Legislature(1999 - 2000)
10/21/1999 10:40 AM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
October 21, 1999
10:40 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Tom Brice
Representative Sharon Cissna
MEMBERS ABSENT
Representative Jerry Sanders
Representative Lisa Murkowski
Representative John Harris
COMMITTEE CALENDAR
HOUSE BILL NO. 207
"An Act relating to the registration of persons who perform home
inspections; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 207
SHORT TITLE: LICENSE HOME INSPECTORS
Jrn-Date Jrn-Page Action
4/21/99 900 (H) READ THE FIRST TIME - REFERRAL(S)
4/21/99 900 (H) L&C, JUD, FIN
10/21/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
WITNESS REGISTER
WILLIAM BRUU
International Conference of Building Officials (ICBO)
Dwelling Inspector
Energy Rater
Home Inspector
165 East Parks Highway, Suite 207
Wasilla, Alaska 99654
POSITION STATEMENT: Testified in support of HB 207.
MIKE TAURIAINEN
Consulting Civil Engineer
P.O. Box 937
Soldotna, Alaska 99669
POSITION STATEMENT: Testified in opposition of HB 207.
RON JOHNSON
Realtor
610 Attla Way, Suite 6
Kenai, Alaska 99611
POSITION STATEMENT: Testified on HB 207.
MARK LEWIS
Registered Civil Engineer
P.O. Box 211021
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on HB 207.
BARBARA GABIER
Program Coordinator
Division of Occupational Licensing
Department of Community and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Testified on HB 207.
TIM HOYT
ICBO Certified Home Inspector
House Master Home Inspection Service
6000 Yukon
Anchorage, Alaska 99516
POSITION STATEMENT: Testified on HB 207.
LAMAR STEEN
Abacus Home Inspection Service
P.O. Box 112765
Anchorage, Alaska 99511
POSITION STATEMENT: Testified on HB 207.
JOHN BITNEY
Legislative Liaison
Alaska Housing Finance Corporation (AHFC)
4300 Boniface
Anchorage, Alaska 99510
POSITION STATEMENT: Testified on HB 207.
ACTION NARRATIVE
TAPE 99-62, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 10:40 a.m. Members present
at the call to order were Representatives Rokeberg, Halcro, and
Brice. Representative Cissna joined the meeting as it was in
progress. Representatives Sanders, Murkowski and Harris were
absent.
HB 207-LICENSE HOME INSPECTORS
Number 0053
CHAIRMAN ROKEBERG announced the committee's first order of business
is HOUSE BILL NO. 207, "An Act relating to the registration of
persons who perform home inspections; and providing for an
effective date."
CHAIRMAN ROKEBERG stated he became aware of the need for regulatory
requirement of home inspections due to the number of difficulties
experienced by real estate licensees with home buyers-sellers and
home inspectors in Alaska. It was his understanding there was no
licensing requirements, and that any person can establish a home
inspection business without regulation. Based on his experience as
a member of the Anchorage business community, he is reluctant to
take up any undue business regulation. He stated numerous comments
and letters of support were received from the Matanuska-Susitna
area (Mat-Su) after the bill was introduced. The Mat-Su area
currently has no building inspection requirements. There seems to
be a rash of problems occurring in that area, particularly in new
home/real estate development. There also seems to be a reliance on
home inspectors to fill the gap for municipally based inspections
for new residential development in rural areas. He said there are
a number of areas that relate to the responsibilities of the
principal relationship between real estate practitioners and
licensees.
CHAIRMAN ROKEBERG further indicated there is a growing shift in the
marketplace that differentiates between a buyer's and seller's
broker. This sets up somewhat of an adversarial or
consumer-oriented relationship than has historically been proven.
He stated there are a number of issues regarding who has the right
and ability to see a home inspection report. He informed the
committee a number of states have already adopted statutory and
regulatory schemes to review the home inspection industry. He
feels there is a greater reliance in the marketplace upon home
inspectors to be a part of the real estate transaction. It was his
belief, in spite of his lack of desire to regulate business, that
the failure to properly regulate home inspectors could have a
negative impact on affordability issues and several other
transactions.
Number 0076
CHAIRMAN ROKEBERG stated the committee will be working from a
proposed committee substitute for HB 207, version 1-LS0132\K.
Lauterbach, 10/19/99. The proposed committee substitute is the
result of a work session with the home inspection community and a
number of the recommendations from the work session were adopted.
He cautioned everybody that this version is merely a draft. He
indicated there is an overwhelming consensus within the business
community to have a formal board rather than rely on the Department
of Community and Economic Development for regulation. This
inclusion would increase the fiscal note associated with the bill
and the biennial licensing fee.
CHAIRMAN ROKEBERG indicated he wants to identify a few important
issues for the committee. One issue relates to the liability
associated with the formatting between the board, the licensing
overview by the department, and the bringing in of the ICBO in
sectors that primarily work in the rural parts of the community.
The proposed committee substitute prohibits the ability to limit
the liability of inspectors to the amount of their fee. It also
provides for errors and omissions insurance to the level of
$250,000. He is not sure the liability issue has been solved with
the proposed committee substitute. He is under the impression the
courts will not truly enforce the contract provisions for
limitations. Another issue is whether or not engineers and
appraisers can do the work of a home inspector without having the
necessary training requirements.
Number 0117
CHAIRMAN ROKEBERG reiterated one of the key issues is how long a
home inspection report is valid. There was a good deal of debate
in the last work session regarding this issue. The proposed
committee substitute sets a one year cap on the length of the
validity of the home inspector's report. He feels it is a good
idea to shorten the amount of time a report is valid for because of
the impacts weather in Alaska has on physical structures. The
proposed committee substitute indicates the client who pays for the
bill or their legal representative is privy to the home inspector's
report. He assumes this person can be a real estate broker, but is
concerned with the way a real estate broker might deal with the
possession of a report. It is clear to him whoever pays for the
inspection has the right to give the report to anybody. The
presumed buyer who pays for the report would provide it to his
lender.
CHAIRMAN ROKEBERG explained there is a growing amount of
arbitration against home sellers regarding structural defects that
are disclosed. He looked at a prototype home inspection statute
from Nevada which includes a provision limiting liability if any
potential problem or defect is disclosed in a home inspection
report. The liability would be limited on the part of the seller,
the home inspector, and even the real estate licensee. The buyer
would be prohibited from coming back if there has been a
disclosure.
Number 0182
WILLIAM BRUU, International Conference of Building Officials(ICBO)
Combination Dwelling Inspector, Energy Rater, and Home Inspector,
came forward to testify. He explained AHFC is in the process of
setting up the ICBO inspections. There is difficulty finding
people in the rural areas who are willing to pay to become
certified Combination Dwelling Inspectors. He specified this was
the origin of the provision within the Alaska housing statutes that
allow engineers and architects to do inspections in the rural
areas. He feels this is one of the concerns the proposed committee
substitute will have to look at. It is his impression that the
minimum number of inspections that a person must accomplish to
become a home inspector is ludicrous. He said it would be
impossible for a home inspector in Bethel to ever do 500
inspections in order to become certified.
