Receiving payment in kind for inspections, especially inspections without a comprehensive report, can result in big problems, advises James Wallace of Wallace Risk Solutions.
You’ve been asked to help out a mate by doing a timber pest inspection on a property he is planning on buying. You agree to assist, and because the friendship has been solid for 20 years, you insist on doing it for free. Your mate says he’ll shout you some beers as a thank you. So you cast your eyes over the property, everything looks pretty good, nothing special required. The home is purchased, and everyone is happy.
That is, until the fateful day when a builder arrives to discuss renovations. Building works commence and when a wall is pulled out, termite damage is discovered. Although it was not visible until the plaster was removed, your friend of 20 years just became the man about to sue you.
As you were mates you didn’t enter into an agreement for the timber pest inspection because you never thought this would happen. The inspection was also not as thorough as it should have been, as beers at the pub were calling. Your report was verbal and not backed up in writing.
At Wallace Risk Associates, we currently have two scenarios like this playing out and it has cost long-term friendships as well as potentially a lot of money.
Here are some key points to consider when thinking of undertaking an inspection job for a friend:
- AS4349.3 states that ‘an agreement shall be entered into prior to the inspection’
- An agreement may provide a level of protection as to the scope of the inspection
- What are your insurance policy terms and conditions?
It is imperative that whenever you are acting in a professional capacity, you act diligently and ensure you treat the job as if it was for any other customer. A $100,000 shortfall on any renovation or rectification works can drive a massive wedge into a friendship.
The same also applies to verbal reports – you’re leaving the business exposed to litigation by not entering into a written agreement and putting your findings in writing.
This isn’t to say that pest managers shouldn’t help out their mates, but it pays to be aware that jobs like this come with risks, and protecting yourself and your livelihood is paramount.