Seller & Home Inspector Liability

amw33629March 10, 2009

We purchased our home 3 years ago. We hired a home inspector who found knob & tube wiring in our attic. The Seller signed an addendum to our purchase and sale contract for the home confirming that she would have a licensed electrician replace ALL knob & tube wiring. We had our inspector re-inspect the property and he indicated that "all visible and accessible knob & tube wiring" had been removed.

A month ago, we began a kitchen rennovation. Two days into the rennovation, our GC found active knob & tube wiring. We subsequently hired an electrician who found active knob & tube wiring throughout the entire house.

We feel that it is clear that the Seller is liable for our damages ($11,500 to replace the knob & tube wiring). While it seems the electrician she hired did not complete the work agreed upon and, in some cases, even seems to have concealed some of the knob & tube, we did not hire the electrician, the Seller did. Regardless, the Seller agreed to replace all knob & tube wiring and this clearly was not done. It seems to be a clear breach of contract.

On the other hand, our home inspector only found the knob & tube wiring in the attic. However it was behind EVERY light switch plate, light fixture and outlet. It seems they bear some liability as well. They also certified that the accessible and visible knob & tube had been replaced when, in fact, it had not. They are governed by ASHI standards which require them to inspect "a representative number of installed lighting fixtures, switches, and receptacles."

Does anyone have insight or experience with a situation like this - discovering home repairs after closing that were part of the purchase and sale contract?

Thank you!

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I dunno- my inspectors contract was pretty specific in that he only inspected what he could see- "all visible" meant exactly that. There was no taking off wall plates or anything like that.

But I'm nobody- I can't wait to hear what the knowledgeable folks say on this.

Best of luck to you.

    Bookmark   March 10, 2009 at 1:57PM
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Our home inspector did take off a few wall plates. This house is relatively new, so there wasn't much in the way of electrical problems. He did miss a major plumbing issue, though.

However, his contract was pretty bullet proof (in his favor). Essentially it said he only inspected what he could see, and being human, might miss stuff. You could drive a whole fleet of trucks through that loop hole.

I imagine most of them have similar contracts.

You probably will need a lawyer to go after the seller, for advice, if nothing else. The seller may be able to recover from the electrician.

You should check your state's statute of limitations immediately, just in case you are close to running out of time. Here, it is seven years for real estate contract issues, one year for most everything else. Every state is different. It might be a lot shorter in your location.

Good luck with it.

    Bookmark   March 10, 2009 at 3:58PM
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Thank you. We are in Florida. We have consulted with a real estate attorney who most definitely thinks the Seller is liable for all of our damages. He also thinks there is some shared liability with our home inspector. We are still within the statute of limitations.

It does seem that the home inspectors have a lot of protection from liability. But it also seems that if the argument is presented clearly, some judges will rule against the inspectors.

We have contacted the Seller and inspector and are hoping for settlement. However, since it is a substantial amount of money, we are confident we may have a good fight on our hands which may lead to having to file a suit.

I guess I was hoping to find out if anyone has had a similar experience with a Seller and/or inspector and what the outcome was. Or if anyone has additional information/insight into this situation.

    Bookmark   March 10, 2009 at 4:20PM
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You have a few problems with this situation.

First, from what you have described, the existence of K&T when it was supposed to all have been replaced by contractual agreement would indicate that the seller could indeed be in violation of that contract.

However, the following questions must be answered in order to determine if indeed the sellers violated the contract as it was written:

1) Exactly how is the contract worded? Did they agree to replace the K&T that was found during the inspection, or ALL of the K&T throughout the house, including that which was/is concealed behind walls?

2) In most municipalities, such a job requires a permit...and a licensed electrician must perform the work. Was the electrician licensed? Did the seller provide the permit to you as well as evidence of a final inspection by a municipal code official? If not..why not?

If the contract does not specify that ALL the wiring be replaced, but has vague language such as the knob and tube found during inspection will be replaced, then it would seem that they fulfilled the contract.

If the town does require permits and approvals, and your attorney did not require that they provide copies of the permit and final inspection approval from the town code official, there is a problem with the attorney as well.

Now for the home inspector. Many home inspectors will not agree to return to inspect a contractors work, as such an inspection is not part of a home inspection, as usually (as is the case here) there is no way to tell for sure if the job was done correctly and completely. Nevertheless, many HI's do offer this as a "service" (and I use that term VERY loosely because this turns out to be more of a problem than a service in most cases) as it provides an extra stream of income for the HI.

That said, HIÂs are not required to dismantle anything...including taking off switch plates, to view what may be behind those switch plates. However, any HI who is going to "sell" the service of checking to see if a home improvement was done and completed properly should do everything in his power to provide a correct assessment...which means going above and beyond what is required in a home inspection.