CHAIRMAN ROKEBERG interjected and stated that is an area of great
unsettlement. He appreciates Mr. Bruu's input on that subject. He
indicated the committee is aware of the dilemma and needs some
input.
Number 0212
MR. BRUU replied he has no quick answers for that problem. He
referred to page 10, line 21 of the proposed committee substitute
and stated that AHFC is currently the certifying agency for
accepting reports by individuals who are Combination Dwelling
Inspectors certified by the ICBO. As it is proposed in the
committee substitute, he views this as a second level of
certification.
Number 0221
CHAIRMAN ROKEBERG clarified there is the inclusion of "or" on line
24 which means that a person can meet any one of the four
requirements.
MR. BRUU stated he does not read it that way. He pointed out the
absence of the word "or" after paragraphs (1) and (2) on lines 19
and 21, respectively. He interprets these as absolute
requirements.
CHAIRMAN ROKEBERG stated the intention is to make each one of the
four elements listed as the basis for [indisc.]. He wonders if the
examination referred to in paragraph (2) was given by the ICBO or
if AHFC certifies it.
MR. BRUU said the certification comes from the ICBO. He explained
that a person needs to reapply for recertification every three
years. Once a person is certified by the ICBO then they can apply
to AHFC.
CHAIRMAN ROKEBERG said it is the intention that that would be
adequate. He wonders if this needs to be statutorily mandated as
an entry point so the board cannot take it away.
MR. BRUU informed the committee that in existing statute ICBO
inspectors are protected by at least one provision that states an
ICBO inspector is exempt from any kind of liability as long as he
is doing his job without intentional misconduct. He believes the
proposed committee substitute changes that and needs to be
addressed.
CHAIRMAN ROKEBERG asked if that is in statute.
MR. BRUU indicated that it is in statute and does exempt the last
ICBO inspectors. He said it does not remove them from total
liability, but provides the limits of their liability. He stated
he has a problem with the proposed committee substitute limiting
inspectors to a visual, non-intrusive inspection. He pointed out
that FHA's definition of a visual, non-intrusive inspection is one
which is done without any tools. He noted that FHA has appraisers
do certain procedures such as the certification of a roof, an
electrical system, or a mechanical system in a house which require
the use of tools. He does not believe there are any inspectors in
the room who would certify any of these procedures without the use
of a tool. He feels this particular piece of legislation is
limiting in terms of what a home inspector can actually look at.
CHAIRMAN ROKEBERG agreed that is a valid point. He thinks a home
inspector should be able to expand his scope of work and charge for
it as well.
Number 0295
MR. BRUU stated he consistently encounters the question of who is
the authority. He explained he might do an inspection on an
existing home and find a life safety item. He said, "I get asked
to go back and do a reinspection on that same property after,
supposedly, all the conditions have been met on the property and
there is that life safety item still in existence and I question it
and I get told, 'Don't worry about it. Somebody's signed off on
it'". He feels the proposed committee substitute does not address
this problem. It is his opinion that somebody has to be the
authority in these situations. With respect to a safety situation,
there needs to be citation to a particular code and a clear line of
authority who can decide whether a certain write-up is valid or
not.
CHAIRMAN ROKEBERG called a brief at-ease.
CHAIRMAN ROKEBERG reconvened the House Labor and Commerce Committee
and noted there was now a quorum.
REPRESENTATIVE HALCRO made a motion for the committee to adopt the
proposed committee substitute for HB 207, version 1-LS0132\K.
Lauterbach, 10/19/99 as a working document.
CHAIRMAN ROKEBERG asked if there are any objections to the adoption
of the proposed committee substitute. He asked Representative
Brice if he is going to vote positively.
REPRESENTATIVE BRICE responded that he would.
Number 0322
REPRESENTATIVE HALCRO asked Mr. Bruu for clarification regarding
who signs off on life safety items.
MR. BRUU responded that many times an appraiser is the person who
signs off on those items. He added it is sometimes the bank or
sometimes it is a nebulous decision that no one particular
individual attributes to themselves. He stated an appraiser's job
is to determine the value of a property, but he feels this is
sometimes misinterpreted. He said,
If the general public is willing to move into a house
with a deck on it without guardrails, and doesn't demand
a change in the price of the house then the appraiser
says that lack of a guardrail has no value. So, he
doesn't mention it in his report. And the bank says, 'It
doesn't exist. It's not a problem...It doesn't show up
in the appraisal report.' So, I've written it up that
this house has a deck with no guardrail, or it needs the
guardrail upgraded. The appraiser says there is no value
to that. The bank says 'We accept the appraisal.'...so
it doesn't have to be fixed.
CHAIRMAN ROKEBERG asked, "Is it life threatening because it would
be under a normal building code requirement?"
MR. BRUU replied, "Sure. Most certainly. My buyer is a young
couple with three small children...under the age of eight."
CHAIRMAN ROKEBERG pointed out that guardrails for infants are
different than those for adults. He asked, "How do you handle
that?"
MR. BRUU said, "No they're not. Guardrails for infants and adults
are different?"
CHAIRMAN ROKEBERG wondered, "Aren't they?"
MR. BRUU responded, "No. Not in the code. Not whatsoever. No.
Absolutely not."
Number 0351
REPRESENTATIVE HALCRO asked Mr.Bruu if it is correct that there are
no building codes in the Mat-Su Valley.
MR. BRUU stated that is correct.
REPRESENTATIVE HALCRO wondered if Mr. Bruu is referring to homes in
the Mat-Su Valley or in Anchorage that fall under a set building
code.
MR. BRUU replied he is referring to all buildings. He explained,
When we talk about existing homes, even though there are
building codes in Anchorage, nobody from the city
building department comes out and looks at a house when
it's transferring from one person to another to see
whether or not it still complies with code or anything
along that line. And, in fact,...the application of
building codes within the city limits of Anchorage are
limited. When you head north out of here you go through
Fort Richardson...The city building department no longer
has authority to apply building codes. Eagle River,
Chugiak...the old City of Anchorage is the limit to the
building department's authority.
Number 0371
CHAIRMAN ROKEBERG asked Mr. Bruu to explain the state building and
its applicability in those areas.
MR. BRUU explained there are three agencies that have basically
adopted different codes for the State of Alaska. He said,
For instance, the state fire marshall is the responsible
agency for the building code. Each jurisdiction is
limited by statute to building fourplexes and above, and
commercial buildings of a thousand square feet and above.
So, he doesn't even look at single-family homes. He
doesn't look at duplexes or triplexes. And if he is not
informed, or the office is not informed, that a fourplex
is being built or a commercial building of more than a
thousand square feet is being built, they don't even go
out and look...and if they are informed, they are limited
to life safety items and basically fire provisions of the
code and that's as far as they go. They don't look at
structural. They don't look at...a way to get out of the
building in case of a fire situation unless it's a large
commercial building and then they start looking at that."
