Litigation Prevention in the Pest Control Industry: Part I
By Greg Crosslin
Interest rates are down. According to real estate websites, home sales are up. Not ironically, the fastest rising area of pest control litigation continues to involve WDI-WDO inspections. WDI-WDOs continue to be hot topics within our industry. Unfortunately the lawsuits I see continue to present the same problems PMPs have been dealing with for several years. Accordingly, I have herein outlined several points that merit attention by every PMP involved in WDI-WDO services to avoid litigation.
1. Do the inspection!
I know, this seems to be common sense, and should not have to be mentioned in an article about how to avoid litigation. Unfortunately, it is the number one item for a reason. There really isn’t much of a defense to not doing the job. Drivebys are simply unacceptable, may void your insurance, probably are not covered and may cause license revocation.
2. When you do it, do it right!
Follow state guidelines, NPMA guidelines or other industry standards, but do the inspection properly. It is more than going in the front door, turning left and following the wall until you get back to the door. While this may appear jaded, if you are going to do inspections (or any services for that matter) they should be done correctly. I recommend that you develop and maintain a detailed checklist for each step of the inspection. This is not only a good organizational tool, and training guide, but it may help to keep you out of a lawsuit. And if you get into a suit, a good checklist, properly followed and documented certainly helps to defend a claim of negligence, improper training etc. Remember, take nothing for granted. Each inspection should be performed as if a jury were watching you. After all, in today’s litigation environment, they just may be!
3. Complete the entire report.
Every form has “questions.” Every form has blanks. All questions and blanks require a response, even if the answer is “not applicable”. Comments can and should be used to explain any unusual findings or situations. Remember to err on the side of providing too much information, not too little.
4. Identify all inaccessible areas.
Each and every single inaccessible area, no matter how small, should be noted on the report. If an attic is blocked, or there were boxes in the garage, state it in the report. You should explain what you see and what you are faced with. Many PMP’s who do a large number of inspections use
a digital camera to confirm inaccessibility. Whatever the method, you should clearly document that an area can’t be inspected and why.
5. You should specify and identify problems.
If you find leaks, or evidence of moisture problems for instance, state on the report what you observed and where. Even if you have been advised that a problem “has been fixed”, your duty is to report what you find. Homeowners, realtors and PMP’s must never forget that a WDI -WDO is a valuable and important service for the buyer who may well one day be either a customer or a plaintiff in a lawsuit. Your job is not “to meet a closing deadline”. Your job is to do a proper inspection. Anyone who asks you to do less should not be a part of your continued business operations.
6. Inspections should be performed by your best people.
WDI-WDO inspections are not the place for a “new” technician. State legislators have enacted laws and regulations regarding inspections and the mortgage industry requires them when houses are financed. Obviously, WDI-WDOs are important and they should always be so treated. Reports should be done by your “best”, “ most experienced”, “most qualified” employees, who have the experience and training to understand what it is they are looking at. The number of these inspections done by your best people should be limited to those that can be reasonably and thoroughly inspected during a workday. Some class action suits have suggested, depending on the property size, location etc, to 10-12 a day. Whatever the number, you may one day have to explain how each day’s inspections could be performed, by the technician in question, in the time allotted.
7. Properly document your findings.
Just as you should complete the form completely, it should be completed with self-explanatory responses. Don’t use phrases like “some damage”, “a lot of termites”, etc. Don’t use partially spelled words or shorthand phrases. Remember, these reports are often being read by people who do not have the same knowledge as you. You must be able to explain your findings in a way the reader can understand what you are providing.
8. Take special care in the delivery of the report.
All too often we are seeing in the litigated cases that the buyers claim they didn’t receive the report until closing; didn’t know about pretreatment records, didn’t have time at closing to read/understand the reports etc. They then of course allege if they had “known the truth” about the history of the house they would not have bought it.
Regardless of whether the report is sent directly to the buyer, a real estate agent or closing company, you need to “confirm” several things and I recommend you do so in a cover letter. These include the following:
a. The property address; (yes, we have seen cases where similar sounding addresses were inspected in error);
b. The date of the inspection;
c. That no other inspections were reported to you in response to your direct inquiry; (So you have to have a policy/procedure to actually ask before you inspect. Yes, we’ve been involved in cases where the PMP was called in after someone did an inspection and the closing couldn’t go forward all without the PMP ever being told.);
d. That you have or have not done a prior inspection of this property for the closing; (if you have done a reinspection after repairs were made in response to your prior inspection, this should be documented and conveyed);
e. You should confirm that the property records you have regarding prior treatment etc, may be reviewed by the buyer or buyer’s agent (with seller’s permission) prior to closing;
f. You should confirm that the buyer may go over the inspection report with the inspector or someone else at your office if they so desire;
g. You should explain how your current service agreement can be transferred if it is transferrable;
h. You should confirm that you will be paid a specific fee at closing;
i. If you send the report by fax, we recommend that you note this in your cover letter and you retain your fax confirmation with your records proving delivery.
9. Charge for your services properly.
It goes without saying that there is a great deal of responsibility inherent with each inspection. The potential liability you may face grows with each inspection you perform. What would happen if only 3% of your inspections last year resulted in a claim or lawsuit? Lets say you do only 10 inspections a week for 50 weeks in a given year. If you have a 3% “problem” rate, you could be faced with 15 claims or suits. What kind of exposure and expense would this create?
Never forget that you are performing a valuable, regulated service that may be required before a house can be sold. If buying a house is truly the largest investment for most people, think of how what you do impacts house sales.
The bottom line is simple. You should charge a sufficient amount to cover your overhead and make a profit so that you can devote adequate time to do thorough inspections by your best trained people.
I have heard all too often about the $40 or $50 “loss leader” inspections. How much time and effort do you think a jury will believe a PMP put into such an inspection when they learn all that is required to do one properly? Either do them to make a profit, or don’t do them at all.
Your job is to do a proper closing, not to “do a favor” or “help out” for a tight closing deadline. Those people won’t be there to respond to the lawsuit lurking around the corner in those “special” deals. Don’t be persuaded into being anything but clear and accurate in your report. Be sure that each and every report is being written as if it will be submitted to a jury to read and understand or is being submitted for approval by a Department of Agriculture regulator. Remember, it just may be!