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Memo 5018 Accuracy of Inspection Results
To: All SPI Contractors and Inspectors
From: Robert Klein
Memo 5018 Accuracy of Inspection Results
As you know, you are our clients' eyes and ears in the field. It is imperative that you use all means available and necessary to determine the correct occupancy status for each property. If incorrect information is reported to our clients, it can lead to a whole range of complications that may ultimately cost our clients and us thousands of dollars .
Below are a few examples of common complications arising from incorrect inspection results. Please review these to assure that you are aware of the problems that incorrect status results can cause, not only for our clients and Safeguard, but also for you as the inspector.
1. The inspector reported a post-sale property vacant, but the contractor who was sent to the property to secure it found that the property was occupied.
With this post-sale property, the incorrect report of vacancy caused the cancellation of the scheduled eviction. When the property was found to be occupied after all, the eviction process had to be restarted. The client incurred costs for canceling and then having to restart the eviction, as well as costs assessed by the investor for delayed conveyance. Since the cancellation and delay were caused by incorrect information from our inspector, the client charged its loss of nearly $4,000 back to Safeguard.
2. The inspector reported a property as in good condition, when actually the property had sustained severe fire damage.
The inspector may have been inspecting an incorrect property; regardless, this mistake caused our client to incur a loss of thousands of dollars. The property could not be conveyed to the investor in its damaged condition, and its value in that condition was substantially diminished, such that it could not bring enough at sale to cover our client's loss. Safeguard was obliged to perform extensive repairs to put the property in convey condition, at a cost of $32,000.
3. The inspector reported a property occupied when it was really vacant.
The property sustained extensive freeze damage that could have been avoided if we had known that the property was vacant and could be winterized. The cost to our client and to Safeguard in this case was over $20,000.
Accurate reporting of occupancy status is especially critical in the winter months. It does not take long at all for a property to freeze if the utilities are off and the property is not winterized, and in some cases, the damage caused by freezing is so severe that the property is deemed a total loss.
In each of the cases described above, Safeguard had to compensate our clients for their loss.
We do recognize that occupancy status can be difficult to ascertain in some situations. However, if you take all possible steps to assure that you are reporting and properly documenting correct occupancy status (e.g. contacting utility companies, talking with neighbors) before submitting your results, you can greatly increase the likelihood that your results are accurate and reduce the possibility of an extremely costly loss.
Thank you for your careful attention to this important issue. We appreciate your efforts to help us safeguard our clients' interests.
Please call your regional coordinator if you have any questions, comments, or concerns about this subject.
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