Legislature(2003 - 2004)
04/22/2003 10:06 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
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 second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken informed the Committee that, while Amendments #1
and #2 were previously adopted, a revised committee substitute has
not, of yet, been provided.
TERRY DUSZYNSKI, International Conference of Building Officials -
Certified Inspector, and Existing Home Inspector, testified via
teleconference from Fairbanks to voice concern that this bill might
remove liability limits that International Conference of Building
Officials (ICBO) inspectors have regarding damages caused by gross
negligence. He clarified that, currently, Home Inspectors are only
liable for damages caused by gross negligence or intentional
misconduct. He informed that State building codes for residential
construction are non-existent and that there is no rule specifying
what should be inspected or what inspectors are liable for. He
stressed that "this problem should be addressed before we start
moving home inspectors into [the Division of] Occupational
Licensing and providing a whole new set of rules." He questioned
whether a fiscal note accompanies the legislation, as he
understands that the Division of Occupational Licensing would incur
expenses in developing a new set of Existing Home inspection
standards. He voiced that this bill should address providing
qualified Home Inspectors as well as requiring continuing education
in the field. He contended that this bill in its current form would
create more problems than it would solve.
REPRESENTATIVE NORM ROKEBERG, the bill's sponsor, responded that
the issue of repealing the section of the Alaska Housing Finance
Corporation (AHFC) statutes that provides immunity for home
inspectors of new AHFC financed homes has previously been
discussed. The repeal language, he reminded, is limited to new
homes that are financed by AHFC and that other new homes financed
by other lenders, are not granted immunity under current statute.
He specified that there is "no assurance standard" currently in
place for any new home inspection at the State or national level.
He noted that a forthcoming amendment would address this issue
further. He informed that the Division of Occupational Licensing
fiscal note has been minimized by including the new provision under
the existing "Specialty Contractors" section, and he reminded that
"all occupational boards and licensures have to be self-supporting
therefore there is no draw on general fund."
WILLIAM BRUU, International Conference of Building Officials
Inspector, New Home Inspector and Energy Rater, testified via
teleconference from Mat-Su in opposition to HB 9 as he stated his
occupation would be negatively impacted by a change in the
provisions regarding AHFC financed new homes. He noted that a
forthcoming amendment would introduce a provision to provide new
home inspectors some protection from nuisance lawsuits. He argued
that, were a new home inspector to improperly perform his job, "the
market itself would discipline him as to whether or not he would
remain in business." He stated that the AHFC provision was
originally established in law to recognize the fact that there was
no insurance available to protect home inspectors from lawsuits and
that no one would venture into the field of home inspection without
some indemnification from AHFC or the State. He noted that the
situation has not improved as there continues to be a lack of
available insurance to protect an inspector's assets. He stated
that, "this provision is the only thing that protects inspectors."
He stated that he has no answer to the insurance situation, but he
stressed that were HB 9 adopted and "this last little bit of
protection" removed, then numerous inspectors would "seriously
consider going out of business."
Representative Rokeberg stated that during his nine years as an
elected official, he has attempted to be a "voice for small
business" and as such, he would not present legislation that would
"jeopardize business activity." He mentioned that a "HB 9 New Home
Inspection Survey" [copy on file] was recently conducted and, of
the 26 respondents, seven indicated that they would not be able to
remain in business because of HB 9. He voiced that while being
"sensitive to these opinions," he is somewhat skeptical. He
reiterated that the big issue is "the availability or lack of
availability for adequate insurance coverage." He voiced that it
should be recognized that provisions in the bill would provide a
one-year statute of limitations for existing homes and a two-year
statute of limitations for new homes. He stated that this counters
Mr. Bruu's comment that no other limitations exist. He reiterated
that rather than harming business, the intent of the bill "is to
regulate an unregulated industry that is a central part, and is of
growing importance, to the housing stock in the State."
Senator Taylor inquired as to whether "a shorter statute of
limitations on a civil action" exists in State statutes.
