Bad Inspector or Bad Expectations?

[bphgravity]

Here is an article from a local newspaper this morning. It's in a questions and answer format. What are your thoughts?

Q: When I bought my house, the home inspector reported no problems with the main electrical panel. After moving in, my insurance company wrote to request a photo of the panel. I sent the photo, and they replied with a cancellation notice, stating that Federal Pacific breaker panels are fire hazards and must be replaced. The new panel cost me $1,050.

When I called the home inspector, he admitted that Federal Pacific panels are hazardous but said he had no obligation to tell me this. He said that 30% of the homes he inspects have these panels and that routine disclosures of this kind would cause many deals to fall out of escrow, exposing him to lawsuits from sellers. This sounds crazy to me, and has me considering small-claims court against the inspector. Do you think he is liable?

A: Your inspector should be nominated for the Dirty Nerve Award of the year. His stated position exceeds the normal boundries of professional outrage. Any reasonable inspector would be stunned by such responses. Simply stated, your inspector failed to disclose an electrical condition that is a known fire hazard. Then he compounded the damage with insult, claiming that he was not required to provide disclosure. On the basis of such thinking, a home inspector could avoid reporting any and all hazardous conditions, including defective heating fixtures, substandard fireplaces, damaged balcony railings, etc.

This inspector clearly has no concept of the purpose and intent of a home inspection, which essentially is to represent the interests of home buyers by reporting observable conditions that could be of concern or consequence. By all means, give him the opportunity to declare his defense to a small-claims judge. Aside from reclaiming your losses, it would be interesting to observe the judge's responses to the inspector's outlandish arguments.

 

[charlie b]

Re: Bad Inspector or Bad Expectations?

My thoughts: Is this question for real? I have to hope not, but I have to admit that it does seem possible.

I once interviewed for a job at a HI company. It had the distinction (from all its competitors ) that all of its inspectors were licensed PEs. They were covered to some extent by "Errors and Omissions" insurance. But in the very few times that they had been approached by former clients demanding restitution, they settled out of court.

 

[hurk27]

Re: Bad Inspector or Bad Expectations?

I have to say I agree with this inspector as if he had stated that the panel has to be replaced without any kind of official recall on them he could have been in hot water with the seller if the deal fell through.

I agree that there was problems with FPE's and they should be replaced but I have not found any official recall that would state a requirement of replacement. This would be like this inspector requiring the whole house to be brought up to the 2005 NEC when it met code when it was manufactured.
The difference with what a insurance company can require is they don't have to have a reason to deny coverage if they don't feel the house is safe.
This comes down to what the home inspector is allowed to report as faulty (that which didn't meet code at the time of manufacture) and what the insurance company can refuse to insure for.

My response would be the home owner doesn't have a claim.

It might have been a good mention on the report that the panel should be replaced but if a buyer backed out of the deal because of it there could have been a law suit over this.

 

[George Stolz]

Re: Bad Inspector or Bad Expectations?

The HI should have disclosed the potential fire hazard.

If the seller had sued, the HI would be able to produce mountains of evidence to support a "recommend replacement" statement, regardless of a lack of official recall in place. His position for a recommendation would be very justifiable.

If the house had a gas leak, which would eventually cause an explosion, would he be within reason not to mention it, because the components causing the gas leak were listed and installed to code when the structure was built?

Anyone (EC, HI) with any credibility would recommend replacement; if not require it, as the insurance company would be within it's authority to do.

[ September 12, 2005, 09:22 PM: Message edited by: georgestolz ]

 

[hurk27]

Re: Bad Inspector or Bad Expectations?

By George: the HI would be able to produce mountains of evidence to support a "recommend replacement" statement, regardless of a lack of official recall in place

I don't think the evidence you find will be backed by scientific test.

