May 13, 2009

Policy #09-001

Purpose:

The purpose of this bulletin is to offer guidance to home inspectors what limitation language is permissible in contracts with clients. Policy: M.G.L. c. 112, s. 225 (6) (v) prohibits home inspectors from "attempting to limit liability for negligent or wrongful errors or omissions by use of a clause within a performance contract that limits the cost of damages for negligent or wrongful errors or omission."

Discussion:

The issue of whether a particular limitation of liability clause violates M.G.L. c. 112, s. 225 (6) (v) will be addressed on a case-by-case basis and is factual dependent. Limitation of liability clauses are only applicable to civil liability may not be used to limit administrative actions. Arbitration clauses are must comply with M.G.L. c. 251. In coming to a determination the Board will review factors including but not limited to:

1) Whether it limits the types of damages available. E.g. precludes consequential or punitive damages and/or limits the amount recoverable;

2) Whether any conditions associated with making a claim are reasonable. E.g. A clause which requires the client to notify the home inspector of the claim prior to taking corrective action and does not exempt emergency repairs may be unreasonable;

3) Whether the limitation is limited to a specific component or is global;

4) Whether the clause is unconscionable. E.g. Where there is the imposition of excessive fees or other conditions onerous to the client associated with filing a claim;