BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 31|
|Office of Senate Floor Analyses | |
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|327-4478 | |
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THIRD READING
Bill No: SB 31
Author: Figueroa (D), et al
Amended: 4/3/03
Vote: 21
SENATE BUSINESS & PROFESSIONS COMMITTEE : 5-0, 3/24/03
AYES: Figueroa, Aanestad, Cedillo, Murray, Vincent
SUBJECT : Home inspectors
SOURCE : Author
DIGEST : This bill provides title act protection for home
inspectors by making it an unfair business practice for an
individual to refer to himself or herself as a "certified
home inspector" unless he or she has met certain, specified
requirements. It requires home inspectors to provide
certain, specified disclosures prior to conducting a home
inspection. Further, it adds to the list of activities
that constitute unfair business practices for home
inspectors.
ANALYSIS :
This bill :
1. Makes it an unfair business practice for an individual
to refer to himself or herself as a "certified home
inspector" unless he or she has met certain, specified
requirements.
CONTINUED
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2. Defines a "certified home inspector" as an individual
who meets both of the following criteria:
A. Has demonstrated to a home inspection professional
association that he or she has fulfilled one of the
following:
(1) Performed at least 200 home inspections for
which a fee was paid.
(2) Performed at least 100 home inspections for
which a fee was paid and completed at least 45
classroom hours of relevant home inspection
education provided by a school approved by the
Bureau for Private Postsecondary and Vocational
Education (Bureau), by a governmental agency, a
community college, or an educational provider
recognized by a home inspection professional
association which has been providing home
inspection education to home inspectors for at
least two years.
(3) Performed at least 50 home inspections for
which a fee was paid and completed at least 90
classroom hours of relevant home inspection
education provided by a school approved by the
Board, by a governmental agency, a community
college, or an educational provider recognized by
a home inspection professional association which
has been providing home inspection education to
home inspectors for at least two years.
B. Has passed a knowledge, skills, and aptitude
examination endorsed by a home inspection
professional association within the past five years.
The examination shall test competence in home
inspection practice, as determined by recognized role
definition methodology, and be developed and
administered in a manner consistent with the American
Educational Research Association's Standards for
Educational and Psychological Testing , the Equal
Employment Opportunity Commission's Uniform
Guidelines for Employee Selection Procedures , the
Civil Rights Act of 1991, and the Americans with
Disabilities Act of 1990.
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3. Defines a "home inspection professional association" as
an organization that meets all of the following
criteria:
A. Has at least 200 members who are home inspectors
in California.
B. Has been in existence for at least 10 years.
C. Operates pursuant to Section 501(c) of the
Internal Revenue Code.
D. Certifies that a home inspector has met specific
criteria without requiring membership in the
association.
4. Provides that it is the duty of a home inspector who is
certified pursuant to this chapter and who is not
licensed as a general contractor, structural pest
control operator, or architect, or registered as a
professional engineer, to conduct a home inspection with
the degree of care that a reasonably prudent certified
home inspector would exercise.
5. Provides that it is an unfair business practice for a
home inspector or a company that employs the inspector
to do any of the following:
A. To use the title "certified home inspector," or a
confusingly similar term, without meeting specific
criteria on or after July 1, 2004.
B. To state or advertise a registration or license
number unless the type and/or category of the license
or registration is specified.
C. To state or advertise that he or she is certified,
registered, or licensed by a governmental agency to
perform home inspections.
D. To fail to disclose or misrepresent any item
required to be disclosed.
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6. Requires a home inspector to disclose in writing, as
soon as it is commercially feasible and prior to
commencing a home inspection, to the party on whose
behalf the home inspection is being done, all of the
following:
A. The name, address, and telephone number of the
home inspection professional association that
certified the home inspector, and the date the home
inspector was certified, unless the home inspector is
not a certified home inspector.
B. A statement disclosing whether the home inspector
maintains professional liability insurance.
C. A statement disclosing whether the home inspector
maintains general business liability insurance.
D. The approximate number of home inspections the
home inspector has performed for a fee.
E. A statement of the home inspector's experience and
education, including the number of years of
experience as a home inspector, and education related
to home inspection.
7. Allows a home inspector to name a seller, real estate
broker, or real estate salesperson as an additional
insured in any liability insurance policy maintained by
the inspector.
8. Allows a home protection company that is affiliated with
or that retains a home inspector to perform repairs
pursuant to a claim made under a home protection
contract.