I'm not saying that it wouldn't be a good idea to make a statement about FPE panels. I just can not find any bondafide scientific proof that they all have this problem. I have read countless articles about these panels but they are all hear say. I know there was some official testing by UL and a higher failure rate was shown but after changes was done at the manufacturing level it was supposed to have been fixed. Now how do you show which breaker is ok and which isn't? I'm sure these HI's don't have the knowledge or equipment to preform this test.
You can't condemn the whole panel if they could prove that not all FPE breakers was involved. And if this happens the HI would loose.

A while back I posted several URL's that was HI's talking about this subject. And in each one they said there was no proof to the alleged hi failure rate of these panels and they could not recommend the panels to be replaced. Even at the AHJ level it's been hands off to require they be replaced.
This is probably why they were never recalled.

[ September 12, 2005, 10:12 PM: Message edited by: hurk27 ]

 

[George Stolz]

Re: Bad Inspector or Bad Expectations?

It is an interesting question. Very undefined.

An analogy: I thought I had a bead on things until I heard the supreme court hand down a "thumbs up" for eminent domain to be exercised by a private corporation to raze homes to build a privately-owned and operated mall. I was shocked.

As a landowner in the path of a proposed private eminent domain driven project, I am biased.

I guess, as an electrician, I am biased against FPE, from the things I have read. The HI could probably well be sued and lose, but one thing would be assured: there would be an electrician close at hand to buy him a beer.

 

[hurk27]

Re: Bad Inspector or Bad Expectations?

I guess I stand corrected as I have been surfing on FPE's and found a whole lot of new info on them.
It does seem that CSPC, UL , and other testing labs have done testing on these breakers and found that they still had a high rate of failure.

So I guess your right George the HI would have had a defence if he would have reported the panel. And no excuse not to.

Here is one web site that has most of the info:
nspect-ny.com

And this one at: Code Check.com

I think I even posted these links before but I must have forgot about them?

 

[jimwalker]

Re: Bad Inspector or Bad Expectations?

I see the HI as being in a tough spot on this one.If he does his job then realtors would be trying to get the buyers to use someone else other than him.At same time since the buyer pays for this service they have the right to know about it.Likely the seller would have helped out some.Would this cost that many sales ?

 

[petersonra]

Re: Bad Inspector or Bad Expectations?

The article does not seem to indicate whether the HI was employed by the seller or the buyer.

If the HI was employed by the seller, his primary obligation is to the seller. Likewise if employed by the buyer, his primary obligation is with the buyer.

IMO, he has an obligation in either case to point out conditions that are generally recognized as hazardous, or that directly relate to the value of the house.

Unless the panel was installed in a hazardous way, or had been modified to be hazardous in some way, I am not so sure that some anecdotal evidence about a particular brand of panelboard is relevant. He is certainly not qualified to make that judgement. It seems to me that if the AHJs and testing labs are convinced this brand of PB is really hazardous, they should issue an unequivical statement to that effect.

However, it seems to me that if he is working for the buyer, he ought to at least disclose the situation so the buyer could make an informed decision.

 

[tony_psuee]

Re: Bad Inspector or Bad Expectations?

IMHO, it is bad expectations. From my own experience with my first house, the "inspector" was actually an appraiser. However, the realtor assured us that the "inspector" would find anything wrong with the house. His job was to determine if the house, as is, was worth the asking price and to list any items that could effect the value. In any house those items are generally roof condition and mold. Even though he listed the 60A service as 200A, there was no liability because that did not effect the value of the house. Bottom line is buyer beware. If a homeowner is paying for an HI they should know what the service provided will be.

Tony

edit for grammar

[ September 13, 2005, 09:28 AM: Message edited by: tony_psuee ]

 

[bthielen]

Re: Bad Inspector or Bad Expectations?

I think the important thing for the HI to remember is that his/her responsibility is to report the facts and not their opinion. If, in fact, these breakers are an increased threat, then I would expect that a HI that I hired would let me know about it. If he failed to inform me of this fact and my newly purchased home burned as a result, he would find himself a defendant in court. I would not want the HI to tell me something was dangerous based on their opinion alone. By stating only the known facts, the HI has some protection from both sides.

Bob

 

[rbalex]

Re: Bad Inspector or Bad Expectations?

