Legislature(2001 - 2002)
02/26/2001 01:03 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 27 - LICENSE HOME INSPECTORS Number 0108 CHAIR ROKEBERG announced that the first order of business would be HOUSE BILL NO. 27, "An Act relating to the licensure and registration of individuals who perform home inspections; relating to home inspection requirements for residential loans purchased or approved by the Alaska Housing Finance Corporation; relating to civil actions by and against home inspectors; and providing for an effective date." [Adopted as a work draft at the previous hearing was version 22-LS0136\S, Lauterbach, 2/20/01.] CHAIR ROKEBERG, speaking as the sponsor of HB 27, referred to the provision regarding legal actions against a home inspector on page 8, and said the original version limited the liability to the length of the validity of the written home inspection report, which was 180 days. He said it was never his intention to limit the liability of the home inspector. He noted that he sponsored this legislation in response to attempts by home inspectors to limit their liability, by contract, to the amount of the fee paid for the home inspection. Typically, a fee for a home inspection is in the $350 range. He added that according to his understanding of common law, that type of liability limitation was unenforceable. He said he was of the opinion that when a causative action has been brought against a home inspector due to an error or omission, the court has found the home inspector fully culpable for resulting damages. Number 0305 Chair Rokeberg added that while he did not want liability limited to such a small amount as the typical fee, neither did he wish to make liability open-ended. He pointed out that the proposed CS has a time frame of 180 days during which the written home inspection report has validity, and (referring to language beginning on page 8, line 13) liability is limited to causative action commenced within two years of the date of the home inspection or home inspection report. Chair Rokeberg expressed confusion at that particular language and asked Ms. Seitz to explain. Number 0420 JANET SEITZ, Staff to Representative Norman Rokeberg, Alaska State Legislature, explained that the drafter thought that by including language referring to both the date of the inspection and the date of the report, it would encourage more people to do what is required by law, which is to submit the written home inspection report to the client. She further clarified that the two years begins running either on the date of the home inspection, if the action is based on the home inspection, or on the date of the home inspection report, if the action is based on the report. Number 0540 GAYLE HORETSKI, Assistant Attorney General, Commercial Section, Civil Division (Juneau), Department of Law, said that that was also her interpretation of when the two years begins. [The language] provided for "either/or". She added that the committee could instead choose to make [the two years begin] at the later time, although she acknowledged that it was a given that the report would happen after the inspection. She said she was not sure why anyone would want to start the two-year period with the date of the inspection rather than the report. CHAIR ROKEBERG said that he felt the language should reflect that the two-year period starts on the date of the written report in order to avoid confusion. He added that this liability limitation language provided an exception to the state's statute of limitation on contracts, which is three years. Number 0637 MS. HORETSKI clarified that instead, the statutes of limitation vary quite a bit: two, three, six, and ten years. She added that the "fall-back" statute of limitation is ten years if nothing has been expressly provided for in statute. She also explained that a statute of limitation runs from a given time forward and is a set limit, whereas a statute of repose focuses on the time that a defect is discovered. Further, the statute of repose, found in [AS 09.10.55], pertains largely to architectural/engineering defects that are not immediately apparent. CHAIR ROKEBERG noted that when the appropriate time came, he would offer a conceptual amendment. He went on to say that the main point of the preceding discussion was to explain that the proposed CS allowed the consumer an opportunity to bring action against a home inspector for an omission or error. CHAIR ROKEBERG also explained that the proposed CS, on page 14, line 1, repealed the portion of the Alaska Housing Finance Corporation (AHFC) statute that allowed for limitation of liability of home inspectors who were performing under the AHFC statute. He added that this change to [AS 18.56.300] was for the purpose of maintaining consistency with the intent of the proposed CS. Number 0800 REPRESENTATIVE OGAN referred to page 10, line 10, and asked if a registered engineer or architect who affixes his or her seal to a written home inspection report or signs the report with his or her registration number on it could be held liable. CHAIR ROKEBERG said that a registered engineer