What are my rihts if a home inspector did not report visibly “out of code” electrical box which voids my homeowner’s insurance in case of electrical fire?

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What are my rihts if a home inspector did not report visibly “out of code” electrical box which voids my homeowner’s insurance in case of electrical fire?

After having my home inspected, I purchased it having been told there were no major issues. Immediately after moving in I found many outlets were recieving no power. I called an electrician out who found that the electrical box was “completely out of code” and should have been seen by any qualified home inspector. I called the inspector and he refused to help in any way. I have already spend a few hundred dollars getting an outlet and wiring in the laundry room so I can wash and dry my clothes, but the fix for the electrical box will be a couple thousand. Along with the electrical issue, a crack was found in the furnace heating exchanger which again should have been seen and now can leak carbon monoxide. This inspector obviously did not do his job correctly and overlooked major things. Home insurance will not cover electrical fires with an “out of code” electrical box which the Inspector failed to report. Do I have grounds for legal action?

Asked on June 5, 2012 under Real Estate Law, Utah

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You can sue the home inspector for negligence.  Negligence is the failure to exercise due care (that degree of care in this case that a reasonable home inspector would have exercised under the same or similar circumstances to prevent foreseeable harm).  Your damages (the amount of compensation you are seeking in your lawsuit for negligence) would be the cost of repairs.

If you can prove that the seller of the house knew of these problems, but did not disclose them, you could sue the seller for fraud.  Fraud is the intentional misrepresentation of a material fact made with knowledge of its falsity and with the intent to induce your reliance upon which you justifiably relied to your detriment.  In other words, you relied on the seller's misrepresentations about the condition of the house and would not have purchased the house had you known the true facts.  Fraud is also applicable in cases of nondisclosure by a seller in which the buyer could not have reasonably discovered the true facts.  You could not have reasonably discovered the true facts about the electrical problems or the potential carbon monoxide leak.

You would file one lawsuit against the home inspector and seller with separate causes of action (claims) for negligence and fraud.  Negligence as mentioned above would be your claim against the inspector and fraud would be your claim against the seller.

Your damages (the amount of compensation you are seeking in a lawsuit for fraud) would be either the benefit of the bargain or your out of pocket loss.

Benefit of the bargain allows a defrauded purchaser to recover the difference between the real and represented value of the property purchased regardless of the fact that your actual loss might have been less.

Out of pocket damages for fraudulent misrepresentation permits recovery of the difference between the price paid and the actual value of the property acquired.


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