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Attorney’s Fees Clause: A Must-Have in Your Pre-Inspection Agreement
by Isaac Peck, Publisher
Home inspection is a balancing act of thoroughness and practicality, where inspectors must navigate the fine line between identifying critical issues and avoiding catastrophizing, all while managing both risks and client expectations. Risk management is an indispensable part of that work. Here at Working RE Home Inspector, we’ve talked a lot about the importance of a well-drafted pre-inspection agreement. It’s not just a professional formality, but an essential risk mitigation tool. From defining the scope of services to clarifying client expectations, such agreements protect the home inspector by limiting liability and outlining clear terms for dispute resolution.
Nothing about the protections offered by these agreements is foolproof. Clients might complain or even initiate legal action anyway. That’s where an Attorney’s Fees clause comes in. It’s an essential shield for when everything else in the agreement fails to do its job or protect you from clients who insist on taking their complaint with you to court (or arbitration).
What Is the Attorney’s Fees Clause?
Imagine a few scenarios:
Scenario 1: A homebuyer sues the inspector over alleged mold damage, despite clear disclaimers and no evidence. The court dismisses the case. Without an Attorney’s Fees clause, the inspector is still out $15,000 in legal fees, even though they fended off the buyer’s attack. But with a “loser pays” clause, the buyer will be expected to cover the $15,000.
Scenario 2: A buyer discovers a hidden plumbing issue after the inspection and sues the inspector, citing the inspector’s advertising tagline “We ensure your peace of mind.” The inspector proves the defect was inaccessible and the tagline was not a warranty, effectively getting the case dismissed. Without the clause, this litigation costs the victorious inspector $20,000 in legal fees. With the clause, the losing party pays the fees.
Scenario 3: A homeowner blames the inspector for a foundation crack that appeared months after the inspection. Expert testimony proves it was not visible or foreseeable, but said expert testimony costs a lot of money. Without an Attorney’s Fees clause, the inspector is out $25,000 in defense costs. Under the clause, the losing plaintiff pays those costs—avoiding financial strain for the inspector and/or a huge hit on their E&O insurance.
Among the various clauses found in inspection agreements, two stand out as essential pillars of protection: the Limitation of Liability clause and the Attorney’s Fees clause. While the former caps the inspector’s financial exposure, the latter is what truly deters baseless litigation and ensures fairness in legal disputes. In practice, the Attorney’s Fees clause becomes the gut-check that filters genuine complaints from opportunistic legal threats.
Identifying the scope of work of your home inspection, as well as which Standards of Practice (SOP) you are adhering to, are hugely important. One way in which you can do so, is by exploring binding arbitration and mediation clauses, a clause limiting the statute of limitations for actions on the inspection to 12 months, and provisions to limit your liability. Then, there’s also provisions to limit the scope of what services are expected, as well as providing a 10-day written notice provision mandating that clients have 10 days to report post-inspection concerns (Read Key Clauses You Need in Your Pre-Inspection Agreement on WorkingRE.com). However, it’s important to remember the “loser pays” Attorney’s Fees provision is one of the most important (and aggressive) clauses that you should include in your pre-inspection agreement. This clause says that if you and your client end up in litigation, the prevailing party is entitled to their attorney’s fees.
At its core, the Attorney’s Fees clause ensures that in any arbitration or legal action where the inspector is found to be without fault, the client agrees to reimburse all legal costs incurred in the inspector’s defense.
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Winning Shouldn’t Mean Losing Money
This clause serves several critical functions:
First, it saves the inspector potentially tens of thousands of dollars in litigation costs even when they win. Hourly rates for real estate litigation attorneys can range from $200 to $600 per hour, or even higher. A “normal” civil lawsuit involving discovery, motions, and pretrial preparation could involve attorney fees between $15,000 and $30,000 and potentially exceeding $30,000 if the plaintiffs are really digging in. That’s even before it goes to trial!
Factors leading to these high fees include the complexity of litigation, a demand for detailed investigations, even expert witness testimony (engineers, contractors, etc.), and complex legal arguments about negligence, breach of contract, or misrepresentation. Such cases may require discovery (requests for documents, depositions, etc.), which can be a major expense. Finally, in many jurisdictions, the “American Rule” is applied to attorney fee rules: each party pays their own attorney’s fees, regardless of who wins the case.
