Legislature(2003 - 2004)
05/05/2003 09:02 AM Senate FIN
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SENATE CS FOR CS FOR HOUSE BILL NO. 9(L&C)
"An Act relating to the registration of individuals who
perform home inspections; relating to regulation of
contractors; relating to registration fees for specialty
contractors, home inspectors, and associate home inspectors;
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 to civil actions arising from residential unit
inspections; repealing a law that limits liability for damages
based on a duty to inspect a residential unit to damages
caused by gross negligence or intentional misconduct; and
providing for an effective date."
This was the third hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE NORM ROKEBERG, the bill's sponsor, voiced
appreciation to the Committee for the thorough discussions that the
Committee has conducted on this legislation.
Co-Chair Wilken clarified that SCS CS HB9 (FIN) Version 23-LS0029\U
with three adopted amendments is before the Committee.
Co-Chair Green moved to report the committee substitute for HB 9
from Committee with individual recommendations and accompanying
fiscal notes.
Senator Taylor objected.
AT EASE 9:31 AM / 9:32 AM
Co-Chair Wilken clarified that Amendment 23-LS0029\U.1, Amendment
23-LS0029\U.2, and Amendment 23-LS0029\U.4, were previously adopted
and would be incorporated into the Version "U" committee
substitute.
Senator Taylor voiced concern that "the shifting of the statute of
limitations to one year" would modify the "normal civic system to
provide a different standard for one group of people." He puzzled
as to the reason that a one-year statute of limitations would be
specifically identified for the home inspector profession as
opposed to the standard three-year statute of limitations for other
construction related entities such as plumbers and electricians.
Representative Rokeberg responded that the intent of this language
is to prevent "the shift of liability from one element of a real
estate transaction to a home inspector without due cause." He
continued that the one-year statute of limitations timeframe has
been identified for home inspectors for several reasons including
the fact that while liability insurance is available for Existing
Home Inspectors, it is unavailable for New Home inspections.
Furthermore, he noted that the liability is limited to $350.
Representative Rokeberg explained that in a new home construction,
the responsibility for a defect would be, as first recourse, the
contractor or other construction entities. However, he attested, in
an existing home inspection, were a defect to surface after one
year from the date of the home inspection report, other factors
such as owner neglect, natural disasters, the weather, or other
unforeseen events could be responsible for the defect. In this
situation, he noted that the seller or the real estate agent might
not have disclosed pertinent information.
Senator Taylor asked for further clarification regarding available
insurance coverage.
Representative Rokeberg reaffirmed that insurance is not available
to home inspectors for new construction; however, he stated that
insurance is available to the building contractor. He noted that
the cost of that insurance has increased dramatically in recent
years.
Senator Taylor stated that the home inspector's report is a
"critical element" in the new home construction process and without
that report, financial and construction requirements could not be
finalized. He argued that the effect of this legislation would be
that, after one year, were it determined that the home inspector
was the negligent party, the home owners would not have any
recourse as the home inspector would be exempt from a lawsuit. He
declared that the unavailability of insurance coverage for new home
construction for home inspectors should not dictate a change in
State policy.
Senator Taylor asked how a real estate transaction occurring six
months after a home inspection was completed would fare under this
legislation, specifically whether the liability would be limited to
the remaining six months.
Representative Rokeberg responded that provisions in the bill limit
the validity of a home inspection report to 180 days. He noted that
the one-year timeframe would allow the dwelling to be exposed to
the various seasonal weather-related elements to test "the
integrity" of the structure. He asserted that the one-year
timeframe is sufficient as that "it would be unfair to have
liability attached" to a home inspector who "only charges"
approximately $350 for a visual report, after that timeframe
because any defeats should become apparent in that year.
Senator Olson asked whether the sponsor would be opposed to an
amendment that would change the statute of limitations.
Representative Rokeberg reminded that Amendment #4 changed the two-
year statute of limitations for new home construction liability to
one-year.
Senator Taylor asked the location of the language regarding the
validity dates of the home inspection report in the bill.
Representative Rokeberg stated that this language is included in
Section 7(d) on page six, line 16. He opined that permitting a home
inspection report to be valid for 180 days is too long.
A roll call was taken on the motion.
IN FAVOR: Senator Olson, Senator Bunde, Co-chair Green, and Co-
chair Wilken
OPPOSED: Senator Taylor and Senator Hoffman
ABSENT: Senator B. Stevens
The motion PASSED (4-2-1)
SCS HB 9 (FIN) was REPORTED from Committee with zero fiscal note #1
from the Department of Revenue; zero fiscal note #2 from the
Department of Law; zero fiscal note #3 from the Department of Labor
and Workforce Development; and fiscal note #4 in the amount of
$66,100 from the Division of Occupational Licensing, Department of
Community and Economic Development.
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