Home Inspector Liable for Overlooking Mould

A home inspector who gave verbal reassurances that a home was “dry”, and who failed to conduct a thorough inspection and communicate potential moisture concerns to a buyer, was found 50% liable to her for subsequent mould and moisture-penetration damage.
The first-time buyer used a real estate agent who also happened to be her friend. Through him, she put in an offer on an 80-year old home, conditional on a satisfactory home inspection. On her friend’s recommendation, she hired the home inspector who attended at the home on the specified day and ran through a standard checklist of inspection items. Although he did notice a serious problem with the furnace (which had to be replaced), he did not notice any mould. In fact, he gave her verbal assurances that the basement of the home was “dry”. Yet almost immediately after closing the buyer – who had serious mould allergies – started experiencing health problems caused by the presence of mould and mildew. In fact, within two months of closing there was already evidence of serious damage to the basement of the home caused by rot, mould, rust, and general dampness and deterioration.
The court was asked to apportion liability for those damages. First of all, it absolved the seller of any responsibility, finding that he had no prior knowledge of any moisture problem in the home.  However, the court found the home inspector partly liable, because he had not done a thorough inspection related to potential moisture penetration, and did not communicate any concerns he may have had to the buyer. Specifically, given that this was an 80-year old home, a reasonable inspection would have focused on the fact that the foundation would not have been damp-proofed, and that the basement would not have been built to be habitable. It would also have prompted concerns over deteriorating parging near the driveway, which could result in water penetration below-grade. Not only was this never explained to the buyer, but these items were completely overlooked and were inconsistent with the inspector’s verbal assurances as to dryness. The buyer would not have closed the deal had she known of the true state of affairs.
Despite concluding that he was “skilled and intuitive”, the court found the home inspector liable since he had breached his legal duty to the buyer, including the duty to communicate concerns relating to the various items on the standard inspection checklist he used.  Incidentally, the court also found that the exclusionary clauses in the home inspector’s contract with her, which purported to limit his liability, could not be relied on because the inspector never reported or explained the significance of those overlooked defects. This amounted to a breach in the standard of care, and rendered the exclusionary clauses ineffective.
In the end, the home inspector was found 50% liable to the buyer for her damages. The real estate agent was also 25% liable, because he had negligently induced her to rely on the home inspector, but then had failed to review the inspection report with her or direct her on how she should use and interpret it. Finally, the buyer herself was liable for the remaining 25%, since she was negligent in not actually reviewing the home inspector’s written report. See Halliwell v. Lazarus, 2010 (ONSCJ).