PROTECTING YOUR COMPANY FROM LIABILITY Jeffrey A. Walker Walker & Mann LLP Laurel Street, Suite 204, Rancho Cucamonga, CA Phone: Fax:

I. Inspection agreement A. Contract Offer Acceptance Consideration Performance Damages Boiler plate contracts?

B. Four issues in breach of contract cases What does it say? What does it mean? Is it enforceable? Is there a way around it?

C. What happens when there is a breach? What were the terms? Who breached? Material breach? What are the damages? Court proceedings What is a mediation clause? What is an arbitration clause?

Why do people sue despite certain terms in a contract? Cause of action in tort People are litigious

Do contract terms matter? Rights Responsibilities Important during litigation

II. Written reports A. What must be included in a written report? Business and Professions Code § 7195 Describe inspected items Material defects CREIA standards CREIA code of ethics

B. Inspection photographs Discretionary, however, check your agreement Right to use CREIA good faith Get consent Clearly in your agreement Right of privacy CREIA good faith section No disclosure to anyone other than client or client’s agent unless client consent

C. Building code references Not an appraisal Not a municipal inspection Helpful in describing the problem

III. Protecting your business What can you be sued for? Breach of contract Tort causes of action What is a tort? Fraud Misrepresentation Negligence

A. Negligence Duty of Care Legislative intent Case law Moreno v. Sanchez (2003) 106 C.A.4 th 1415, 1435 CREIA Standards of Practice CREIA Code of Ethics Good faith What duty do you owe? Who do you owe a duty to?

B. Liability Home Inspector Liability Statutes Business and Professions Code § 7196 Caselaw Moreno v. Sanchez Leko v. Cornerstone Building Inspection Service Liability in tort despite written contract

Liability continued Broker’s Duty Statute California Civil Code § Caselaw Easton v. Strassburger Leko v. Cornerstone Building Inspection Service Joint and several liability

IV. Third party liability Subsequent purchasers (non-clients) Equitable indemnity by real estate agents

V. Time limit Statute of limitations Business and Professions Code § 7199 Generally 4 years Delayed discovery rule Accrual period Can I put a clause in my contract to change that? Only to shorten the 4 years, but NOT the accrual period

VI. Ethical considerations Business and Professions Code § 7197 Referrals Agency Make sure the seller/buyer knows you are a separate entity