MR. BRUU further explained that other codes, such as plumbing
codes, electrical codes, and mechanical codes, are adopted and are
applicable statewide for any building. He believed there are two
plumbing inspectors for the entire state. The chances of those
individuals getting out and seeing everything that is going on and
having some authority is limited.
CHAIRMAN ROKEBERG asked if there is any liability on the part of a
contractor to meet the uniform building code that was adopted by
the Department of Labor.
MR. BRUU said the only liability a contractor has is if he does not
meet the code. If a contractor does not obtain a signature from an
ICBO inspector on an inspection sheet, the building will never be
financed by AHFC. He stated,
The statute does not apply to the general public. It
applies specifically to AHFC. And it just tells AHFC
that you will not participate in a mortgage or make a
loan or use state funds in any way to finance that piece
of property unless it has this certification by an ICBO
inspector.
MR. BRUU explained there is an additional statute which establishes
the building energy efficiency standard (BEES) for Alaska. Energy
raters are a part of the BEES program. They do decompression tests
and energy ratings on houses and determine whether or not the house
meets BEES. Part of that process is the issuance of a certificate
that will star rate a house. The star program AHFC is used to
provide interest rate reductions on mortgages. He said energy
raters also test houses for airtightness and certify whether or not
a house is properly ventilated. It is his opinion that this
relates directly to the health of the buyer or seller and is a
liability issue that needs to be looked at.
CHAIRMAN ROKEBERG asked what the level of competency and normal
background is of an energy rater in this state.
MR. BRUU replied that energy raters are typically certified by an
entity such as the Alaska Building Science Network (ABSN) and AHFC.
He said they go through significant training that lasts about a
week or a week and a half. They are tested, and then certified as
energy raters. They become entrepreneurs and are able to perform
such tests as a blow-a-door test. He said his firm has performed
approximately 600 or 700 of these tests on houses in the last three
or four years. It is his impression that there are many builders
in Alaska who are building adequate homes that are tight, but are
ignoring any ventilation provisions.
CHAIRMAN ROKEBERG asked how much the blow-a-door test cost.
MR. BRUU replied his firm charges $175.
Number 0483
CHAIRMAN ROKEBERG inquired if Mr. Bruu supports the bill overall.
MR. BRUU stated he does.
Number 0499
MIKE TAURIAINEN, Consulting Civil Engineer, came forward to testify
on the proposed committee substitute for HB 207. He said he has
been in business for over twenty years and has been doing home
inspections during that time. He has been a member on the board of
Architects, Engineers, and Land Surveyors (AELS). He feels there
are four things that licensing of home inspectors would ensure: a
reduction of competition; an increase of fees; an increase in the
state budget; and an increase in regulations. As a prior AELS
board member he has had experience continuously dealing with the
fine points of regulations and the restriction of competition. He
feels the market is a great system for assuring competence and
weeding out incompetence. He realizes it is not a perfect system.
It is his opinion the industry, banks, realtors, etcetera, are very
able to determine who is competent or incompetent to perform home
inspections, and can advise clients accordingly. He does not feel
licensing will prevent incompetence or fraud. He said the
Department of Environmental Conservation (DEC) implemented a
certified installers program several years ago, let it go by the
boards, and then reinstituted it. He stated the program has
certainly not eliminated incompetence and fraud in the installation
of septic systems. He tests and inspects septic systems on a
regular basis and knows who does a good job. He does recommend
installers who do a good job to people who need a septic system put
in their home. He does not feel licensing and certification will
prevent the problems proposed committee substitute is attempting to
resolve. He feels the current system is adequate.
TAPE 99-62, SIDE B
Number 0003
REPRESENTATIVE HALCRO asked Mr. Tauriainen if there is an
association of home inspectors in Alaska.
MR. TAURIAINEN stated he does not belong to an association, but
noted several home inspection organizations exist nationally.
REPRESENTATIVE HALCRO wondered where a home buyer would file a
complaint against a home inspector.
MR. TAURIAINEN stated, if there is a problem, a person should first
approach the home inspector, then a lending agency, and, if
necessary, the person could use the legal system.
Number 0020
REPRESENTATIVE HALCRO referred to Mr. Tauriainen's example of a
septic system. He asked if the contractor would be liable for a
faulty septic system the contractor installs. He wondered if the
contractor would have to reinstall the system or bear any of the
costs associated.
MR. TAURIAINEN replied the contractor would be liable, but he
warned it does depend on the situation.
REPRESENTATIVE HALCRO clarified he is referring to Mr. Tauriainen's
specific example of a septic system with respect to fraudulent
installation. He again wondered who is liable for repairing the
system.
MR. TAURIAINEN indicated the primary obligation falls upon the
owner of the septic system, but the contractor is obligated to
repair the septic system. In some cases, the contractor who
installed the system may or may not be around any longer.
REPRESENTATIVE HALCRO asked if the home owner is responsible if the
contractor is not available.
MR. TAURIAINEN replied, "Yes. That would be the case, whether in
home inspections or home building or septic systems."
Number 0034
REPRESENTATIVE CISSNA asked if a home owner is the person who
contacts a home inspector.
MR. TAURIAINEN answered that a home owner would contact a home
inspector if there is a problem.
REPRESENTATIVE CISSNA wondered if there is a contract that is used
with the home owner. She asked Mr. Tauriainen to explain the
provisions of the contract.
MR. TAURIAINEN explained there is a contract with the home owner.
The contract could be anything from a handshake to a formal
contract that describes what will and will not be done and what the
costs are.
REPRESENTATIVE CISSNA asked if there is an "industry standard" of
contract.
Number 0043
MR. TAURIAINEN stated there is not. He said some of the home
inspection organizations do have standard agreements and inspection
forms.
CHAIRMAN ROKEBERG asked if Mr. Tauriainen limited his liability to
the amount of the fee in his contract as a rule.
MR. TAURIAINEN said it is limited to some amount, but depends on
the level of service that is provided.
CHAIRMAN ROKEBERG wondered if Mr. Tauriainen makes a distinction
between acting as an engineer and acting as a home inspector.
MR. TAURIAINEN replied, "I don't know that...when I am inspecting
a home that I can ever take off my engineering hat and
responsibility."
CHAIRMAN ROKEBERG asked if Mr. Tauriainen has a stamp engineering
opinion that he gives on specific structural items.
MR. TAURIAINEN said he would certify specific structural items,
such as a septic system, as an engineer. The inspection report is
sealed as a professional engineer.
CHAIRMAN ROKEBERG asked if he deals with the liability issue as an
engineer. He also wondered if Mr. Tauriainen has ever been sued.
MR. TAURIAINEN replied he does deal with the liability issue. He
stated he has only been sued once in 20 years.
CHAIRMAN ROKEBERG inquired how the liability issue works for an
engineer.