Representative Rokeberg voiced that he is unaware of any, and he
deferred to Senator Taylor's knowledge regarding this issue.
Senator Taylor relayed that, other than as specified in this bill,
he is unaware of any other one-year statute of limitations. He
furthered that due to tort reform and other legalities, liabilities
for contracts have been reduced to a three-year period. He asserted
that the hiring of a home inspector by a home purchaser or seller
would qualify as a contract under State statute, as it is a
contract for services. He questioned the reasoning behind this
action as he voiced that limiting the buyer to a one-year statute
of limitations protection period is unacceptable.
Representative Rokeberg replied that Senator Taylor's "good points"
address the public policy issue that is pertinent to this
legislation. He informed that a home inspector conducts a "visual
survey" of a home at a cost of approximately $300. He stated that
one element of this legislation would provide inspector experience
and competency qualification requirements where none currently
exist. He stated that the statute of limitations should reflect the
service being performed rather than providing "a chain of deep
pockets for people to pick on." He stated that currently the
inspection addresses the condition of a house at the time of
inspection, and he attested that weather conditions and natural
disasters such as wind, hail, flooding, and earthquakes could
change the condition of the home. Therefore, he argued, the
inspector's report should only be valid for 24 hours as the
condition of a home could be changed in a short period of time. He
stated that in a situation where latent defects were unidentified
by a home inspector, a longer period could be provided; however, he
specified that those liabilities should be the responsibly of the
builder, homeowner, or subcontractor rather than being the
responsibility of the home inspector. He declared that the home
inspector's liabilities should be limited to what is being
provided. He noted that contract language exists that limits the
amount of liability to the inspector as the amount of the contract,
which he qualified "is unenforceable as a matter of law." He stated
that, while he agrees with Senator Taylor's sectional analysis, he
stated, "there is a valid public policy consideration to shorten
this period."
Senator Taylor opined that realtors, in an effort to protect
themselves from lawsuits, lobbied the Legislature to incorporate
the use of home inspections into the real estate transaction. He
stated that when realtors sold a home with defects, "the old adage,
let the buyer beware, applies." He continued that when people
brought lawsuits for damages against the realtors, the realtors
came to the Legislature for help. He noted, that although he
opposed the legislation, the home inspection program was enacted by
the Legislature, and, he furthered, upon its adoption, every bank
began insisting "instantly" that a home inspection be performed. He
stated that the home inspection program increases the cost of every
house in Alaska that is bought or sold by whatever the cost of the
inspector is. He attested "that the home inspector provided another
opportunity for the realtor to say this isn't my fault, blame the
home inspector and sue him."
Senator Taylor continued that, subsequently, in order to provide
protection to home inspectors, the legislature "set up a limitation
on liability called the gross negligent policy." Therefore he
asserted, when the realtor gets sued, "in court he professes that
it was the home inspector that is at fault and by the way, rather
than gross negligence it was simple negligence" therefore "you
can't sue the home inspector." He stressed that this legislation
limits the liability for simple negligence to one year, and that
gross negligence must be proven in order to extend liability to the
three-year statute of limitations.
Senator Taylor continued that this legislation would require home
inspectors to be certified, registered, and bonded, and that any
lawsuit brought against a home inspector would be required to be
brought within one-year. He stated that were a lawsuit brought
within one year, other than the home inspector, all other involved
parties would be protected "by saying blame the home inspector but
guess what you can't sue him so sorry." He stated that the only
reason this legislation is being presented is to allow "certain
professions to shield themselves from their own negligence and
liability."
Senator Taylor asserted that while realtors support this
legislation, home inspectors do not. He aired that "it provides no
service to the average mom and pop homebuyer and just adds another
layer of bureaucracy to the transaction." He warned that this
legislation would make home inspections mandatory as "all financial
institutions would adopt every single thing included in the
legislation?the cost of buying and selling every single home would
rise based upon what it would cost the home inspector to be bonded,
what it costs for him to be licensed," as those costs are passed on
to the consumer. He remarked that the only person provided
protection by this legislation is the realtor.
