Speaker 1: Arbitration clauses are generally seen in home inspection contracts, and for the most part for many years, they were very helpful, but as we see more states move toward regulation, the issue that comes up is that we now have a legal standard of care, and we want to be able to appeal a mistake made relative to the application of that particular standard of care. For example, if you go to arbitration, unless it's under very narrow circumstances, the arbitrator's decisions regarding the law, evidence, testimony, experts, and everything else that's involved in the claim is not appealable, which means that the only way you're going to be able to avoid a mistake of law in an arbitration is to prove that the arbitrator committed fraud. I can tell you in 20 years of practicing law, I've never had an arbitrator commit fraud. Not having that critical ability to file an appeal is a strong consideration in terms of whether or not you want to use your arbitration clause. You also need to check with your errors and omissions insurer, if you have one, as to whether or not they require you to have an arbitration agreement in your contract. I would start there, and then certainly if you have questions about arbitration agreements, we're happy to help you, and you can certainly submit an email to us, and we're happy to walk you through some of the other issues with those, but keep in mind, the main problem with arbitration is the inability to appeal the decision. Other clauses we see in these contracts are limitation of liability, and in some cases, a limitation on the time for your client to bring a legal claim related to the home inspection. Limitation of liability clauses, or liquidated damages clauses, are used in most inspection contracts. Unfortunately, they're not enforceable in every state, and in sub-states, like New Jersey, the mere inclusion of that clause can trigger a consumer fraud violation. Most consumer fraud statutes allow the plaintiff's attorney to recover the fees and costs associated with that claim. Many insurance policies don't cover you for fraud. Because of that, the exposure to a consumer fraud claim by merely including a limitation of liability clause can be catastrophic to your business. In my own personal experience, I've represented inspectors in two class actions, where the plaintiff's class action attorney was trying to establish a class and sue all of the home inspectors who use those clauses in states where they're not supposed to. The expenses related to the defense of inspectors in those claims are high. So again, it's critical that you're knowledgeable about what's allowed in your state and what's not, so that you don't put yourself in a hole that you can't climb out of. Limitations on time to bring a legal action are enforceable in some states. For the most part, many of the states don't have any good case law or regulatory provisions related to these clauses. But generally, what we're trying to do there is to shorten what might be the statute of limitations in a particular state to a shorter period of time, so that we can avoid the problems that generally come when we have a situation where the claim doesn't come in for sometimes two, three, or four years after you do your inspection. The main problem we have in those cases is that things change rapidly. Conditions at the house change. Certainly, the exteriors and the roofs can change over time, especially in areas with a lot of bad weather. For those reasons, we generally like to try to limit that time period they can bring a legal action to one year. In my personal experience, I've never had a judge enforce anything less than a year. In some states, like New Jersey, there's a four-year statute of limitations to bring a claim against a home inspector, so we want to try to limit those wherever possible. Again, that's something that's going to be determined by your state law, but most states don't have any case law on it, so when you can use it, it's certainly something you want to have in your back pocket, should you have a claim arise several years after you did the inspection. With regard to the timing and sending of the agreements, many of the regulated states have specific requirements. Some of them say specifically that the agreement, or the form of the agreement, must be sent to the client within a certain period of time after the appointment is being made. Now, whether or not your state enforces that kind of regulation, from a best practices standpoint, it's a very good idea to get in the habit of doing that. The reasons are, generally, we want your client to read and understand the contract before you do the service. We also want to have the client to have an opportunity to read that contract, because should a claim arise later, we don't want the client to be able to say, I received a contract at the time of the inspection, I didn't have time to read it, my settlement or closing date was coming up rapidly, and I had no choice but to proceed. By sending the agreement based on the timing of the making of the appointment, you avoid a lot of those situations. Now, certainly, there's going to be situations where you get called the day before an inspection, it's an emergency, and you don't have the opportunity to do that. In those situations, you want to make sure you have a copy of the contract with you, and you want to make sure your client gets to read it and sign it before they start the inspection. Because we may have to do that, you want to keep the contract limited to the terms that are most important. We don't want to put a lot of legalese or other information in the contract to confuse your client, because they may have to read it on the date of the inspection. You always want to get the contract signed before you start the work. Now, in some situations, because of timing and other issues, an inspector gets to the property before anybody else. In a lot of those situations, in an effort to use the time wisely, an inspector will start the exterior inspection, or the roof, or maybe the grounds, because they can do all that stuff before they get access to the interior of the property. I can tell you in some situations, in cases I've handled, the fact that the inspector started the work before the contract was signed by the client, voided the contract. So, again, for best practices, it's critical that you have the agreement signed before you start any of the work. Now, in some of the regulated states, that's required anyway, but for practical purposes, it's better for you in the long term, because if a claim arises, again, as your lawyer, you want to be able to say, the client had the inspection contract and signed the agreement before we started the work, and therefore, that agreement has to apply here. Now, I see a lot of times in inspection contracts, some clauses, for example, fee shifting clauses, or other clauses that put the onus on the client to do certain things in order to be able to bring a claim, or sets it up where if they bring a claim, they can't prove that they're required to pay your attorney's fees. For the most part, these clauses are never, ever enforced by any judge. The reason being is because they are onerous, and many judges would consider them unconscionable. In the American legal system, generally, all parties bear their own costs for any legal actions, and the courts and the judges tend to follow that rule, and they'll void those clauses for fee shifting. One of the other things we've seen recently, obviously, with the rise of social media, are clients going on to sites like Yelp, or Google, or Facebook, and leaving negative reviews about an inspector after the inspection's done. In those situations, we can, in some instances, use a clause in the contract where the client agrees not to file any postings on social media. In my own experience, talking to my clients, I've found that many of your clients are skeptical of a clause like that, and it concerns them that you would be able to prevent them from actually making a comment on social media about your services. Where we generally try to do that is if we settle a claim, we put that in the release agreement that they're not going to go ahead and post things, and if they have, that they're going to remove those as part of the agreement. That clause, in and of itself, if you put it in the inspection contract, certainly isn't going to harm you, but keep in mind, from a marketing and public relations standpoint, it might not be the best way to let your client know that you're going to give them great service. Those are the general issues that come up with home inspection contracts. We are always here to help you answer questions about your contracts. I've written one for every state in the country, and I'm certainly happy to share my knowledge and experience with you should you need it. If you have any questions about contracts at all, please reach out to us, and we're happy to put you in the right direction. Thank you. Thank you. Thank you.