MR. TAURIAINEN explained it is his opinion that an engineer has a
greater liability than a home inspector or contractor.
CHAIRMAN ROKEBERG asked if he had errors and omissions insurance
and if it is affordable.
MR. TUARIAINEN replied he does have insurance and that it is more
affordable now than it had been previously. He said his limit of
liability is $500,000.
CHAIRMAN ROKEBERG wondered if Mr. Tauriainen has spoken with his
underwriter about the home inspections he does.
MR. TAURIAINEN said, "Yes."
CHAIRMAN ROKEBERG asked if he makes a distinction between the fees
charged as an engineer and those charged as a home inspector.
MR. TAURIAINEN explained the fees charged depend on the effort
involved. He said sometimes the fees are a lump sum or sometimes
they are "time and expense".
CHAIRMAN ROKEBERG asked if Mr. Tauriainen charges more for being
required to make an engineering stamp and giving an opinion letter.
MR. TAURIAINEN said most of the inspections he does do not require
an engineering report. If an inspection requires an engineering
report, it generally takes more time and therefore costs more.
CHAIRMAN ROKEBERG inquired if Mr. Tauriainen gets involved in home
inspections in the course of a normal real estate transaction.
MR. TAURIAINEN replied that he does.
CHAIRMAN ROKEBERG asked if the engineering stamp is placed on the
report in that case.
MR. TAURIAINEN responded affirmatively.
CHAIRMAN ROKEBERG asked Mr. Tauriainen if he qualifies to be
licensed as a home inspector under the provisions outlined in the
proposed committee substitute.
MR. TAURIAINEN indicated he does not qualify under the outlined
provisions, but one of his engineers would. He feels some of the
requirements are a bit onerous and very restrictive.
CHAIRMAN ROKEBERG asked Mr. Tauriainen how long he has been in
business.
MR. TAURIAINEN replied, "Over twenty years." If the proposed
committee substitute passes, he feels certain engineers should be
included in the provision if they have done home inspections.
CHAIRMAN ROKEBERG requested he get back to the committee with his
recommendations. He asked Mr. Tauriainen to estimate the number of
homes he has inspected.
MR. TAURIAINEN answered, "More than 200, less than 500...Most of
ours are existing construction that we inspect."
Number 0109
REPRESENTATIVE BRICE asked Mr. Tauriainen if there are currently
any requirements for home inspection.
MR. TAURIAINEN said he is not aware of any.
REPRESENTATIVE BRICE said, "You outlined fairly eloquently the
protections that the buyer has...in terms of seeking redress if the
inspector is doing whatever. What about the seller?...I understand
traditionally it, within the real estate transaction, it's
the...action of the buyer that initiates the home inspection. But
that also has implications on the seller."
MR. TAURIAINEN wondered if Representative Brice is referring to
"frivolous comments".
REPRESENTATIVE BRICE said, "Yes".
MR. TAURIAINEN explained that is a problem, but, in large part, it
is a judgement call. He does not feel this legislation would
address that issue because it does not prevent someone from looking
at a house for a friend or someone else. He explained the current
laws for disclosure require anything brought out be disclosed.
REPRESENTATIVE BRICE said, from his point of view, the proposed
committee substitute establishes a baseline.
Number 0132
CHAIRMAN ROKEBERG told Mr. Tauriainen he would be happy to know
there were proposals to attach the proposed committee substitute to
the Architects, Engineers, Land Surveyors, and Landscape Architects
Board. Chairman Rokeberg said he was dissuaded from that. He
wondered if the "culture" would be incompatible.
MR. TAURIAINEN is not sure it would be incompatible, but feels it
would unnecessarily bog down some of the workings of the board.
CHAIRMAN ROKEBERG asked if the board would "take them under their
wing."
MR. TAURIAINEN replied, "If that was a law, they would."
Number 0141
CHAIRMAN ROKEBERG asked if the board would even want to do that.
He said,
As I understand it...Senator Leman is working on a plan
which I support; is, I call 'regulation light'. Because
I have been looking for a way to establish boards and
commissions that were not so heavy on the budget and on
the legal requirements. I understand that board you were
formally a member of is...stepping out from somewhat of
the umbrella of the state.
MR. TAURIAINEN stated that has been looked at several times. He
believes it would be a step in the right direction.
CHAIRMAN ROKEBERG said he is aware of that and does not think Mr.
Tauriainen wants to add to that. He finds himself in a conundrum
over this. He feels there is a need here.
MR. TAURIAINEN suggested the industry look at regulating itself and
establish a state home inspector's organization.
CHAIRMAN ROKEBERG replied,
I feel like the father with the shotgun, and this is a
shotgun marriage. And that's the problem I find myself
in. Plus we have a constitutional requirement that
regards boards and commissions of state right in our
constitution...Had there been an organization of home
inspectors that was able to take that up, then perhaps we
wouldn't have had to take this step of introducing this
legislation.
MR. TAURIAINEN believes the industry wants registration primarily
for financial reasons rather than protection of the public.
CHAIRMAN ROKEBERG interjected, "They couldn't qualify for federal
contracts unless they had the state certification and (indisc.)."
MR. TAURIAINEN noted that is only partially true. He explained
home inspectors could be registered in other states and accomplish
that. He said the industry wants the state to come in and
establish some gates for them.
CHAIRMAN ROKEBERG stated that Mr. Tauriainen's point was well
taken. He said there could be a (indisc.) by the contract and a
slight increase in cost. He understands affordability is really an
issue.
MR. TAURIAINEN indicated those same building inspectors could say,
"Let's establish an organization and set our standards, and we can
set them aside as we want."
CHAIRMAN ROKEBERG asked, "But that hasn't happened?"
MR. TAURIAINEN replied it has not happened.
CHAIRMAN ROKEBERG hopes it will happen.
Number 0176
REPRESENTATIVE HALCRO referred to Mr. Tauriainen's comment
regarding his loss of business in the existing market due to new
competitors. He wonders if these new competitors are above board
and conduct themselves in a professional manner.
MR. TAURIAINEN is not aware of any competitors who do not conduct
themselves in a professional manner. He is sure there are some
that are not as above board as he would like to see. He said this
happens in other professions as well, such as with engineers,
doctors, and attorneys.
CHAIRMAN ROKEBERG asked if Mr. Tauriainen's competitors in the
Kenai market are engineers.
MR. TAURIAINEN stated most are not engineers.
REPRESENTATIVE HALCRO said,
The problem I see, and I dislike regulations in any form
of business as much as the next guy, but the problem I
see with voluntary compliance is that you have an
association of home inspectors and a couple of these
fly-by-nighters don't want to play...If it's not set in
state statute, then realistically they don't have to
play. And they're still able to go out there and create
(indisc.) and sometimes dangerous situations in the
market place while the rest of the respectable businesses
are playing by the rules.