DAVID OWENS, Owner, Owens Inspections Services, testified via
teleconference from Mat-Su that a new home inspector could be
likened "to a third-party inspector of a construction project" as
he stated the inspection might require ten visits to a house as it
progresses. He stated that even with frequent site visits, the home
inspector could not observe the entire process. He stated that
there is a significant difference between a new home inspection and
an existing home inspection, as he explained, an existing home
inspector views a completed home whose walls could conceal a
multitude of things. This, he stated, would require an existing
home inspector "to make his best guess" based on what equipment he
might have and general rules based on national standards.
Mr. Owens stated that the aforementioned survey addresses a variety
of concerns and issues with, he contended, the biggest issue being
the additional liability placed upon the home inspector. He noted
that he could support the bill were amendments relating to
liability adopted.
STEVE WISDOM, Owner, Wisdom & Associates, testified via
teleconference from Kenai to voice that his company conducts new
and existing homes inspections and code compliance inspections. He
stated that confusion arises in the bill because it addresses two
different types of inspections: those conducted on new homes and
those conducted on existing homes. He qualified that the gross
negligence clause is limited to new construction inspections. He
continued that an existing home inspection is primarily conducted
as a component of a real estate transaction.
SFC 03 # 60, Side B 10:55 AM
Mr. Wisdom continued that, "anyone could purchase a fifty dollar
business license and perform existing home inspections legally in
the State of Alaska." Unfortunately, he shared that this has
resulted in numerous people being defrauded by unqualified people
identifying themselves as home inspectors. This situation, he
declared, "was the original focus of HB 9."
Mr. Wisdom explained that, currently, a typical home inspection
should take two hours to complete and "the home inspector is
required by the American Society of Home Inspectors [ASHI] code of
ethics and standards to provide their client with information
regarding the condition of the systems and components of the house"
at the time of the inspection. He furthered that items relating to
structural, health, and safety issues are usually noted; however,
he shared, it is uncommon that an existing home inspector "walks
into a home and finds a major defect." Rather, he noted, "they
would usually find small clues that would lead them down a path to
discovering a major problem within the house."
Mr. Wisdom contended that the majority of today's building
inspectors are trained in current building code standards rather
than receiving adequate training to inspect an existing home built
in 1970 that would not meet today's building codes. He avowed that
an existing home inspection is not "a code compliance inspection
and does not act as a warranty of quality workmanship, but is
simply a report of the home's condition at the time of inspection."
Mr. Wisdom furthered that the ASHI and other organizations have
excellent training programs and provide testing to gauge competency
in understanding the principles required for an existing home
inspection. He stressed the importance of understanding that
existing home inspections and new construction and code compliance
inspections are very different and require different skills. He
informed that code compliance and new construction inspectors must
demonstrate competency before earning their code compliance
inspector license. He furthered that currently AHFC is the only
entity that provides guidance to code compliance inspectors who are
referred to as new home inspectors in this legislation.
Mr. Wisdom stated that the home inspection program was adopted in
the early 1990s after prompting, "from the housing industry itself"
to address the substandard housing built in the 1980s "due to no
minimum standards being in place." He continued that the effort to
assure that the home inspection program would be adopted was based
in "tying the enforcement to State funding of the housing through
the AHFC loan program." He noted that some municipalities have
established building departments and building codes; however, he
alerted that "most of the housing was being built as it is today,"
outside of a municipality jurisdiction. He declared "this left the
AHFC as the State's building authority by default." He stated that
this is why AHFC supports this legislation. He urged that new
construction compliance codes be included, and he stated that AHFC
views this legislation as a positive way to regulate and police new
construction code compliance inspectors.
