Just about 2-3 times a week I get a contact from a client who says, "My relator gave me a list of inspectors and said that it was against the Law for her to refer one, so I am contacting everyone on the list," or "I asked my realtor for a home inspection referral and she said it was against the Law for her to refer anyone, so I found you on the internet," or I will hear from a realtor that "It is against the Law for me to refer a single home inspector" or "it is against the Law for me to refer home inspectors", etc.
All of these statements have one thing in common: they are all inaccurate.
Let me be very frank, then more detailed: there are absolutely no Washington State Laws which say or suggest that a Realtor can not or should not refer a home inspector.
Now to the detail...
Not only are there no laws in the State of Washington prohibbiting a realtor from referring home inspectors or even a single home inspector, but, rather there are laws which assume that it is done as common practice.
In January of 2009 Washington State enacted a Law which states that the Realtor must disclose "business" or "familial" relationships with their clients when referring a home inspector. Catch that? The law assumes that a referral is given: it just says that the Realtor must disclose "business" or "familial" relationships. (see: RCW 18.85.035 and WAC 308-124C-050)
Now, what is a "familial" relationship? That is simple: it is one established when one has a family relationship with the home inspector, or vice versa. If the home inspector is the agent's husband, cousin, or brother-in-law, that relationship must be disclosed to the consumer.
So, what about this "business" relationship? When the Law came out I immediately (within days... and I still have the emails...) contacted the Department of Licensing (DOL): Real Estate Division stating that they needed to define what constituted a "business relationship" requireing disclosure or that they would have offices or associations establishing bylaws or in-house policies that were not intended by the (actual) Law itself: namely, you would have offices or associations saying that "if you have referred a home inspector in the past you must disclose this because it is a business relationship". Immediately I received an email back from the DOL Real Estate Division that said business relationships were not established by the mere presence of past referrals to the home inspector. Rather, the intent of the Law was to have disclosure when the agent and inspector had worked together in past business (say the inspector was at one time the agent's partner and did real estate together), or if the agent had listed the inspector's house for a real estate transaction, or the agent had sold the home inspector his house, or the home inspector inspected the agent's house when the agent bought a house, etc. Any way you cut it, "business relationship" was not and is not having referred a home inspector in the past.
I thought that was all fine and well, but I still contended that if the DOL didn't come out with a written clarification you would have offices establishing in-house policies and bylaws that were not intended by the DOL. And many offices in fact did. For example one office has the agents bring up this disclosure form to the client and I have seen the agent say to the buyer when they are going over this paper, "I am required to notify you that I have a business relationship with the inspector because I have referred them in the past." Nope. That is not correct. That is not a "business relationship", per the DOL.
In the Spring/Summary DOL Real Estate Division newsletter they came out with a written statement saying that "business relationships" were not constituted by the mere presence of past referrals. If you would like a copy of it, please email me at nickelsenhomeinspections(at)gmail(dot)com and I will send it to you. I also have Washington State approved real estate continuing education class notes (the actual notes in PDF format) which say the same thing (again, email me and I would be happy to provide you with a copy).
So, the State assumes referrals. You must disclose family or business relationships, but business relationships are not established by the mere presence of past referrals.
But the misnomers continue...
Here is another common one, "Washington Law requires that I give out three business cards or three names of inspectors." Nope. Again, there are no Washington State Laws which say this. None whatsoever. There are offices in this area that have the Realtors fill out these forms with three inspection companies on it that they give to the client so that they can satisfy these "law requirements". In fact, in one office the agent will not get paid unless they turn in the paper showing that they referred three inspectors. Let me be clear: there is no law in the State of Washington that says the agent must refer three inspectors. None at all. None whatsoever. Now... can an office or an association say that this is their "policy"? Sure. But, call a cow a "cow" and a horse a "horse": don't say that it is the "law" when it isn't "the law".
So...
1. No Law in the State of Washington prohibits the Realtor from referring home inspectors.
2. No Law in the State of Washington prohibits the Realtor from referring a single home inspector.
3. No Law in the State of Wasington says that the realtro must refer three home inspectors.
4. No Law in the State of Washington says that the realtor must disclose that they have a business relationship with the home inspector they referred simply beacuse they have referred them in the past.
5. If an agent has worked directly with a home inspector in the past they must disclose this.
6. If an agent has hired a home inspector in the past for their own home inspection, etc., they must disclose this.
7. If an agent has worked for a home inspector before, either selling their home or selling them a home, they must disclose this.
Questions class?
UPDATE:
One person said that Form 41D is a clear indication that Washington State in fact DOES have a Law requiring that realtors disclose if they have worked with the inspector in the past, under the pretence that this is a "business relationship", and, this person, also said that the form has 3 inspectors slots, thus requiring that three inspectors be referred. Response: The form in question is http://www.larspeterson.com/agentnorthwest/nwmlsforms/Form41D.pdf . This is a NWMLS Form, not Washington State Law. Second, Form 41D may well have been written in response to the Laws in question (RCW 18.85.035 and WAC 308-124C-050), that doesn't mean that it is 1) accurate, or 2) reflects actual "Law". That said, a Realtor may very well need to follow their "office policies" or "association by-laws", such as those of NWMLS. That said, Form 41D doesn't say "what" is a business relationship, though the STATE HAS. As such, the form could be left EMPTY (by Law). Further, the three slots do NOT mean that you must refer three inspectors: it is just three slots so that if you want to refer three inspectors, you have them. It doesn't preclude one from referring 400 inspectors, though that would be a b#### to have to write out! NOW, again, I must emphasize that an individual realtor may belong to an association or work at an office that requires the agent to refer three inspectors and disclose that they have refered the inspector in the past. My point is simple: there is no "law" in the State of Washington that says a Realtor MUST refer three inspectors, and there is no "law" in the State of Washington that says a Realtor has to disclose as a "business relationship" a home inspector they have simply referred in the past.
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