Even when inspectors successfully defend themselves in court, the cost of doing so can be devastating. Without an Attorney’s Fees clause, prevailing in a legal dispute can still result in substantial out-of-pocket legal expenses. Inspectors may spend thousands proving their innocence, only to receive no reimbursement. The clause corrects this imbalance, ensuring that inspectors are not financially punished for baseless claims.
Second, the clause is a deterrent to litigation. In today’s litigation-heavy climate, even minor inspection disputes can spiral into costly legal showdowns. While most clients act in good faith, some are plaintiffs-in-waiting, or they get bad advice from friends or family members and start leveraging legal threats to pressure insurance carriers or the inspectors themselves into quick settlements. Ambulance-chasing plaintiff attorneys are fond of making obscene demands and filing lawsuits in an effort to force an insurance carrier into a settlement. The Attorney’s Fees clause acts as a firebreak. Knowing they may be liable for legal fees if they lose, clients will think twice about initiating frivolous claims.
Third, an Attorney’s Fees clause clarifies legal responsibilities and expectations. Not all legal disputes are dramatic lawsuits: some might arise over misunderstandings about the scope of an inspector’s work, or other minor conflicts and misunderstandings. In those situations, the Attorney’s Fees clause sets clear expectations: if legal action is necessary and the inspector is vindicated, reimbursement will follow. Rather than being a threat to the client, this kind of transparency fosters mutual accountability and reduces the chance of confusion breeding conflict.
Fourth, an Attorney’s Fees clause discourages cases where the home inspector is pulled into catch-all lawsuits, where a buyer sues everyone involved in a transaction: the buyer’s agent, the seller’s agent, the seller, the home inspector, and so on. With this clause, the buyer may carefully consider whether to include the home inspector in these catch-all lawsuits, especially without having a discussion first.
Finally, the Attorney’s Fees clause gives an inspector leverage in court proceedings, the arbitration process, negotiations, and other legal proceedings. It’s especially helpful during settlement negotiations, when parties are trying to figure out the least risky way to dispose of a case. An inspector-defendant can point out that the chances of an outright win for the plaintiff are not certain, or even a long shot, and that the price of losing will be more than just the plaintiff’s pride.
Inspectors Deserve Protection, Not Punishment
When it comes to agreements, most clients are easy to work with, but there are always going to be exceptions: clients who find what they perceive to be problems and then get “trigger-happy” with the idea of bringing claims against you.
OREP recognizes that most inspectors are experts in properties, not in legalese. That’s why every OREP Member receives access to attorney-prepared pre-inspection agreements that incorporate protective clauses like the Attorney’s Fees provision. These documents are reviewed by legal professionals and tailored to the inspection industry’s specific risks. OREP equips Members with agreements so they never start from scratch. They’re shielded by language that anticipates real-world scenarios and provides a legal framework for resolution.
The Attorney’s Fees clause is not an afterthought. It’s a strategic safeguard, and not only that, it sets the tone for the entire transaction, creating a fair playing field and discouraging predatory claims. An Attorney’s Fees clause reinforces professional boundaries while ensuring inspectors aren’t financially ruined by baseless allegations. In tandem with the Limitation of Liability clause and other important provisions, it becomes a robust insurance policy against legal risk.
While the limitation of liability is not enforceable in at least four or five states nationwide, we are not aware of a state that rejects the Attorney’s Fees clause on its face. Reputation and liability are everything to a home inspector, and those are constantly on the line. Inspectors need the shield of pre-inspection legal understandings. The Attorney’s Fees clause is one of its sharpest edges on that shield. Stay safe out there!
About the Author
Isaac Peck is the Publisher of Working RE magazine and the Senior Broker and President of OREP.org, a leading provider of E&O insurance for savvy professionals in 50 states and DC. Over 14,000 professionals trust OREP for their E&O and liability insurance. Isaac received his master’s degree in accounting at San Diego State University. Reach Isaac at isaac@orep.org or (888) 347-5273. CA License #4116465.
Published by OREP Insurance Services, LLC. Calif. License #0K99465