Number 0195
MR. TAURIAINEN does not think licensing would prevent that. He
explained that a home inspector would not create an unsafe
condition. The home inspector may overlook an unsafe condition,
but that could happen with himself or anyone else, especially if
the unsafe condition is concealed and cannot be seen. He
indicated that people can ask around to find out which home
inspectors do a good job.
CHAIRMAN ROKEBERG asked, "Don't realtors make about 90 percent of
the referrals?"
MR. TAURIAINEN answered,
Sure, and I think that's a good thing because the
realtors are working on a regular basis with these people
and they know who does a good job. And the banks
also...If they can figure out whether they can lend me
money or lend you money, they can figure out who to hire
to do a home inspection.
Number 0212
RON JOHNSON, Realtor, testified via teleconference from Kenai. He
said, "You don't need this bill because it's way too big." He
referred to page 1, line 11 of the proposed committee substitute
and suggested deleting "or" and adding "and" after "a licensed real
estate broker". He feels it is necessary to have both a real
estate broker and a certified real estate appraiser because both
are significantly impacted by this. He further suggested changing
the number of members on the proposed Board of Home Inspectors from
five to seven; three of which would be inspectors, a real estate
broker, an appraiser, and two public members. He indicated the
AHFC Board was originally created in such a way that a member of
the real estate agency is on the board. He said there has not been
a member of the real estate agency on the board in the past few
years. The Home Builder's Association has taken over the position
of AHFC in directives. This is having significant impacts on the
real estate community. Mr. Johnson seems to think it would be wise
to follow the real estate license law in order to establish a
surety fund.
Number 0231
MR. JOHNSON referred to page 6, line 26 of the proposed committee
substitute regarding home inspector's compensation for performing
a home inspection. He feels the requirement of who to pay should
not be legislated.
CHAIRMAN ROKEBERG wondered if compensation is collected for at the
time of closing.
MR. JOHNSON replied that compensation is collected in many cases at
the time of closing. He said there are some inspectors who require
payment up front because they know the inspection will be
challenged. In the past there have been home inspectors who have
limited their liability to the amount of the payment. It is his
opinion this is ludicrous.
CHAIRMAN ROKEBERG asked if he noticed that it is spoken to in the
bill.
MR. JOHNSON said he did. He suggested creating a statutory
requirement that builds liability into the license. This would
eliminate the need for the boards and commissions because the
business license would have specific requirements. He stated,
I see in this bill where the board has the authority to
issue tickets. The Department of Labor has the authority
to issue tickets for money. I speak from experience on
the real estate commission. We passed that law and the
Department of Law came in and said, 'No you don't'. So,
that's probably not a workable situation.
CHAIRMAN ROKEBERG feels the proposed committee substitute could be
simplified to address specifically what the requirements are for
being licensed by a business license.
CHAIRMAN ROKEBERG pointed out to the committee that Mr. Johnson
formerly served as the chairman of the Alaska Real Estate
Commission and has had a good deal of experience with these issues.
With respect to the number of people on the proposed Board of Home
Inspectors, he stated, "The folks in the business are acutely aware
there may be only about a hundred people, not 2,000, like there is
in a real estate community. So, they're having trouble supporting
a larger board. We talked about three members, but we informed
them that really isn't workable." He noted from the fiscal note
there would be almost $1,000 biennially to start the board.
MR. JOHNSON addressed that issue. It is his opinion that the real
estate commission needs to have more public members and fewer
members from the industry because people tend to become
self-serving. He thinks a case should be presented in a manner
that convinces members of the public or members of other industries
who are impacted. He feels three members would be reasonable as
long as one is a public member.
CHAIRMAN ROKEBERG asked Mr. Johnson to clarify from his previous
testimony what exactly the Department of Law had objected to.
MR. JOHNSON explained the intent under HB 33 was to allow the Real
Estate Commission to issue tickets for wrongdoing and unlicensed
activity. The Department of Law objected to this stating it was
their responsibility. He said, "I don't believe we have improved
our ability to police our own workings by HB 33."
CHAIRMAN ROKEBERG asked, "You mean the investigator can't issue the
violation?"
MR. JOHNSON stated that is the position of the Department of Law.
CHAIRMAN ROKEBERG said, "You're kidding."
MR. JOHNSON replied he is not.
CHAIRMAN ROKEBERG wondered if Mr. Johnson was on any of the board
legislative committees.
MR. JOHNSON stated he is not.
Number 0301
MARK LEWIS, Registered Civil Engineer, Home Inspection Service,
came forward to testify. He feels there are were a number of
issues that were not addressed. He feels the establishment and
adoption of a checklist is impractical because there are so many
different types of inspections involved especially in new
construction.
CHAIRMAN ROKEBERG stated he also has some questions regarding that.
MR. LEWIS reiterated that a checklist is impractical. He said the
Municipality of Anchorage does not even use a checklist and they
deal primarily with new construction.
CHAIRMAN ROKEBERG asked Mr. Lewis to speak generically about the
proposed committee substitute, but requested he submit specific
criticisms in writing. It is his intention to draft another
committee substitute after the meeting. It is possible there will
be another meeting regarding this legislation prior to the
legislative session.
MR. LEWIS believes the board should establish reporting standards
that allow for narrative checklists. He said it restricts free
markets and the ability for an inspection to be performed for the
benefit of the client.
CHAIRMAN ROKEBERG answered, "I agree. That's gone."
MR. LEWIS indicated he is somewhat in favor of this type of
legislation. He believes there should be something that helps
establish some standard performance criteria. He stated he is a
member of American Society of Home Inspectors (ASHI) and is in the
process of forming a new chapter. He is offended by the notion
that home inspectors are trying to cover something up because they
collect a fee up front. Home inspectors get paid at the time
services are performed which is generally at the time of the
inspection when the client is there. Otherwise, it can be
difficult, if not impossible, to collect money for services that
are performed.
MR. LEWIS said, "In fact, when you go into surgery, a doctor...in
a hospital will limit their liability...to zero. And this is a
major surgery on you...yet when we're talking about a home
inspection we can't limit our liability. I think it's
interesting."
CHAIRMAN ROKEBERG replied, "I'm not sure the dying patient whatever
he signs is going to protect (indisc.)."
MR. LEWIS stated, "You can always contest it in the courts, and
that's what the legal system is for...it seems to work to a large
extent." He said there is no experience requirement for licensing
except for the initial grand fathering or transitional licensing.
It is his feeling that if a person takes the exam then they will
become licensed.
CHAIRMAN ROKEBERG said, "It spells out the transition requirements,
but leaves up to the board (indisc.)." He wondered if that is a
defect.
MR. LEWIS agreed it is a defect that needs to be addressed. He
referred to Sec.9 relating to transitional licensing provisions and
recommended that the paragraphing be 1 and 3, or 2 and 4,
respectively. This is his understanding of the discussion during
the last meeting.
CHAIRMAN ROKEBERG said, "We've heard some testimony today about the
level of figuring rural home inspections and dropping these down
create too low of a (indisc.)?"