or architect would not be held liable because that person would not be a licensed home inspector. To further his explanation, he said that there was controversy surrounding the issue of whether registered engineers and architects who perform home inspections should be licensed [as home inspectors]. He said he believed that these individuals should be licensed [as home inspectors] but added that as a matter of public policy, it would not be prudent. He added that these individuals could perform home inspections but could not portray to the public that they were licensed home inspectors; thus, by signing/sealing any home inspection reports, they could become liable by virtue of being a registered engineer or architect. The recourse for an aggrieved consumer, then, would be to complain to the board of architects/engineers. Number 0921 CHAIR ROKEBERG noted that currently, there is not any avenue of redress for consumers who have complaints against home inspectors. He also noted that currently, home inspectors do not have any regulations to comply with. Another point he made was that Juneau, Anchorage, Matanuska-Susitna (Mat-Su), and Fairbanks have different standards of practice from each other. For instance, the main inspectors in Juneau have been engineers, and when the legislature has called a document a home inspection report, the inspectors in Juneau have had a different document in mind. Representative Rokeberg said he found that the first hurdle to overcome for this type of legislation was to define terms so that all parties, in all areas of the state, could work from a common base. REPRESENTATIVE OGAN also referred to language on pages 10 and 11 and asked if that meant that a licensed heating subcontractor (or a licensed electrician) could not come in and do an inspection on a heating system (or electrical system) unless he or she were also a licensed home inspector. CHAIR ROKEBERG said that that was not the meaning; the proposed CS would not in any way inhibit or prohibit someone during the normal scope of his or her work. He pointed out that the home inspector's duties are more "all-encompassing," and with the proposed CS, those duties and procedures would be embellished and defined to a greater degree by the board [of home inspectors]. He also said that in his opinion, specific exemptions for people with specialty subcontractor licenses were not needed because they were not performing home inspections; those individuals would be focusing on specific components instead of writing inspection reports on the multiple components of a home. Chair Rokeberg said, for the record, that the proposed CS was not intended to be for those people with specialty subcontractor licenses who were doing their normal scope of work. Number 1173 CHAIR ROKEBERG brought attention to amendment 22-LS0136\S.1, Lauterbach, 2/26/01 [called Amendment 1], which reads as follows: Page 12, following line 6: Insert a new bill section to read: "* Sec. 4. AS 08.57.010(a) is amended to read: (a) There is created the Board of Home Inspectors consisting of five voting members and one nonvoting member. Three voting members shall be licensed under this chapter and shall have been engaged in the practice of home inspection in the state for three years immediately preceding appointment, one voting member shall be a licensed real estate broker, associate broker, or certified real estate appraiser, and one voting member shall be a public member. [THE EXECUTIVE DIRECTOR EMPLOYED BY THE ALASKA HOUSING FINANCE CORPORATION UNDER AS 18.56.052, OR A DESIGNEE OF THE EXECUTIVE DIRECTOR, SHALL SERVE EX OFFICIO AS A NONVOTING MEMBER OF THE BOARD.]" Renumber the following bill sections accordingly. Page 14, following line 1: Insert a new bill section to read: "*Sec. 10. AS 18.57.010(b) is repealed." Renumber the following bill sections accordingly. Page 14, line 4: Delete "sec. 8" Insert "sec. 9" Page 15, following line 26: Insert a new bill section to read: "*Sec. 15. Sections 4 and 10 of this Act take effect July 1, 2005." Renumber the following bill sections accordingly. Page 15, line 28: Delete "sec. 4" Insert "sec. 5" Page 15, line 30: Delete "Section 5" Insert "Section 6" Page 15, line 31: Delete "Sections 8 and 9" Insert "Sections 9 and 11" Page 16, line 1: Delete "secs. 13 - 15" Insert "secs. 15 - 18" CHAIR ROKEBERG said that Amendment 1 resulted in the AHFC ex officio member being removed from the board effective July 1, 2005. This would ensure that the AHFC is involved in the startup process of the board, and then allow the AHFC representative to drop off the board. Number 1276 JOHN BITNEY, Legislative Liaison, Alaska Housing Finance Corporation, Department of Revenue, testified via teleconference and simply expressed satisfaction with Amendment 1. Number 1292 CHAIR ROKEBERG made a motion to adopt Amendment 1. There being no objection, it was so ordered. Number 1317 CHAIR ROKEBERG made a motion to adopt Conceptual Amendment 2, on [page 8,] line 15, to delete "a home inspection or"; on line 16, to delete "respectively"; and on line 17, to delete "home inspection or", "respectively" and