In the past, many home inspectors have allowed the payment of their services to be paid at the time of closing. This means that the bill for the home inspection services would be rolled into the closing costs for the home that is being purchased.
The Kansas Home Inspectors Professional Competence and Financial Responsibility Act was recently passed and is in effect in Kansas. One stipulation to this act states that the Kansas Home Inspector Registration Board may deny, suspend, or revoke a home inspectors registration if the inspector allows the inspection fee to be contingent on the closing of the underlying real estate transaction.
Do you see the ethical dilemma? Do you think your inspector will be 100% honest about the conditions found in a home if he/she knows that payment is contingent upon you closing the deal?
Hopefully, you’ve got an inspector that is honest, believes in a strong code of ethics, and stands by that code by joining an organization that promotes strong ethical accountability, such as ASHI (American Society of Home Inspectors).
Mortgage brokers, lenders, home buyers take heed. It’s against the law for a home inspector to bill the services to closing without some other type of guarantee of payment. By aiding in this practice, you may be as guilty as the home inspector.
But notice what I wrote: “…some other guarantee of payment”. Some home inspectors will take a credit card number or a personal check at the time of the inspection AND provide a way to allow their services to bill to closing. If the deal does not close, for any reason, or the home inspector’s fees are not paid at the time of closing, the inspector is still guaranteed payment, either by charging the credit card that was provided, or cashing the check.
I’m not an attorney, so I don’t know whether this loop hole is legal. For me, it’s just better to stay away from perception of a conflict of interest. That’s also in the ASHI Code of Ethics. And is a good enough reason to stay away from that practice.
Cash, check or credit at the time of inspection, or no inspection service. Its the law.