9. Adds intent language that would require mandated
insurance for certified home inspectors when providing
substitute disclosure as an "other expert" in order to
protect buyers.
10.Allows a home inspector to be deemed an "other expert"
for purpose of substitute disclosure if the following
criteria are met:
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A. The home inspection report deals with matters
within the scope of the certified home inspector's
certification.
B. The home inspection report is prepared by a
certified home inspector who meets all the criteria
specified to use the title "certified home
inspector."
C. The report expressly specifies an understanding by
the certified home inspector that the information
provided will be used as substitute disclosure.
D. The certified home inspector's certification is in
good standing.
E. The certified home inspector has a valid policy of
errors and omissions insurance applicable to the
transaction in an amount of not less than $75,000.
F. Beginning January 1, 2009, and every fifth
anniversary thereafter, the minimum face amount of
the errors and omissions insurance specified in this
subdivision shall be adjusted for the following five
year period by multiplying the product of one plus
.01 times the change in the Consumer Price Index for
the anniversary year multiplied by $75,000.
11.Does not prohibit a licensed contractor from performing
a home inspection.
12.Does not require an agent or broker to refer a certified
home inspector rather than a non-certified home
inspector when making a referral.
NOTE: See Senate Business and Professions Committee
analysis for a list
of prior legislation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/3/03)
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Coalition of California Home Inspectors
Los Angeles County District Attorney's Office
OPPOSITION : (Verified 4/3/03)
American Home Inspectors Association
California Chamber of Commerce
Service Master (AmeriSpec)
and numerous individual home inspectors
NOTE: The California Association of Realtors (CAR)
removed its opposition with the inclusion of recent
amendments and is now neutral. According to the
author's office, it is anticipated that the
following groups will also remove their opposition:
Bakersfield Association of Realtors
California Desert Association of Realtors
Century 21, Schutjer Realty -Vallejo, CA
Chico Association of Realtors
Citrus Valley Association of Realtors
Coastal Mendocino Association of Realtors
Coldwell Banker - Huntington Beach, CA
Contra Costa Association of Realtors
Everson Realty - La Mesa, CA
Heartland Real Estate - La Mesa, CA
Inland Valley Association of Realtors
Jordan Real Estate- Benicia, CA
McElwain Real Estate - Paso Robles, CA
North San Diego County Association of Realtors
Northern Solano County Association of Realtors
Orange Coast Association of Realtors
Orange County Association of Realtors
Pasadena-Foothills Association of Realtors
Plumas Association of Realtors
Redlands Association of Realtors
Remax Hometown Realtors - Santee, CA
RIM of the World Realty - Lake Arrowhead, CA
Santa Barbara Association of Realtors
Santa Clara County Association of Realtors
South Lake Tahoe Board of Realtors
Sutter-Yuba Association of Realtors
Tehachapi Area Association of Realtors
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Tuolumne County Association of Realtors
Veterans Home and Finance - National City, CA
Victor Valley Association of Realtors
Visalia Association of Realtors
Yosemite Gateway Association of Realtors
and individual realtors
ARGUMENTS IN SUPPORT : According to information provided
by the author's office, there are approximately 1,500 home
inspectors working in California. The author's office
believes that consumers are unaware that some of these
inspectors have little, if any, background in performing
home inspections. Many inspectors also claim to be
"certified," but there is presently no legal standard for
what a "certified" home inspector means, or what
qualifications are required to perform home inspections.
Furthermore, there is no current requirement that a home
inspector disclose what background or training they may
have in providing home inspections, or if they are properly
insured. As such, consumers have little opportunity to
choose a qualified home inspector and have possibly no
recourse against a home inspector who provides a poor
report on the condition of the home to be purchased.
ARGUMENTS IN OPPOSITION : According to the California
Chamber of Commerce, "SB 31 would significantly increase
the costs to existing businesses engaged in home inspection
and would create unfair barriers to entry in the industry."
"The certification process outlined in SB 31 includes
requirements for a minimum number of home inspections,
classroom hours, and passage of an aptitude examination
endorsed by a home inspection professional association.
These prescriptive certification requirements may be
onerous and costly to small home inspector companies."
"Further, SB 31 narrowly defines a "home inspection
professional association" as one which has at least 200
members and has been in existence for at least 10 years.
This definition has the effect of legislatively delegating
control over access to certification to one or two trade
groups. Such a limitation on the number of certification
entities would create a barrier to entry for individual
inspectors which would ultimately drive up costs to small
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home inspector companies."
CP:mel 04/03/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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