That brings us to the HI's pre-inspection agreement. Did the agreement state that he would check the entire house to certify that ALL the wiring was changed? I doubt this, as that would be impossible without opening walls. That saidÂÂexactly what did the HI agreement say? Did it state that he would remove all plates to check the wiring? If so, how was his report phrased? Did he document each outlet and switch per room that he checked? Did he include digital photos to document his findings?

A lot here hinges on what definition the HI was using for visible and accessible, because the actual definition of that phrase (in accordance with nationally accepted HI standards) means whatever is visible and accessible, without dismantling anything.
AlsoÂdid your HI carry errors and omissions insurance in order that you have recourse if it is determined that he erred or omitted?

Last but not least, membership in ASHI (or any professional organization) is meaningless to the consumer, as membership is based upon the honor system. ASHI has no way to know who is doing a good job or notÂand even when complaints are received, the most that happens is a wrist slap.

If your state licenses the profession, those regs trump ASHI as they are law. Of course, most states have little ability to monitor who is behaving ÂÂbut at least when a complaint is lodged they do have the ability to impose finesÂ.and even revoke the license. In what state do you live?

More info with regard to the above will enable me to give you a more definitive picture of whether or not it would be worth your while to pursue from a legal standpoint.

    Bookmark   March 10, 2009 at 4:58PM
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logic - to answer your questions:

The addendum the Seller signed required her to replace ALL knob and tube. There were no qualifiers as to location of knob & tube or that it even be active. It also required that she hire a licensed electrician. We have subsequently determined that the electrician she hired represented himself as fully licensed but was not. Obviously the electrician seems to have committed several acts of fraud, but it is our position that the Seller would need to recover damages from him after we recover from the Seller.

We did not have an attorney associated with our home purchase. We had a real estate agent.

Unfortunately, the inspector's contract referenced that he would follow ASHI standards which is as you mentioned - visible and accessible. We agree that the definition of visible and accessible seems debatable. The inspector did not provide us with any photos of any kind.

    Bookmark   March 10, 2009 at 5:11PM
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Since the HI found knob and tube in the attic, there was a high probability that it existed elsewhere (likely pretty much everywhere) in the house. His report should have warned of that, in my opinion.

If it did, I can't see how he could conceivably be on the hook.

    Bookmark   March 10, 2009 at 5:25PM
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amw33629, it does seem as if the seller is indeed on the hook; however, I'm still curious about the permits and final approvals. Does your town require them? If so, and your REA agent did not advise you to obtain them from the seller, it seems that the REA bears liability as well, as the agent handled the transaction.

Visible and accesible is only as debatable as the HI contract or agreement states in respect to the limitations.

What does the HI contract or agreement state with regard to what he will and will not be able to inspect in terms of determining if ALL K&T was replaced?

    Bookmark   March 10, 2009 at 5:42PM
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We are in Florida. Yes, permits are required for the type of electrical work performed in this situation. We were first time home buyers and were not advised to ask for the permits. Regardless, I would not think it would be our burden to look over the Seller's shoulder to make sure she was complying with the law. She agreed contractually to hire a licensed electrician to perform the work - any licensed electrician would be knowledgeable of the codes and laws and therefore would need to pull a permit.

    Bookmark   March 10, 2009 at 6:47PM
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If it was your home at the time the work was done, you may have some liability if a permit wasn't pulled. If you hadn't closed at the time, it would not be your responsibility at all.

    Bookmark   March 11, 2009 at 8:46AM
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Thank you. It was not our home when the work was done. The Seller had the electrical work done prior to our closing.

    Bookmark   March 11, 2009 at 9:42AM
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The reason I ask about permits is twofold:

1) IF the REA had done his/her job and advised you (especially as you were first time homebuyers) to request copies of the permits and final approvals you would have:

a) Discovered that most of the wiring was NOT replaced, BEFORE closing, giving you immediate recourse from the seller.

b) It would have provided assurance that the work was performed in accordance with code. If the work was not done in accordance with code, there is a higher risk of malfunction that could result in an electrical fire. As your property would be damaged, and you or someone else could be injured (or God forbid, killed), it is VERY important for a potential buyer to take steps to make certain that any work done by the seller or the sellers contractor was done correctly. Your REA most assuredly knows this...and was derelict in their duty to not advise you of such.

2) Once you buy a house, anything that the seller may have done incorrectly now becomes your financial problem to fix and/or repair. Of course you can sue the seller...but that does not guarantee that you will win. It also does not guarantee that even if you do, the seller will have the ability to pay. It does not guarantee that you can even find the seller. Same for the contractor.
And...unless your attorney will work on contingency, you are out the fees. does not mitigate the aggravation of having to have the whole house rewired while you are living in the house.