I?m siding with the HI in this case. He is correct that a negative report, in absence of a clear ?official? recall of the product, would subject him to a lawsuit ? and one he would loose if it caused a sale to fall through.

In my opinion, it is the insurance industry that is the problem ? and the solution. The insurance industry needs to broadcast their intent to deny coverage if they believe FPE panels are dangerous - BEFORE THE FACT. Then the HI industry has the ability to report a real fact.

 

[petersonra]

Re: Bad Inspector or Bad Expectations?

Originally posted by rbalex:
I?m siding with the HI in this case. He is correct that a negative report, in absence of a clear ?official? recall of the product, would subject him to a lawsuit ? and one he would loose if it caused a sale to fall through.

In my opinion, it is the insurance industry that is the problem ? and the solution. The insurance industry needs to broadcast their intent to deny coverage if they believe FPE panels are dangerous - BEFORE THE FACT. Then the HI industry has the ability to report a real fact.

In my opinion, the AHJ's and testing labs need to show some spine and issue an unequivical statement if they believe these panels are bad. It is not the insurance industries responsibility to do this.

It is amazing to me that these people who claim to be all about safety cannot make up their mind about this situation. They need to get together and decide whether these things are, or are not safe, and issue some kind of statement to that effect. It is their responsibility to do so, and they have shirked long enough.

 

[rbalex]

Re: Bad Inspector or Bad Expectations?

Whether the ?safety? organizations have made a definitive statement is irrelevant in this case. If the insurance industry has determined that a installation or product is beyond the their actuarial risk models they have the obligation to notify the public they will deny coverage as a general policy.

While in some states they may still be forced to insure something (e.g., aluminum wiring) for ?political? reasons, in general they have no obligation to insure anything.

 

[petersonra]

Re: Bad Inspector or Bad Expectations?

I am not sure there is enough information about which to make any acturial decision. My guess is they figure there is enough anecdotal evidence of a problem that they choose to not insure dwellings with these panels.

i agree they should make their underwriting standards more open, but not just over this one issue.

[ September 13, 2005, 01:31 PM: Message edited by: petersonra ]

 

[rbalex]

Re: Bad Inspector or Bad Expectations?

Originally posted by petersonra:
I am not sure there is enough information about which to make any acturial decision...

That's the whole point - but they have made the decision anyway.

 

[hurk27]

Re: Bad Inspector or Bad Expectations?

From reading in some of the links I posted, it seems that this issue came up way back in 1980 and even after UL did do some testing it was swept under the rug. From what I gather is they did pull the listing on these breakers but won't admit it. At the time Exon who purchased Reliance Electric who is the parent company for FPE sued FPE because they tried to cover up the sub-standard manufacturing which Exon would have to bear the whole expense of a recall, then politics got in the way and UL and other testing labs played along to protect Exon. CPSC never did a recall even tho there own test showed problems with the two poles and some of the single poles. It seems that no one wanted to go against Exon. :roll:

 

[petersonra]

Re: Bad Inspector or Bad Expectations?

Originally posted by rbalex:

Originally posted by petersonra:
I am not sure there is enough information about which to make any acturial decision...

That's the whole point - but they have made the decision anyway.

Insurance carriers are entitled to make their own coverage decisions, based on their own criteria, or even a bias against a particular product if they so chose. I just wish they were a little more open about what that criteria is.

 

[mhi]

Re: Bad Inspector or Bad Expectations?

Bad Inspector. Note the history of concerns let the client make their own judgement on replacement

 

[petersonra]

Re: Bad Inspector or Bad Expectations?

Originally posted by mhi:
Bad Inspector. Note the history of concerns let the client make their own judgement on replacement

If I were a HI, I might be inclined to have a booklet seperate from the official report that migth list things that while they meet code and are probably "OK", might want to be looked at a little closer. this might well be one of the items in that category.

i am not so sure that it is wise for a HI to make the call that these things are bad. since the testing labs and AHJs refuse to do so, I can't see a mere HI who typically has little or no in depth knowledge can make such a judgement.