MR. LEWIS stated that is an interesting problem that is dealt with
all the time in Alaska. He did not have any good ideas about how
to deal with that. One idea is to possibly have a licensed home
inspector review a report generated by someone in the field to
ensure that it complies. The person in the field would not
necessarily have to be a licensed home inspector.
CHAIRMAN ROKEBERG pointed out there is no provision for associate
inspectors in the transition period.
MR. LEWIS stated the only provision is for a person to work for a
licensed home inspector who would be liable for all of that
person's work.
CHAIRMAN ROKEBERG asked, "Does that work (indisc.)? You need to be
able to hire new people that come on into the business."
MR. LEWIS responded, "It drives the cost up."
Number 0412
MR. BRUU explained that an associate inspector will drive the cost
up for the buyer.
MR. LEWIS clarified that a licensed home inspector would have to
compensate for the additional liability created by sending an
associate inspector into the field unsupervised. This means the
licensed home inspector's liability would inherently increase.
CHAIRMAN ROKEBERG stated there was an issue in Texas where there
was a problem having an apprenticeship in the statutes. After the
statute was passed in the regulations, there was an inability for
people to obtain the apprenticeship positions.
MR. LEWIS said there is no incentive to hire associate inspectors
right now.
CHAIRMAN ROKEBERG interjected there would not be an incentive if a
person wants to expand their business.
MR. LEWIS agreed. He indicated it could possibly be detrimental to
the growth of a business if a person is sued and loses everything.
CHAIRMAN ROKEBERG commented there seems to be a problem.
MR. LEWIS explained the way it is dealt with in ASHI is by taking
the test, but then a person would not get their membership until
they complete the work.
CHAIRMAN ROKEBERG asked how a person would complete the work if
someone does not want to hire that person and that person is unable
to do an inspection unless a certified inspector is there.
MR. LEWIS said,
When I started up here working for someone else, there
was a probationary period where I followed that person
along. I was paid not nearly as much, but I was paid for
following them along. They absorb that cost as a
training period which any business owner will have to do.
CHAIRMAN ROKEBERG stated he is interested in cleaning up that issue
before moving on to the next version of the bill. He does not want
to create a situation that drives up cost and restricts entry into
the business. He wants to help the business grow.
Number 0451
MR. LEWIS replied there will always be a demand. He referred to
page 4, lines 3 through 7, of the proposed committee substitute
which states that all documentation prepared by a home inspector
must include their name, mailing address, and license number. He
does not believe there are any other regulated professions that
have this requirement. He feels it is a limitation. He suggests
including a home inspector's name and license number.
CHAIRMAN ROKEBERG said, "This comes from years of experience in
dealing with license (indisc.)."
MR. LEWIS responded that it may be a requirement for some
contractors, but he is not sure that means they actually do it. He
reiterated that the inclusion of the home inspector's name and
license number is the way to go. He feels it would be cumbersome
to include any other information. He also does not think the time
when a payment is due should be statutorily required.
MR. LEWIS, in general, feels the proposed committee substitute is
a step forward. He stated,
There's another issue about the liability of the
inspector towards the person who receives the report.
Does this allow a report to be sold? If somebody decides
they're going to buy a house they have an inspection
done, they decide not to buy the house, they can then
possibly sell that report to somebody else.
MR. LEWIS continued,
As I've stated previously, we as home inspectors should
not be liable to a third party because there are numerous
things that I deal with in the course of an inspection
that I'll state verbally or I'll point them out...As a
required part of that inspection that that person be
there. If they're not there, then it is in their
interest, and it's stated in the report that they are
highly encouraged to call and discuss anything that they
don't understand. Now if somebody else calls back to
us...and says, 'What do you mean by this?' This means
that we have to get written permission from a seller to
even talk to a contractor about the specific item that we
identified in the inspection...when you talk about some
of these liabilities,...as the report gets tossed and
passed, I think it can be pretty difficult, and I think
that our liability should be stopped at the person that
pays for the inspection.
CHAIRMAN ROKEBERG said, "I could see where that would happen. As
a property manager wouldn't you go ahead, if a buyer DFT'd
(defaulted) a deal,...and then wanted to sell. That does occur, I
guess."
MR. LEWIS answered,
Well, they don't necessarily sell them, but...if a seller
gets a copy of the report, then that seller uses and says
(indisc.) there was already an inspection on the
property, you don't need to go get another one.' Well,
I disagree with that...Weather conditions change. There
could be a rain event...three days after and it's been
dry for a month and we didn't see anything. There are a
number of things that can be missed.
CHAIRMAN ROKEBERG asked if this is because of the way some
inspectors conduct their business. He wondered if some inspectors
give a walk-thru with the buyer to point out the problems.
MR. LEWIS replied he always does a walk-thru if possible.
CHAIRMAN ROKEBERG commented the problems are not necessarily in the
report, but at least the buyer is informed of them verbally.
MR. LEWIS referred to the checklist in Sec. 08.57.020, paragraph 5.
He feels the items that should be included in the checklist are
impractical because certain items such as "comfort and convenience"
levels are subjective. He believes the market dictates that these
items are allowed to be open so agents can recommend inspectors
they feel are complete and reasonable. With respect to code
compliance and safety, he said,
Say a house was built in 1960, its electrical system is
going to be different than what it is now. Does that
mean it's unsafe? Not necessarily. It means it was
built in 1960 and not 1999...Every three years or
thereabouts, the municipality adopts a whole new set of
codes...and if you were to say that a house needs to be
brought into compliance with current, there is no way to
draw a line. There is absolutely no way. You would have
to rip the house down and rebuild it, foundation and all.
TAPE 99-63, SIDE A
Number 0002
BARBARA GABIER, Program Coordinator, Division of Occupational
Licensing, Department of Community and Economic Development, came
forward to testify on the proposed committee substitute for HB 207.
She is unclear on the mechanics of how the actual licenses would be
issued and how the registration of business names might be
registered.
Number 0017
TIM HOYT, ICBO Certified Home Inspector, House Master Home
Inspection Service, came forward to testify on the proposed
committee substitute for HB 207. He stated,
A big concern of mine is the intermingling of ICBO
requirements (indisc.) ASHI or other requirements. The
ICBO combination dwelling inspector requirement with AHFC
as required is for new home construction. This bill is
basically addressing existing home inspections. Yes,
there is some carryover. Apples and oranges are
different, but...you can still eat both. But that's
about as far as it goes. New home construction, the
inspector is allowed a tremendous amount of viewing
opportunities. Pre-existing homes, we don't have any
knowledge of what is buried within a wall. I don't feel
that an ICBO inspector necessarily would make a good
pre-existing home inspector...It's not a guarantee since
they're worlds apart in their responsibilities from the
minute they inspect a home.
