Present:    All the Justices

KENNETH R. ASH, SR. AND
 JOYCE A. ASH
                                             OPINION BY
v.   Record No. 972711            JUSTICE LAWRENCE L. KOONTZ, JR.
                                          November 6, 1998
ALL STAR LAWN AND
 PEST CONTROL, INC.


           FROM THE CIRCUIT COURT OF THE CITY OF PORTSMOUTH
                      James A. Cales, Jr., Judge

       In this appeal, we consider whether the trial court

properly ruled that purchasers of real property could not

recover under a claim of breach of contract against the

inspection company for failure to provide an adequate termite

and moisture damage report on behalf of the seller as required

as a condition of the sale of the property.

       Under well-settled principles, we recount only those facts

necessary to our resolution of the appeal.    On January 3, 1994,

Kenneth R. Ash, Sr. and Joyce A. Ash (the Ashes) completed the

purchase of a home in Portsmouth.    The contract of sale required

the Ashes to take possession of the home “as is.”    However, as a

condition of the sale, the seller agreed to provide the Ashes

with

       an approved VA/FHA wood destroying insect report from
       a licensed pest control operator prior to Settlement
       Date showing the Property’s principal dwelling and
       garage to be free of visible wood destroying insect
       infestation with no visible unrepaired damage from
       said infestation. Said report shall also indicate
       that readily accessible areas of the foundation and
     understructure including crawl space, sills, joists,
     subflooring and substructure support timbers to be
     free of standing water and/or visible moisture damage.
     Cost of inspection and required treatment and repairs
     shall be paid by Seller.

     The seller contracted with All Star Lawn and Pest Control,

Inc. (All Star) to provide this inspection report.   Jeffrey C.

Stuart, owner of All Star and a licensed pest control inspector,

conducted an inspection of the home on December 18, 1993 and

completed a standard form reporting the condition of the home.

In that report, Stuart noted that he had found and repaired

existing moisture damage in two locations outside the home.

     Section 7 of the form Stuart used to make his report

included a pre-printed statement that the “[a]ttic, interior of

walls, under floor coverings and behind appliances” were

inaccessible areas and obstructions and, thus, were not subject

to inspection.   In addition to the areas listed in the printed

portion of section 7, a handwritten notation made by Stuart

indicated that areas of the “Crawl Space - Behind Air Ducts”

were also inaccessible.

     Section 11 of the form consisted of four disclosures made

by All Star, the first three of which are relevant to this

appeal:

     A. The inspection covered the readily accessible areas
     of the property, including attics and crawl spaces
     which permit entry. Special attention was given to
     those accessible areas which experience has shown to
     be particularly susceptible to attack by wood


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     destroying insects. Probing and/or sounding of those
     areas and other visible accessible wood members
     showing evidence of infestation was performed.

     B. The inspection did not include areas which were
     obstructed or inaccessible at the time of inspection
     . . . .

     C. This is not a structural damage report. Neither is
     this a warranty as to absence of wood destroying
     insects.

     Section 10 of the form provided space for the inspector to

make additional comments.   In that section, Stuart noted that

there was evidence of treated and repaired termite damage, but

did not identify the location where this was observed.   He

further indicated that there was “no visible structural moisture

damage in crawl space.”   Stuart charged the seller $1,010 for

his services, which included a $35 fee for the inspection and

$975 for repairing and repainting the areas where unrepaired

moisture damage had been observed.

     The crawl space was 18 inches in height.    Portions of it

were obstructed by sheet metal air ducts suspended between the

floor joists and the ground.   Stuart subsequently testified that

these areas were inaccessible to him because “I’m six-one and at

the time I was 260 pounds.”    Stuart further testified that he

attempted to see beyond the air ducts and tested the accessible

area by probing the wood with a claw hammer.

     Stuart conceded that he was able to get 10 feet into the

crawl space, and that he attempted to look beyond the air ducts


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using a flashlight.   He maintained that he did not observe any

unrepaired moisture or termite damage anywhere in the crawl

space.   The Ashes introduced a photograph of the area of the

crawl space in front of the air ducts that shows a screwdriver

pressed into a floor joist as a probe to establish the existence

of moisture damage.

     The Ashes signed the purchasers’ acknowledgement at the

bottom of the form on the day of settlement at the office of the

closing attorney.   At trial, Kenneth Ash testified that he had

“no recollection” of reading All Star’s report at closing,

saying “[w]e were just told [to] sign the papers.   We [were]

going to be here all night if you had to read everyone of them.”

Joyce Ash testified that she would not have signed the report if

she “had been told there was anything wrong with it.”

