Who Is Responsible When a Home Inspection Misses a Serious Defect? An Update on Rhode Island Home Inspector Liability

Home inspector liability in Rhode Island depends on the inspection’s scope, the work performed, the accuracy of the report, and whether a failure caused the buyer’s loss. A professional home inspection helps buyers evaluate a property before closing. When an inspector issues a clean report but misses a condition that a careful inspection should have identified, the inspection agreement, report, photographs, and surrounding circumstances require close examination.

This article updates our December 2020 discussion with a more complete explanation of Rhode Island’s existing protections for home buyers, including required insurance coverage, restrictions on certain contractual liability caps, filing deadlines, and potential claims against inspectors and inspection companies. It also explains why buyers should investigate an inspector’s qualifications and referral relationships before hiring the inspector.

For a broader discussion of the evidence and legal issues involved, see our Rhode Island Home Inspector Negligence page.

Rhode Island Home Inspector Liability and Licensing Requirements

Home inspectors in Rhode Island are regulated under the Rhode Island Home Inspector Licensing Law, R.I. Gen. Laws § 5-65.1-1 et seq., administered by the Contractors’ Registration and Licensing Board. Anyone performing home inspections for compensation must be licensed, and an inspection company may not operate unless a licensed home inspector continuously supervises its inspections. R.I. Gen. Laws § 5-65.1-12. By statute, a home inspection is a written evaluation of the readily visible and accessible components of a home, including the heating, cooling, plumbing, and electrical systems, structural components, foundation, roof, masonry, and exterior and interior components, unless the scope is clearly limited in writing in the report. R.I. Gen. Laws § 5-65.1-2.

Insurance and Contractual Liability Limits

Three protections in the statute deserve particular attention from buyers:

• Mandatory insurance. Every licensed home inspector must maintain both an errors and omissions policy and a general liability policy, each with a minimum of $500,000 in the aggregate. R.I. Gen. Laws § 5-65.1-10(a). When we last wrote on this topic, we referenced a $250,000 requirement; the current statute sets the minimum at $500,000 for each policy.
• Liability caps below the statutory insurance limits are void. Home inspection contracts once commonly limited the inspector’s liability to a refund of the inspection fee. For any home inspection contract issued on or after September 1, 2016, a provision limiting the inspector’s liability to less than the statutory insurance limits is void. R.I. Gen. Laws § 5-65.1-10(c). A missed defect claim can no longer be contracted down to the price of the inspection.
• Loss of license. An inspector who fails to maintain the required insurance immediately loses the license. R.I. Gen. Laws § 5-65.1-10(d).

The Board is also authorized to adopt a code of ethics and standards of practice for licensed inspectors, R.I. Gen. Laws § 5-65.1-3, and those standards serve as a useful benchmark for the standard of care in litigation.

Home Inspector Liability: Claims a Buyer May Bring

Rhode Island law gives a wronged buyer more than one path to recovery. The foundational decision is Davis v. New England Pest Control Co., 576 A.2d 1240 (R.I. 1990). In Davis, a seller’s pest inspection company reported no signs of termite infestation; after the buyers moved in, they discovered damage so extensive the house had to be razed and rebuilt. The Rhode Island Supreme Court held that there is implied in every contract for work or services a duty to perform it skillfully, carefully, and diligently and in a workmanlike manner, and that a negligent failure to observe those conditions is a tort as well as a breach of contract. Id. at 1242. In the Court’s words, the inspector was “at the very least” obligated “to see what was there to be seen.” Id.

When the Buyer Did Not Hire the Inspector

Davis also addresses a potential defense in these cases: that the buyer never hired the inspector. The Court held that when one party for valuable consideration engages another to do some act for the benefit of an intended third party, that intended beneficiary may maintain an action for breach of contract, and the law implies privity. Id. at 1242-43.

Because the buyers in Davis were the intended beneficiaries of the pre-closing termite inspection, they could pursue the inspection company even though they never hired it. Whether a particular buyer qualifies as an intended beneficiary depends on the facts of the transaction, but where the inspection was arranged for the sale and the buyer relied on the report, Rhode Island law gives the buyer a path.

Legal Theories in Home Inspector Liability Claims

Home inspector liability can arise under different legal theories. A buyer may pursue the following claims when the required elements can be established:

• Negligence, where a defect was present and should have been discovered in a reasonably careful inspection. The standard of care is typically established through industry standards, the inspector’s own practices, or expert testimony, and whether an inspection was negligently performed is generally a question for the jury.
• Breach of contract, express or implied, including the implied duty of workmanlike performance recognized in Davis, available to the client who hired the inspector and to an intended third-party beneficiary.
• Negligent misrepresentation, where the inspector failed to exercise reasonable care in obtaining or communicating false information, and the buyer justifiably relied on that information and suffered financial loss. Restatement (Second) of Torts § 552(1) (1977).
• Fraud, where the defendant “made a false representation intending thereby to induce plaintiff to rely thereon,” and the buyer justifiably relied on that representation to the buyer’s damage. Travers v. Spidell, 682 A.2d 471, 472–73 (R.I. 1996).

