Dear Dave,
We have our home under contract, and during the inspection, the buyer’s inspector reported four major issues involving heating, cooling, plumbing, and sewer. One glaring error: they mistook a sprinkler valve for a sewer service cap and claimed a possible “active sewer leak”—nowhere near the actual sewer line. We’re worried the buyers may walk away because of this.
I was shocked to learn that home inspectors in Colorado aren’t licensed by the state. It seems ridiculous that someone without state credentials could derail a sale. Do inspectors typically carry Errors & Omissions insurance? And what’s your experience with sellers taking legal action after a faulty report ruins a sale?
– Shawn, Loma
Shawn,
Ugh… I hate this for you. Unfortunately, I’ve seen this story unfold too many times, in varying forms. I’m sorry this is happening to you and your family. I’m sure your first question was, “How is this possible?” followed by total frustration and disbelief.
Let’s start with the basics. You're right—Colorado does not require home inspectors to be licensed. No standardized training, no state oversight. While many local inspectors do great work, some lose sight of their true role: to observe, document, and advise—not speculate or misidentify.
The bigger problem? Inspectors, like all of us, can speak too quickly and form conclusions before fully understanding what they’re seeing. And when an inspector blurts out an incorrect statement—especially something dramatic—it can scare buyers and have lasting consequences. A good rule of thumb (for all of us): if you don’t know, don’t guess. Say you’ll find out.
That brings us to trust. Buyers place enormous trust in their home inspector. When they say something, especially something concerning, it’s often treated like gospel. Many buyers—especially first-timers—don’t question it. Unfortunately, I believe most inspectors don’t realize the weight their words carry. Their “opinion” can sink a sale, and they may never know the ripple effect they caused.
Now, let’s talk about insurance. Many inspectors carry both E&O (Errors & Omissions) and general liability insurance. E&O typically covers things they miss or mistakenly report that result in damage down the road—say, failing to note a faulty electrical panel that later causes a fire. General liability usually covers injuries that happen during the inspection.
However, home inspections are “visual” only. They don’t cover hidden issues—like pipes inside walls or mold behind tile. So while insurance is there, its coverage can be limited depending on the situation.
As for suing an inspector? I haven’t personally worked with a seller who successfully sued one, although I’ve had many threaten to. Legal action is tough, expensive, and often not worth the battle—unless the inspector's mistake was both clear-cut and catastrophic.
Shawn, I’m truly sorry for what you’re going through. Hopefully, cooler heads prevail and the deal survives. But even if it doesn’t, trust that something better may be around the corner. Control what you can. The rest? Sometimes, it really is meant to be—even if we don’t know why in the moment.
Dave Kimbrough
The Kimbrough Team
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