the comma. CHAIR ROKEBERG explained that without the amendment, the liability period could start on either the date of the inspection or the date of the report. He said his intention [with Conceptual Amendment 2] was to have the two-year liability period start on a single date - the date of the written home inspection report. He said he thought [Conceptual Amendment 2] would help avoid confusion on the part of the public. Number 1466 REPRESENTATIVE COGHILL asked whether [Conceptual Amendment 2] would encourage a home inspector to delay the written home inspection report. REPRESENTATIVE ROKEBERG said that as a practical matter, a home inspector is not paid until the written home inspection report is delivered. REPRESENTATIVE MEYER added that he thought [Conceptual Amendment 2] was an important feature of the proposed CS, and he supported it. Number 1517 CHAIR ROKEBERG asked whether there was any objection to the adoption of Conceptual Amendment 2. There being no objection, it was so ordered. Number 1527 CHAIR ROKEBERG made a motion to adopt Amendment 3, which reads as follows: Page 4, line 1: After: "or" Insert: "an unresolved" Page 4, line 13: After: "or" Insert: "an unresolved" Number 1546 MS. SEITZ explained that current language in the proposed CS reflects that an unresolved criminal complaint or disciplinary action was sufficient to disqualify a person from obtaining his or her home inspection license or registering as an associate home inspector. With Amendment 3, the language would reflect that the disciplinary action must be unresolved in order to disqualify a person from obtaining a license or registering as an associate home inspector. Number 1614 CHAIR ROKEBERG asked whether there was any objection to the adoption of Conceptual Amendment 3. There being no objection, it was so ordered. REPRESENTATIVE OGAN commented that he had not received any complaints about home inspectors; therefore, he did not see an overriding need to create another level of bureaucracy in the state. CHAIR ROKEBERG responded that he had been shown a need for the proposed CS. Currently there is a complete void of regulatory controls or avenues of complaint for the public. He said he was surprised that Representative Ogan had not received any complaints, given the area that Representative Ogan represents. He himself had received many complaints, particularly from the Mat-Su area, which is completely unregulated and without building code enforcement. In addition, the standards of practice and construction [in the Mat-Su area] verge on "almost the unbankable." He pointed out that [the Mat-Su area] does have International Conference of Building Officials (ICBO) inspection activity because some homes do qualify for AHFC loans. He said he was sure that other lending institutions are also demanding home inspections in [the Mat-Su] area, but because there is not any building code enforcement, there is a tendency for shoddy building practices. He reiterated that currently, when people are financially injured by an unregulated home inspection industry, they are without recourse. REPRESENTATIVE COGHILL commented that the fiscal note assumes that the board consists of members from the following locations: two each from Anchorage and Juneau, and one from Fairbanks. He suggested that instead, one of those members should come from the Mat-Su area. CHAIR ROKEBERG agreed with Representative Coghill's reasoning but counseled against being geographically specific due to a limited recruitment pool. He acknowledged, however, that there was a tendency on the part of the governor and the legislature to take into account geographic distribution with regard to board compositions during appointments and confirmations. Number 1807 REPRESENTATIVE MEYER spoke in favor of the proposed CS. He added that his district had experienced a lot of growth, and the proposed CS would assure both homebuyers and homebuilders that legitimate home inspectors were inspecting houses. He said that although he agreed with Representative Ogan's opinions regarding another layer of bureaucracy, he believed that sometimes [another layer of bureaucracy] was necessary in order to ensure the protection and safety of the people. CHAIR ROKEBERG noted that during his tenure with the legislature, this was the first time he had attempted to create another board or commission, and he was still looking for ways to cut the board's costs. He added that it is constitutionally mandated to provide [legislative] oversight for boards and commissions once they are created. Thus, if public policy demands that a board or commission be created, then the legislature is required to regulate its activities. He also said that he did not like creating more bureaucracy, but [the proposed CS] was a self-financed way to protect the public without affecting the budget. Number 1920 REPRESENTATIVE MEYER moved to report CSHB 27(L&C), version 22- LS0136\S, Lauterbach, 02/20/01, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 27(JUD) was reported from the House Judiciary Standing Committee.
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