     In September 1994, the Ashes employed Stuart M. Zenzel, a

civil engineer and licensed pest control inspector, to reinspect

the home.   Zenzel testified that upon entering the crawl space

he was able to observe unrepaired moisture damage in the area in

front of the air ducts.   This was the area that Stuart had

conceded he had been able to enter and inspect at the time of

his inspection.   Zenzel, who is of a slighter build than Stuart,

was able to move beyond the air ducts to the back areas of the

crawl space and discovered significant termite and moisture

damage in those areas.    Zenzel further testified that all of the


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damage he discovered was not of recent origin and would have

been visible at the time of Stuart’s inspection.

     As a result of Zenzel’s report, the Ashes contracted with

Wright Construction Company, Inc. for a structural evaluation

and estimate for cost of repairs to the home.   Joseph A.

Fosnock, an estimator for Wright Construction, confirmed the

existence of the damage discovered by Zenzel and estimated the

cost of repair at $16,900.

     On January 23, 1995, the Ashes filed a motion for judgment

against All Star seeking damages of $18,500.    In that pleading,

the Ashes alleged that they were third-party beneficiaries of

the contract between the seller and All Star.

     The matter was heard by the trial court in a bench trial on

September 29, 1997.   At the conclusion of all the evidence, the

trial court ruled that All Star’s report “clearly indicated

[Stuart] couldn’t get to every place, that every place was not

read[ily] accessible.”   Accordingly, the court determined that

the Ashes were on notice that the report was incomplete and

could have required a further inspection.   Noting that “[c]aveat

emptor still applies in Virginia,” the court entered judgment in

favor of All Star.    We awarded the Ashes an appeal.

     We begin by noting that although All Star initially

contested the Ashes’ claim of being third-party beneficiaries of

the contract between the seller and All Star, that issue was not


                                  5
raised at trial.   During oral argument on appeal, All Star

conceded that it did not challenge that assertion at trial or

assign cross-error for purposes of raising the issue on appeal.

Accordingly, for purposes of this appeal, we accept that the

Ashes were intended third-party beneficiaries of the contract.

     The Ashes assert that the trial court erred in ruling that

All Star could insulate itself from liability by disclaiming on

the report that certain areas were accessible.   In conjunction

with this argument, the Ashes further assert that the trial

court erred in construing the statements in the report in favor

of All Star.

     We agree with the Ashes that merely making a broad and

generalized disclaimer on a termite inspection report following

a casual or defective inspection does not automatically insulate

the inspector from contract liability.   To hold otherwise would

render the report useless.   The inspector, in preparing the

report, undertakes the obligation to report clearly and

effectively the existence of damage to the structure inspected.

See Baird v. Dodson Bros. Exterminating, 217 Va. 745, 749, 232

S.E.2d 770, 773 (1977).   Inherent in that obligation is the

corresponding duty of the inspector to explain clearly and

effectively any impediments encountered in making a thorough

inspection through the use of clear disclaimers and disclosure

of his failure to inspect specific areas of the structure.


                                 6
Where this is done, the inspector will be insulated from

liability.    However, the evidence presented in this record does

not support the trial court’s judgment that an adequate

disclosure was made in this case.

     The evidence clearly showed that the area behind the air

ducts in the crawl space was not “inaccessible” in the same

sense as other areas excluded from the report, such as interior

walls and areas beneath permanent floor coverings that are not

traditionally subject to inspection.   These latter areas are

“inaccessible” for visual and physical inspection because access

to them would require structural alterations.   By contrast, here

the sole cause of the area behind the air ducts being

inaccessible was, as Stuart conceded, that his large physical

size prohibited him from going over or under the air ducts.     At

best, Stuart’s disclaimer was ambiguous.   At worst, it was

misleading.   In either case, the disclaimer did not effectively

explain the circumstances surrounding Stuart’s limited

inspection or give notice to the purchasers of the property that

a thorough inspection of the area would not otherwise require

structural alterations.

     Moreover, while the report states that there was “no

visible structural moisture damage in [the] crawl space,” the

evidence at trial clearly showed that unrepaired damage was

readily apparent in the area of the crawl space accessible to


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Stuart.      Thus, notwithstanding his disclaimer, he simply failed

in his contractual obligation to discover and disclose the

unrepaired damage in the accessible area of the crawl space.

Accordingly, the evidence in this particular case does not

support the trial court’s conclusion that All Star complied with

its contractual obligations.     Code § 8.01-680.

     For these reasons, we will reverse the trial court’s

judgment, and, because the trial court did not reach the issue

of damages, remand for further proceedings consistent with this

opinion. *

                                               Reversed and remanded.




     *
      Because of our holding on the issue addressed, we do not
address the other issues raised by the Ashes in this appeal.

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