Home Inspection Liability

Faulty Furnaces and Inspection Issues.

It’s always a good idea to get a professional building inspector to assess any property you’d like to buy. But it doesn’t guarantee 100% that you won’t have problems with your real estate purchase! Whose responsibility is it if there are issues that the inspector doesn’t find? The following is a story about a client, an inspection, and a rusty old furnace.

My client hired a reputable home inspector to check a potential house purchase in Calgary, Alberta. After what appeared to be a thorough inspection, which included the 17-year-old furnace, my client decided to purchase the 1960 bungalow.

Days before occupancy, the natural gas furnace died, apparently from a rusted out heat exchanger. My client thought the home inspector should have caught this. The two estimates for repair were $4,000 and $10,000.

My client was under the impression that home inspectors offered warranties against such issues. He wanted to know if there was any legal recourse he could pursue, either against the home inspector or the sellers. My client also asked how he could protect himself from such an occurrence on future purchases.

My response was that the building inspection industry has learned how to draft pretty tight contracts so there was likely no help there. I commented that, “If part of the contract was to inspect the furnace, did that inspection include or should it have included as part of what any standard inspection would include, a look at the heat exchanger? Why? Because it takes years for a heat exchanger to rust through. If it was rusted through, the inspector should have caught it.” I also suggested a 2nd opinion from another inspector, the gas company, or a plumbing and heating specialist.

As far as seller liability, likely the seller had none under the doctrine of ‘caveat emptor,’ translated as ‘buyer beware.’

For the future, I suggested that my client be very sure about what the inspection report covers and what it doesn’t. Older properties have more potential problems, and so additional or specialized inspections might be required.

My client followed up with me in a couple of days and said the story had become a little more convoluted…

To add some details, after the furnace in the new home stopped operating, two inspections and quotes were obtained from two separate furnace repair companies both claiming to have the best service, equipment, etc. Both companies said that there were rust holes in the heat exchanger of the admittedly antique 17-year-old furnace—the same one that was given a clean bill of health by a reputable home inspector just 60 days prior.

In the meantime, the floor re-finishers were giving my client an earful about how they could not continue the resurfacing job on the main floor without some heat. And the moving truck was coming to move my client and his family into the house in just three days.

Just as my client was about to commit to $4,000+ worth of new furnace and associated extras, he finally got in contact with the original home inspector.

Although the home inspector was unable to fully inspect the heat exchanger at the time of the original inspection (which he was not obliged to do as part of his inspection and a review of the inspection contract does specify this limitation) he was convinced that the diagnosis received from the two companies was suspect. The home inspector made several suggestions of what else might be wrong with the furnace, including giving my client a referral to a reputable furnace company.

That third company was brought in; they cleaned the dirty pilot light, recommended a more thorough cleaning sometime soon, and within 20 minutes were gone, leaving only a small bill, a resuscitated furnace, and a thankful homebuyer.

My client believes it was a classic case of sales fraud. The weather had been unseasonably warm and companies were out trying to push new furnaces. Some companies are unscrupulous. One repair estimate received was $10,000, and my client was not convinced that the repairman that inspected the furnace was properly licensed.

In the end, my client feels much, much better that, although he had to pay for service calls from three furnace companies, he’s still ahead of the game because he wasn’t swindled for un-necessary repairs or replacement. He also learned that a little maintenance can save your wallet!

How things had changed. My client went from looking to blame the home inspector for his expensive predicament, to realizing that he shouldn’t blame the inspector for questions he wasn’t qualified or contractually obligated to answer in the first place. Although the home inspector was a well-informed and experienced technician, he was not a furnace repairman.

Lessons learned

  1. Read the fine print:
    Home inspectors have very tightly drafted contracts that limit their liability. Read the contract carefully to see what you are actually getting and what, if anything, is under warranty.
  2. Don’t rely on a generalist when you need a specialist:
    If you want information and an inspection about the furnace in your next property, make sure you hire a reputable, licensed furnace company. You can also check with your local natural gas provider. They sometimes provide limited inspection service.
  3. Buyer beware:
    Sellers have limited liability because of the doctrine of caveat emptor.


If you’re buying or selling real estate in Alberta, the lawyers at RMLO Law LLP can help. Get in touch now!

House/Home Inspection” image by Mark Moz used under CC Attribution 2.0 Generic.