whether the falling guest settled with the daughter at some point.  However, the falling guest did sue the termite inspector by claiming that the termite inspector should have discovered and reported the wood damage to the balcony railing.  The falling guest claimed that the damaged railed constituted a safety hazard, and that the termite inspector had a duty to discover and report the damaged wood and to recommend that it be repaired.

So as between the falling guest and the possibly negligent termite inspector, who wins?

The Court of Appeal found that a termite inspector does have a duty to “make a reasonable assessment of property for potential safety defects.”  But the Court also found that the falling guest didn’t hire the termite inspector and so there was no contract between the termite inspector and the falling guest.  The court further found that the termite inspection report was prepared the daughter’s benefit.  The court found that the termite inspector didn’t prepare the report for the benefit of the falling guest, and as a result, the termite inspector owed no duty of care to the falling guest.  Therefore, even if the termite inspector failed to find or report the damage to the balcony railing, the falling guest had no valid claim against the termite inspector.  This decision is reported as Formet v. The Lloyd Termite Control Co. 2010 DJDAR 8738.

So the score at the end of the day: Termite Inspector – 1, falling guest – 0.

This case involved a complex analysis by the Court of duty and negligence liability theories.  Liability issues and questions can be complex, and they are governed by a sophisticated set of statues and case law.  The fact that the falling guest lost this case is no indicator as to a how a court may rule in any given situation.  As with all legal questions, persons who may have a claim should seek competent, qualified legal counsel.