In addition, some townships will fine a homeowner for work performed without permits and approvals, even if it was the fault of the previous owner or contractor. In addition, they may require tear out of any concealed areas in order to make sure the work was done to code. This may not apply in your case...but it is further reason that the person responsible for handling your closing is obligated to practice due diligence in informing you of this information.

Last but not least, some insurance companies will not insure a home with Knob and tube. Some will...but only with certification from a licensed electrician that it is in perfect condition. As you have neitherand as your insurance company THINKS it has insured a house with all new wiring, you hopefully won't have a reason to make a claim until it is they could deny the claim if they so choose.

Buying a home is a huge responsibility. That is why IMO is best to utilize the services of a good reputable RE attorney in the he/she has no personal financial gain if you buy the home or not. And...REA's are not attorneys...therefore it is more likely that something like this will happen if they are allowed to handle the deal.

Bottom line, when buying, it is always best to realize that the sellers lack of due diligence or honesty will become your problem as soon as you sign on the bottom line, so it is in your best interests to require full documentation of any work the seller may claim to have you are the one left holding the bag otherwise.

    Bookmark   March 11, 2009 at 11:33AM
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Thank you, logic. I agree with your points about the permit.

We have already located and contacted the Seller. She still lives locally and we have reason to believe she has the funds to pay if we are successful in our suit. My husband is actually a corporate attorney, so his firm is representing us on a pro bono basis.

I'm not concerned about being fined at this point for the work because the electrician we hired that just completed the re-wire pulled a permit.

You're correct - our homeowners would not cover knob & tube wiring. That's where the inspector comes back into the picture - we hired him for the reinspection specifically to write a letter to our homeowners certifying that the knob & tube was gone which he did.

You make all good points and I agree with them all. I'm just hoping to get information now on our likelihood to recover damages from the Seller and/or inspector.

Thank you!

    Bookmark   March 11, 2009 at 11:57AM
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amw33629: "You're correct - our homeowners would not cover knob & tube wiring. That's where the inspector comes back into the picture - we hired him for the reinspection specifically to write a letter to our homeowners certifying that the knob & tube was gone which he did."

I'm glad to hear that it seems as if you are well positioned to recover the costs involved without incurring costs.

That said, your HI is an idiot. I am not exactly surprised that he was foolish enough to write such a letter when he clearly had no way to know if the was telling the truth...or not....especially since you were specifically asking for this for an insurance purpose.

There have been discussions on this forum by those who believe that when an HI steps beyond the parameter of the profession that it is always a good thing as he is going above and beyond in the best interests of his client.

However, here is a classic example of how this backfires on both the buyer AND the HI in doing so, when the HI does not perform a thorough job...and/or does not have the training, education or experience to perform the job properly.

That said, the majority of the HI's whom I know will not certify anything for an insurance company. The report is for the buyers use only. They advise the buyer to hire a licensed professional (in this case an electrician) to perform the inspection and provide certification.

I hope he carries E&O insurance; he is going to need it once you pursue your claim.

Best wishes.

P.S. Brickeyee? If you are reading this, note that the insurance company would not insure with the K&T.

    Bookmark   March 11, 2009 at 1:05PM
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"P.S. Brickeyee? If you are reading this, note that the insurance company would not insure with the K&T. "

Time to complain to the state insurance commission.
K&T is compliant wit the NEC.

    Bookmark   March 11, 2009 at 2:41PM
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"P.S. Brickeyee? If you are reading this, note that the insurance company would not insure with the K&T."

And how did you divine this?
All I see is an inspection and a contract addendum to replace the K&T.

    Bookmark   March 11, 2009 at 2:48PM
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Just a reminder that inspectors are not obliged (certainly not in Canada anyhow) to pass on things not readily "visible" - they can't be expected to tear down the whole house to see what's hidden in walls, after all, only to check what's checkable and recommend either doable fixes or further inspection by e.g. engineers, or electricians, etc., people who can go further into such systems to check out their condition and suitability.

    Bookmark   March 11, 2009 at 4:12PM
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Brickeyee: "And how did you divine this?
All I see is an inspection and a contract addendum to replace the K&T."

Then maybe it is time for some readers. The below is a quote from the OP.

amw33629: "You're correct - our homeowners would not cover knob & tube wiring."

    Bookmark   March 11, 2009 at 4:26PM
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Brickeyee, can you direct me to any documentation that states that insurer's MUST insure everything that is compliant with NEC?

After all, they can drop you for the slightest I'm curious as to how you came to know that they have no right to refuse insurance under any circumstance that they may choose.


    Bookmark   March 11, 2009 at 4:31PM
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Talk to the state insurance commision.
The one in Virginia is pretty nasty to the iunsurers if they expect to do busniess in the state.