When evaluating home inspector liability, the statutory scope of the inspection matters. Because an inspection covers the readily visible and accessible components of the home, inspectors defend these cases by arguing a defect was latent or concealed. The dividing line in most cases is whether a qualified inspector exercising reasonable care would have seen the problem, or at least seen the warning signs requiring further evaluation.

Home Inspector Liability and the Three-Year Filing Deadline

Rhode Island has enacted a statute of limitations specifically for claims against licensed home inspectors. An action for injury or damage arising out of a home inspection must be commenced within three years of delivery of the written home inspection report to the client. R.I. Gen. Laws § 9-1-14.4. Note what starts the clock: delivery of the report, not the closing, and not the day the defect is discovered.

The statute does contain a discovery rule for truly hidden problems. Where the injury or damage could not, in the exercise of reasonable diligence, have been discovered at the time the report was delivered, suit must be brought within three years of when the damage reasonably should have been discovered. R.I. Gen. Laws § 9-1-14.4. That exception is vital in latent defect cases, such as concealed water intrusion or structural deterioration that does not show itself until years after closing, but it is applied against a reasonable diligence standard.

The statute separately tolls the deadline for persons under a disability by reason of age or mental incompetence, who have three years from the removal of the disability to bring suit. A buyer who notices warning signs and waits does so at real risk. If you suspect your inspector missed something, the time to evaluate a claim is now, not after the repairs are complete.

The Inspection Does Not Let the Seller Off the Hook Either

Our 2020 article discussed a Rhode Island Supreme Court decision involving a home with known water issues, and it remains instructive today. In McNulty v. Chip, 116 A.3d 173 (R.I. 2015), the buyers’ inspection report flagged very high basement moisture, evidence of water penetration, and the need for a new sump pump. The buyers purchased anyway, under a contract with an as-is clause, and later suffered significant flooding. The Supreme Court vacated summary judgment on the fraud count because the general disclaimer did not specifically address the alleged flooding and water-penetration misrepresentations. The Court emphasized that “neither the disclaimer clause nor the provisions concerning plaintiffs’ waiver of their right to inspect, contains any reference to the issues of flooding and water penetration.” Id. at 184.

McNulty cuts in two directions. For buyers, it confirms that an as-is clause is not an automatic shield for a seller who concealed what they knew. The inspection report’s warnings and the buyers’ response remain facts to examine when evaluating reliance, causation, and the claimed loss. The practical lesson is the same one we gave in 2020: read the inspection report carefully, take its warnings seriously, and get specialist follow-up on anything it flags before you close.

A Word of Advice: Choose Your Own Inspector

Bilodeau Capalbo recommends that buyers independently investigate and select their home inspector rather than hire an inspector referred by either real estate agent participating in the sale. Our concern is the inspector’s continuing source of work. An inspector who depends on those agents for repeat referrals may face pressure to preserve those relationships, while the buyer needs a candid assessment that could lead to further investigation, renegotiation, or termination when permitted by the purchase agreement. Buyers should select an inspector based on qualifications, the quality and scope of the inspection, and the inspector’s ability to provide an independent assessment of the property.

Verify that the inspector is licensed with the Rhode Island Contractors’ Registration and Licensing Board. Confirm that the required errors and omissions and general liability coverage is in place, review sample reports, and obtain independent references from past buyer clients. Ask about ongoing referral relationships with either agent involved in the transaction and whether the inspector has previously inspected the property. Review the inspection agreement before signing it so you understand which systems and conditions the inspection will cover.

Read the complete inspection report and arrange appropriate independent follow-up evaluations before the applicable inspection deadlines expire. If the report identifies a concern or recommends evaluation by an engineer, roofer, electrician, or other specialist, address that recommendation before deciding whether to proceed. Selecting an independent inspector and following up on the report’s findings are both part of the buyer’s investigation.

Contact a Rhode Island Real Estate Litigation Attorney

If you purchased a home and later discovered a serious defect your inspector should have caught, or you believe the seller misrepresented the condition of the property, you may have a claim against the inspector, the inspection company, the seller, or all of them. Home inspector liability claims are time-sensitive, fact-intensive, and often turn on expert evaluation of what a careful inspection would have revealed. The Rhode Island real estate attorneys at Bilodeau Capalbo have extensive experience litigating construction defect, nondisclosure, and inspection claims throughout Rhode Island. Call our office today at 401-300-4055 or contact Bilodeau Capalbo, LLC to schedule a free consultation.