Dollar Limit on Subject To Inspection Clauses

I have occasionally come across clients who have accepted an inspection subject clause wording that greatly reduces their ability to pull out of the purchase if they are not satisfied with the findings of the home inspection report.


This clause can be worded similar to:

“Inspection Report against any defects whose cumulative cost of repair exceeds $ entered dollar amount (often $1000) and which reasonably may adversely affect the property’s use or value. The Seller will allow access to this property for this purpose on reasonable notice.”

There are two problems associated with a clause similar to above.

The first problem is that there can be conditions or characteristics uncovered during the home inspection that man not have a high dollar value to address, or in some cases may not even have the ability to assign a dollar value to, but cause the dwelling to be undesirable in the eyes of the purchaser. One example is rodents in the attic. Many people are not comfortable with this style of defect even though the cost of remediation can be in the low hundreds of dollars. If you accept a subject clause limiting your ability to pull out only when deficiencies are over $1000, then if the rodents are the only found issue, you are stuck purchasing a home you are really not comfortable living in. Another example of a characteristic of a home that you may not be able to assign any value to, and that actually caused one of my clients to pull out of their purchase, had nothing to do with the dwelling itself but instead addressed a ‘green belt’ that ran behind the property. During my review with the client at the end of the inspection, I indicated that the ‘green belt’ was in fact being utilized as a dirt bike obstacle course and that the bike activity could be clearly heard inside the house with all doors and windows closed during much of the inspection. When this was reported to the wife, a decision was quickly made that this was not the property for them. They were not interested in their peaceful weekend mornings, drinking coffee on the porch, being interrupted by the howl of dirt bikes going by.

The second problem with this kind of limit being set is that it is difficult for the purchaser to prove a specific dollar value to remediate defects uncovered by the inspection. Often it is pretty clear that the defects are well over the subject limit, but without a quote, how can the buyer prove this. Inspectors are not contractors and cannot possibly provide accurate estimates for each and every defect uncovered. Many inspectors will not provide any estimate at all for remediation while others will try to provide some form of ballparks to the purchaser. So in order to comply with a clause like the above, the buyer would need to bring in contractors to provide fixed quotes on the various defects identified by the report. The subject removal period does not typically grant enough time for this type of activity and so extensions would have to be granted (often a week or more would need to be added).

You can see that neither condition is desirable for the purchaser. Even if it can be proven that the condition found is below the limit set by the clause, the buyer may not be comfortable living in a home with the condition even in a repaired state. Or the buyer may not have the time or facilities to deal with a repair and the delay it may represent to the ability to occupy the home. These are all decisions that should be left to the purchaser and not limited by an inspection clause.

We recommend that buyers not accept a dollar limit in their inspection subjects and instead insist on wording as close as possible to:

“Subject to the Buyer being satisfied with a property inspection to be performed, at the Buyer's expense, by a licensed Home Inspector of the Buyer’s choosing. Access to the property will be provided by the Vendor on reasonable notice and to the extent required to fulfill the Buyer’s due diligence”

The last part of this clause is important as we have occasionally come up against vendors who have refused to provide adequate access to the property. Because there agent (selling agent) has advised then that most inspections take 3 hours or less, they have initially refused access for our 4-8 hour process. The wording of this suggested clause also provides access to the property for secondary inspections that may be warranted based on the original findings of the home inspector.

Bottom line: As a buyer, you should not accept any wording that reduces your ability to legitimately pull out of the purchase should your home inspector uncover a deficiency or condition you are not comfortable accepting.

What kind of inspection report should you insist on?

OK, I have advised that to try to lower your potential liability in buying into multi-family-dwellings as much as possible you need to:


1) Make sure you have the Condo inspected

2) Make sure you choose an inspector who takes the time to perform a thorough evaluation of not just the purchase unit, but also the building envelope/exterior, roof, parkade, and all common mechanical areas.

3) Most important of all, look for an inspector who’s ‘process’ includes a detailed review of all engineering reports commissioned by the Strata in the last 5-10 years.

I would like to now talk about the type of report the buyer should ensure their chosen inspector provides.

By far the most common form of report used by home inspectors North America wide is the ‘Check List’ report. This takes on many different flavours and can even be included in a fancy publication like the Home Reference Manual which looks impressive but at its core is only a 9 page check-list-format report. The rest of the binder is boiler plate text that may or may not be relevant for the home you are purchasing and often does not describe a given defect with enough information to be truly informative in my view.

The fundamental problem with checklist style reports is that they have been designed to be of as little effort as possible for the inspector to fill out while at the same time protecting the INSPECTOR from liability. They typically do not go out of their way to inform you the PURCHASER and ensure YOU are protected from liability. There is physically not enough room to do so on most of these styles of reports as they often have limited opportunity to add enough commentary to fully describe a defect or deficiency. Inspectors often like this style of report because it takes very little skill, thought, or time to fill them out. Because you do not have to explain the deficiency, you can rush through the home with the only purpose being of identifying what may be a problem on the checklist and then state ‘further evaluation recommended’. Now of course most purchasers follow that advice- right? The reality is that very few purchases take additional steps, beyond the home inspection, to determine the current condition of the dwelling.