MR. HOYT continued,
My next concern is the cost of this...If an inspector is
required to be both an ICBO combination dwelling
inspector and an ASHI member...it might drive up that
inspector's personal costs maybe as much as $3,800 a
year. That obviously is going to have to be passed on to
the consumer. Now the way I got these numbers was a lot
of it concerned ASHI's continuing education requirements
and the difficulties Alaska residents would have in
getting the amount of continuing educations credits we
need. We would basically have to travel outside...I
think you echo my concerns...are we doing good in driving
up the costs? I think we're...gonna keep a few more
people out of homes. On the other hand, hopefully some
of the fly-by-nighters will (indisc.). We're precluding
people from housing by doing this unfortunately...I work
for a national franchise...Do they have to list my
license number on every national commercial? I think
that needs to be reworked, or, ideally, done away with.
Number 0060
CHAIRMAN ROKEBERG, referring to continuing education requirements,
asked if Mr. Hoyt is making the assumption that the board would
require that.
MR. HOYT said he is. He explained that if a person is to be a
member of ASHI in good standing, that person would have to do their
continuing education to renew their membership.
CHAIRMAN ROKEBERG asked if a person had to join ASHI just to take
the examination.
MR. HOYT answered affirmatively.
CHAIRMAN ROKEBERG wondered if a person could join ASHI, take the
exam and then drop the affiliation unless it is a future
requirement.
MR. HOYT is not sure. He thinks that is side-stepping the intent.
CHAIRMAN ROKEBERG said,
Well, certainly there's encouragement there. As a
property manager,...I would assume that it would get more
people involved in the business in taking (indisc.)...You
could allocate some of those costs, particularly if they
were mandated continuing education requirements...I
assume there would be costs which would include those
classes...Maybe you could do your own continuing
education up there.
MR. HOYT replied it would certainly help. He indicated it is a
very lengthy process to get a course approved by ASHI.
CHAIRMAN ROKEBERG and Mr. Hoyt engaged in a brief dialogue that is
indiscernible.
MR. HOYT said, "We've got 20 ASHI members in the Anchorage/Mat-Su
area to defer the costs of this one guy versus 2,000 realtors to
defer the cost of this one guy."
CHAIRMAN ROKEBERG stated he appreciates what Mr. Hoyt is saying.
Number 0078
MR. BRUU indicated it would probably boil down to a cost per
continuing education unit. He said he is not an ASHI member, but
is working on becoming one. He commented,
The way I read the continuing education requirements that
are very difficult to achieve in great numbers, it
basically reads you go to the national convention every
year to earn enough credit hours. That wouldn't be a
cheap proposition."
CHAIRMAN ROKEBERG referred to the intermingling of ICBO and ASHI
and stated Mr. Hoyt had said the technology and expertise were
different because of new houses versus existing houses.
MR. HOYT replied he had not said anything about the area of
expertise between new and existing houses. He explained,
Everything that is within the building is hidden away to
the pre-existing inspection. I don't know what went on
in this wall of this building if there's wire-splices or
not. The ICBO inspector would have a schedule of
inspections before the sheetrock was applied, before the
installation was in place. They have a much fuller view
of the building.
CHAIRMAN ROKEBERG indicated he is concerned about that.
MR. HOYT said he started out as an ICBO inspector and then branched
out to pre-existing houses thinking he knew what he was doing. He
stated he received quite an education because there is a big
difference between inspecting pre-existing homes versus new homes.
CHAIRMAN ROKEBERG asked if the proposed committee substitute should
recognize the continuing differential because it currently does
not.
MR. HOYT agreed that it does not.
Number 0121
LAMAR STEEN, Abacus Home Inspection Service, came forward to
testify on the proposed committee substitute for HB 207. He stated
he has been in the home inspection business for almost 10 years and
has done over 3,000 inspections in the Anchorage, Mat-Su, Wasilla,
Girdwood and Seward areas. He wondered where the statistics are
coming from that show there is a problem with home inspectors. He
said 90 percent or more of his business is directed to him through
the real estate industry. It is his impression that most
professional realtors control the quality of work they get. In the
past he has participated in some of the ASHI forums and has been on
some of the liaison committee between realtors and inspectors.
MR. STEEN said the larger, recognized real estate companies have
two requirements. In order to be on their list of approved
inspectors a person has to first become a full ASHI member.
Secondly, they need proof of errors and omissions insurance. He
believes there are at least 20 states that have some kind of
license and requirement. He said there is an apprenticeship
program in Texas where a person has to pay to be an apprentice. He
wants to avoid a similar situation in Alaska.
CHAIRMAN ROKEBERG said there are no statistics, but there is
evidence to indicate there is not a good relationship between the
home inspection community and the licensed realtors in Alaska.
MR. STEEN agreed. He does not feel that it is due to problems on
the consumer's behalf. It is his impression that professional
agents want home inspectors to do their very best job. He believes
it is the fly-by-night real estate agents that are problematic
because they get upset if a home inspector kills one of their
deals.
CHAIRMAN ROKEBERG said he agreed. He stated the other issue
pertains to where the liability revolves around. He feels the
relationship between all parties involved needs to be clarified so
the chain of activities revolving around the transaction can move
forward smoothly. He is concerned about affordability and
overregulation.
MR. STEEN said that is also his biggest concern. He spoke to the
issue of collecting a home inspector's fee prior to the inspection.
He said it is a national standard that the home fee be collected at
the time of the inspection. With respect to ASHI continuing
education credit, he indicated that a person does not have to leave
the state to obtain credit. He provided a few examples of what
types of continuing education classes are available for people
within the state. He feels ASHI is probably the leader in
standards for home inspectors because they have strict requirements
for taking tests.
MR. STEEN stated an ICBO inspector basically inspects for code
items. A home inspector is there to not only look at code items,
but also standards of practice. He gave the example that nowhere
in the code does it say that a roof cannot leak. He mentioned
there are several common sense items the code does not address. He
said only a good licensed inspector with common sense would be able
to see those things and know how to identify them. This ability
comes with experience and common sense. He believes people with a
background in construction would make good inspectors.
MR STEEN further stated that, even though he is an engineer,
approximately 90 percent of his experience in the inspection
industry comes from his background in construction. He said it is
tougher to pass the ASHI exam than the ICBO exam because the ASHI
exam is a practical exam which requires a person to be able to
identify problems. Identification of problems is something that
generally comes from experience. He feels experience is critical.
He realizes it is difficult to obtain enough experience in the bush
areas of Alaska. He stressed getting experience is imperative. He
hopes inspectors will form some type of group in order to
self-regulate and set some standards of practice.
Number 0266
CHAIRMAN ROKEBERG wants to keep in mind the requirement for
affordability and the impact on transactions. He is concerned
about what is happening. He asked if Mr. Steen is aware that
sellers are changing or amending their disclosure statements.
MR. STEEN indicated that happens quite often. He said he asks for
a copy of the disclosure which he likes to have before he arrives
at the site. He noted there are many cases where the disclosure
has been changed after the inspection because of a discovery he has
made. One of the biggest concerns he has relates to the ability of
a seller to waive disclosure. If the seller is aware of a problem
he should not be able to waive disclosure.
