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A North Carolina Court of Appeals has ruled that a home inspection arbitration agreement signed after the inspection had been completed and paid for was unenforceable.
In Edwards v. Taylor, No. COA06-883, 2007 WL 1119395 (N.C. Ct. App. April 17, 2007), Edwards contracted to buy a home from Taylor, and arranged by phone to have co-defendant Smith–sole shareholder of The Home Inspector, Inc.–conduct a pre-purchase inspection of the home.
After the inspection was complete–after the report was presented to Edwards and Edwards paid Smith for the work–Smith presented Edwards with a written "Home inspection contract" which contained an arbitration clause. All parties signed the agreement; three months later, complaining of a "multitude of defects" with the house, Edwards brought suit in state court.
In refusing to grant Smith's motion to compel arbitration, the Court noted that the work was done and paid for under an oral contract, which by law could not contain a valid arbitration agreement because arbitration agreements must be in writing. Because no valid agreement to arbitrate existed, the Court ordered the case back to trial.
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