The final fundamental problem with checklist style reports in my view is that they never contain photos. Photos are the single most important tool that a good inspector has of portraying information to their client. Yet for a majority of the industry, they are not part of an inspector’s process. How can they be? When the average inspector provides a carbon copy checklist report on site and then never sees the purchaser again, how can photos be included? The answer is they can’t and typically aren't. Those that do will often just provide the client with a memory card or CD/DVD of raw unedited photos with no commentary. There is also a whole segment (significant) of the inspection industry where the inspector is scared to provide photos. A regular topic of discussion on inspector forums and at association meetings is around the concept that an inspector could be found liable for a defect shown in a photo but not referenced in the inspectors report.

Computer generated ‘checklist style’ reports are a slight step up from a hand written checklist as they can allow more extensive commentary and the addition of narrated photos, BUT only if the inspector is willing to put in the hours of time to modify the out of the box software template and then the extra time required on a per inspection basis to create the report at site or back in their office. Unfortunately, many don’t.

You can see that I am not a fan of checklist reports. I wish I was, they are much faster and easier than the reports I utilize in my business. Not many inspectors relish the idea of spending a day behind a desk creating a report and I am no exception. I am always looking for ways to decrease the report production time but always ensure that my number 1 priority is informing and protecting the client. In my opinion the best inspection report is a narrative report created specifically for the inspected dwelling that is augmented with lots of annotated photos. This is much the same format used by most engineers. The process is intense in the time frame typically allotted for subject removals and usually takes between 10-15 hours, but this has been the only way I have personally found that allows me to ensure that my client is as fully informed as possible.

Why does SENWI take so long?

I was recently at another inspection association's seminar. At a break I got to talking with one of that association's longest members and I mentioned that I can often take up to 300 photos when looking at a property. He laughed and said - "How long does that take?" I replied that I am often at a house for 5-7 hours. He made the typical claim of how long he had been in the field and that he is looking for the 'big ticket' items only and implied that any inspector worth a grain of salt could do that in under 3-1/2 hours.

SO why does SENWI take longer?

Well first of all, our clients are usually with us (something uncommon in the industry) during the inspection. This allows them to be better informed regarding the condition of the dwelling and does take on average a hour or two longer per inspection depending on their level of interest and questions. It allows the buyer to understand the defect because they have seen it with their own eyes.

Next, we are not looking for just the 'big ticket items'. Our reports present a majority of the conditions we find in the house that could be improved upon. Who are we, as inspectors, to decide up front what is important to you as a buyer? I have had many client choose not to buy a home not because of the dollar value of a problem, but because they were not willing to deal with a specific problem. That is and should be your prerogative as a buyer.

Lastly, I suspect that we, at SENWI, take a bit more time to look at things than inspectors who take less time on site. We open up most access panels, we will move a couch or chair to see behind, we will clear out a closet to get into an attic or crawlspace and we will look behind that picture to see what it may be hiding (where incidentally many electrical distribution panels are found). We almost always inspect a roof from its surface or multiple eaves-trough locations (many in the industry just look at it from grade with binoculars), we will crawl over a fence in order to get into an otherwise inaccessible point of the back yard. This all takes time and increases our ability to report on deficiencies which in turn reduces your liability as a buyer.

Could we inspect the roof from grade and get a good idea on the OVERALL condition and age? Yes, but what about all the smaller details that may not be a condition of the roof issue, but more where the roof meets other parts of the dwelling, locations that may be allowing water into the wall or roof cavities. These can only be examined from arm's length and I do not know anyone with arms long enough to reach a roof from the ground level.

So, yes we could perform our inspections without the buyer present, we could state that areas are not accessible because of storage or fences, we could look at roofs from grade, we could leave our cameras in our truck, we could fill out a pre-printed checklist on site (hard copy or software driven), … We would still meet the legal requirements of our contract and our certifying body's Standards of Inspection. But we do not want to, we want to provide a service that is better than that, one that we can be proud of, one that PROTECTS YOU - not us.

What makes a good inspection report?

The most common style of report in the industry is called a checklist report. It usually contains a series of checkboxes per building component with captions like “Appears Serviceable”, “Functional”, or “Poor/Average/Good”. These are not descriptive terms and often mean different things to different people. Most of these reports have minimal space to expand in a narrative fashion on the problem identified and the client can often be left unsure of the meaning of a specific reported item. This style of report is popular because it is a one size fits all solution to house inspecting. They often come in carbon copies and can allow the inspector to rush through an inspection, ticking off items without really providing substantive information on the current condition of the dwelling.

At SENWI, we do not use a pre-printed checklist-style report. Instead, we create a custom narrative report supported with photos to explain the found defects. Our reports will only have information on the inspected dwelling and you will not have to wade through piles of boilerplate text to get to the relevant data. And because we custom write every report we are able to take as much room as is required to adequately explain the found defect.

We are proud that we exceed the industry average. We will not compromise our standards or the ability to provide you with a detailed and accurate report that you deserve and have paid for—a report that you need to make an informed purchase decision.