CHAIRMAN ROKEBERG asked if waiver of disclosure is allowed in the
statute.
MR. STEEN stated he has not seen that in writing. He has been told
on several occasions that the realtor has told them the disclosure
has been waived because the owner did not occupy the property for
many of years. He is not sure if it is by statute or not.
CHAIRMAN ROKEBERG wondered if a person could be an absentee
landlord and rent the property.
MR. STEEN said, "Exactly."
CHAIRMAN ROKEBERG said he is motivated by the whole issue that
revolves around the disclosure statement. He views it as
interrupting and potentially raising the cost. He said existing
law requires an amendment to the disclosure statement.
Number 0346
MR. STEEN asked if anyone has given Chairman Rokeberg any of the
correspondence between ASHI and HUD.
CHAIRMAN ROKEBERG said, "No."
MR. STEEN stated he needs to be aware of that correspondence
because there have been some meetings between ASHI and HUD. He
explained that one of the letters indicated ASHI and HUD had not
intended to make appraisers into inspectors. Apparently, some
appraisers and real estate agents interpreted it otherwise.
CHAIRMAN ROKEBERG said,
They're doing a lot of back peddling and apparently
there's a new handbook and they've really opened up
Pandora's box, but, nevertheless, that needs to be taken
care of, but it brings up the issue about this whole
thing...there's a changing business practice as you are
well aware of and your business has been expanding and
increasing I take it...If I was selling homes, I wouldn't
even consider making an offer until there had been an
inspection...I think I'd be breaching my fiduciary duty
if I did that now.
MR. STEEN replied, "When I say professional... the professional
realtors, I think I'll agree with them. I don't think any of them
have a problem with that, and I think they look to do that."
CHAIRMAN ROKEBERG said he looks at home inspectors now as vital and
integral parts in a whole chain of the transaction. How one fits
into a highly regulated area as an unregulated part of a link in
that chain is one of his concerns.
MR. STEEN is concerned about driving up the cost of the inspection.
He has not raised his fees in five years.
CHAIRMAN ROKEBERG assumed Mr.Steen's business has substantially
increased because of changing practices.
MR. STEEN said business had increased, but costs had also gone up.
He feels a smaller committee would be better because it would help
keep costs down.
CHAIRMAN ROKEBERG asked Mr. Steen to speak on the issue of
associate home inspectors. He thinks associates have to be
included.
MR. STEEN agreed. He is not sure how to address that issue
entirely. He referred back to the problem in Texas where a person
has to pay for apprenticeship. He was quoted a fee of $30,000 that
had to be paid in order to attend inspections with a licensed
inspector.
CHAIRMAN ROKEBERG understands the law has been changed because of
that. An apprentice is allowed to take an exam to become
marketable in the business. He does not want to create that
barrier.
MR. STEEN agreed there has to be some type of transition to allow
other people to come into the industry.
Number 0412
CHAIRMAN ROKEBERG said that helps hold the cost down. He indicated
he would like Mr. Steen to look over the proposed committee
substitute.
Number 0425
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation (AHFC), came forward to testify on the proposed
committee substitute for HB 207. He clarified he is not speaking
on behalf of the Governor's Office or the administration, but noted
AHFC is in support of the concept outlined in the proposed
committee substitute.
MR. BITNEY noted many previous speakers had commented that if there
is a problem it will end up in court. He said,
I guess that's our fear is that once it does go to
court...where a judge is going to end up with a decision
on this thing somewhere down the road...in the name of
consumer protection...I mean we're seeing judges now
getting into the appropriation process of the
legislature, of schools and those kinds of things, while,
we, Alaska Housing (AHFC), would be viewed, in some of
these instances, as quite a deep pocket...Some of the
folks pointed out here today that the inspection often
times occurs during construction.
MR. BITNEY continued,
I think in some of the discussion here, there was kind of
an impression, that often times that, for existing
construction, you have a seller and a buyer, but in our
case, in new construction, usually the inspection is
incurred during the construction process and so the
inspector was brought...into the home by the builder, and
it just leads to discontent by the home owner if
something does go wrong as far as who's at fault and who
they're supposed to blame. We've been involved in
potential litigation and litigations where, what the home
buyer usually does in that situation is they paint a
broad brush and they just sue everybody and it's the old
saying, 'Let God sort it out.' So, our pleasure in the
bill is trying to see that the state offer up some clear
delineations for the liability.
Number 0482
CHAIRMAN ROKEBERG said he has the March 3, 1999 letter from Dan
Fauske [CEO/Executive Director, AHFC]. He wondered if Mr. Bitney
had a chance to refresh him memory on that one.
MR. BITNEY indicated he had read the bill at the time it went out,
but it has been a while since he has looked at it. He referred to
Section 4 of the proposed committee substitute which begins on page
8 and continues on page 9. He said this section would bring "these
inspectors in an inspection that would qualify to do a home for us
to finance."
CHAIRMAN ROKEBERG stated there is an amendment which neglects to
pick up the date change.
Number 0499
MR. BITNEY responded, "Right...then that would do away with the
ICBO. I think that there was some discussion, if I remember
correctly, that ICBO is going to change its name or something along
those lines."
CHAIRMAN ROKEBERG said, "You might need a successor agency
reference." He further stated there had been some discussion
earlier in the meeting regarding the appropriateness of bringing
the ICBO inspectors underneath this law. There seems to him to be
a true issue about whether or not to include them. He asked Mr.
Bitney to state if the ICBO inspectors should be covered. He also
asked him to explain how the inspectors are certified and how they
are employed.
MR. BITNEY replied he does not know the specifics of what is
involved in the ICBO. He clarified that ICBO is a separate
organization. The statute requires an inspection on a structure
that was built after 1992 in order for it to be financed. There
are five different phases of construction that have to receive an
inspection.
Number 0534
CHAIRMAN ROKEBERG wonders why the date should be changed from 1992
to 2000.
MR. BITNEY does not know the rationale behind the date change. He
does not remember it as a significant issue. He explained the
issue with AHFC is to "allow whatever licensed inspectors this bill
sets up to do the inspections that the law requires that we need to
have done in order to finance a home."
CHAIRMAN ROKEBERG asked Mr. Bitney to come back to the next meeting
on this legislation to provide a stronger rationale for the date
change. He asked for a brief description of how certification
works and how the examinations are administered. He referred to
the request in Mr. Fauske's letter for the BEES program to be
"taken underneath this particular bill".
MR. BITNEY indicated it is AHFC's desire for that to happen with
the BEES program, but he said, "I think that getting the bill is a
more worthy goal."
CHAIRMAN ROKEBERG wants further input on how the ICBO and the more
traditional inspectors could fit together and how that would help
AHFC.
Number 0588
CHAIRMAN ROKEBERG recessed the House Labor and Commerce Standing
Committee which will resume at 1:30 p.m. for a meeting on HOUSE
BILL NO. 190, "An Act relating to viatical settlement contracts."
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