Raise it as a 'red lining' issue to avoid insuring in certain locations and watch what happens.

Allowing insurance companies to decide what wiring methods are acceptable is not going to sit well with the insurance commission.

K&T is still listed in the NEC (the law in many places that have adopted it) as an acceptable wiring method.
If the insurance company thinks it is a significant risk they should lobby the National Fire Protection Association to have the NEC revised.
Of course they would have to provide verifiable evidence of a problem.

K&T is NOT a risk unless it has been modified or over-fused.

    Bookmark   March 11, 2009 at 4:52PM
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The Seller's attorney just called my husband and said the Seller is prepared to pay us in full for the extent of the damages!!!

    Bookmark   March 11, 2009 at 5:21PM
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amw33629, tht is wonderful! Congratulations!

Brickeyee, as usual, you did not answer my question. That said, since a number of insurance companies are refusing to cover homes with K&T, and others are charging sky high premiums to do so, the insurance commissions in various states are obviously allowing it...with VA as an exception....maybe. Until I see documentation of that, I tend to think otherwise.

And yes, K&T is not a risk unless its been modified or overfused......but also if its in poor, deteriorating condition. As the lions share of existing K&T have at least one of the above as the characteristic, it is easy to see why an insurer would not want the risk.

Throw in some insulation over the K&T that fits any of the above defects, and you have a hazard. And, as far as I know, even NEC agrees with that one.

That said, NEC is IMO way behind in updating their position on this ..considering the electrical demands of today's well as the fact that some K&T is close to 100 years old.

    Bookmark   March 11, 2009 at 7:22PM
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Most HI contracts give them an out...they are only liable for the price of the inspection no matter what. That is why home inspections are so cheap. If they were liable for everything they could possibly miss it would be like an insurance policy and would cost thousands of dollars.

    Bookmark   March 11, 2009 at 8:58PM
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Thank you, logic. Also, just to respond to your questions and comments you are posing regarding the insurance coverage for K&T...we bought our house 3 1/2 years ago. We're in FL. Our homeowners provider would not insure K&T and we were told that no insurance provider would cover K&T.

I feel like a K&T hazard expert after this ordeal. You are absolutely correct that splicing into K&T is not the only hazard. K&T was used decades ago - in our case, in 1924 - therefore, over time rodents and other factors have eaten away at the wiring insulation which poses a serious hazard. Also, as you pointed out, we had a lot of K&T in our attic and recently added insulation (before we knew there was K&T still in the attic). Serious hazard! It's almost a given that since K&T hasn't been used in decades that it has either been spliced into at some point or some of the insulation has eroded and/or been compromised by rodents.

    Bookmark   March 11, 2009 at 10:56PM
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And there you have it.

Best wishes and much enjoyment going forward in your newly rewired home. :-)

    Bookmark   March 12, 2009 at 12:13PM
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"...over time rodents and other factors have eaten away at the wiring insulation which poses a serious hazard."

Not really since the wires are run separately and in normally concealed locations.

    Bookmark   March 12, 2009 at 8:59PM
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I saw for myself where rodents had chewed completely through the K&T insulation. Also, if you look online, you'll find almost every website that discusses K&T mentions that as a hazard.

    Bookmark   March 13, 2009 at 9:42AM
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brickeyee, until you have personally inspect and analyze every home with K&T, points that you attmept to make such as the above are moot.

But you know that...don't you? ;-)

    Bookmark   March 13, 2009 at 11:23AM
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Okay, here goes - What is K&T?


    Bookmark   March 13, 2009 at 11:53PM
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Jane - It is knob and tube wiring.

    Bookmark   March 14, 2009 at 11:08AM
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Thanks Lyfia, but what is it? Some different type of wiring?
How would one know if they have it. My house was built in the 60's.


    Bookmark   March 14, 2009 at 10:08PM
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Jane...K&T was installed primarily before the 50's...but that does not mean that it was not installed thereafter.

Below is a link to what to look for to determine if you have K&T. Bear in mind that the visible portions may have been updated, with K&T still in the walls. In that event its best to hire a licensed electrician to determine if K&T is present..and "live" in the respect that it is still a functioning part of your electrical system.

You may have aluminum wiring as it was popular in the 60's and 70's as a less expensive alternative to copper.
There have been problems with this as well...but there are methods to mitigate the problems. Here is the URL for that website:

Hope this helps.

    Bookmark   March 15, 2009 at 12:46AM
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Logic, K&T wiring in NJ (northern, anyway)was usually installed before 1930- in my experience, and I see it a few times a week.

"Not really since the wires are run separately and in normally concealed locations."

Unless the wires are crossing/touching, in contact with pipes, metal ducts or foil insulation facing. Seen all the above.

    Bookmark   March 15, 2009 at 3:31PM
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