Mr. Wisdom voiced that this legislation is positive in that it
would regulate and police new inspectors, however, he attested that
the removal of the gross negligence clause would cause great
problems in the industry. He noted that a compliance code inspector
must have an ICBO issued license, which would demonstrate
competency in codes relating to one-and-two-family dwellings. He
stated that failing this test is common as the test covers all
topics relating to new construction codes including such things as
administrative duties, building plans, footings, foundations,
framing, pouring, welds, chimneys, energy efficiencies, mechanical
systems and components, plumbing systems and components, electrical
systems and components, and swimming pools. He stated that a code
compliance, or new home inspector, must examine a home repeatedly
throughout the construction process. He stated that new
construction/code compliance inspectors must know, in excess of
1700 pages of codes for residential construction.
Mr. Wisdom informed that while "municipalities could be insured
through their general liability policy and by favorable state
statutes that provide protection to political entities," HB 9's
removal of the gross negligence clause would ensure that no
insurance carrier would provide Errors and Omission Insurance [E&O]
insurance to small firms. He continued that this, coupled with the
extended two-year liability period designated for new construction,
which he attested is one year longer than the general contractor is
held liable for his work, and "would open the door for many
lawsuits." He stated that this would place private inspection firms
at tremendous risk. He exampled some construction scenarios in
which a leak caused by a defective nail plate might show up
eighteen months later; however, he declared, that, as a result of
the two-year liability clause in this legislation, the inspector,
rather than the contractor or another entity whose liability ended
twelve months after the home was completed, might be held liable.
He stated that it would be possible, even after careful inspection,
that one detail of the 1700 pages of code might be overlooked. He
stated that this is why the gross resilience clause is important.
He stated that, "the original authors of the original inspection
requirements intended to require new construction inspections, but
not to place such liability on the inspector to discourage the
inspection from taking place." He qualified that this should not
imply that the industry does not require policing, and he noted
that this legislation would allow the Department of Labor and
Workforce Development and the Division of Occupational Licensing in
the Department of Community and Economic Development to investigate
and stop inspectors who are not adequately performing their jobs.
He alerted that the removal of the gross negligent clause would
accomplish nothing more than increase the cost of housing to the
consumer.
Mr. Wisdom reminded that the gross negligence language in the bill
is limited "to new construction code compliance not the existing
home inspection which is a very different item." Therefore, he
reiterated that the "great differences" in the two types of
inspections requires that specific certification requirements be
maintained for each type of inspection.
Senator Bunde voiced that, "the more I hear about this bill, the
less I understand." He stated that it appears that the "Buyer
Beware" component referred to by Senator Taylor "is being taken out
of the equation in lots of situations." He suggested that perhaps
the new and existing home controversy could be resolved by
implementing a law that would require every home built outside of a
municipality that has inspectors to be labeled with the warning
that the home is built in an area that does not require inspection.
He stated that the warning would alert the homebuyer that losses
might not be recoverable.
Representative Rokeberg agreed that compliance codes are not
required for structures built outside of a municipality.
Senator Bunde attested to the seriousness of the situation as he
was unaware that a new home built, for instance in Chugiak which is
outside of a municipal building code area, might not meet building
codes. He understood that while private inspections are available
in those areas, something might be missed just as it could be
during a new home construction inspection within a municipality.
However, he stated that at least those homes being build in a
municipality would be build under the auspice of municipal codes.
Senator Bunde opined that an existing home inspection is "really
someone else's best guess." He stated that while there is a fee for
this service, ultimately, he declared, "it isn't worth anything
more than advice." He puzzled as to what would be accomplished by
this legislation.
Representative Rokeberg replied that the purpose of this
legislation "is to bring some level of competency and qualification
of certification to these practitioners?and provide some resource
for grievance through a formal procedure." He stated that, in the
past, the Legislature has imposed "a disclosure statement
requirement on the sale of all existing homes in the State." He
stated that this "has driven the development of home inspection."
Representative Rokeberg referenced the copy of the home inspection
disclosure report [copy on file] that is required on all home
sales. He stated that this report is of great benefit to the people
of the State as the report recommends, in two sections, that a home
inspector be retained. In response to Senator Taylor's assertion
that this would increase the cost of buying a home, he countered
that the majority of the financial lending community already
require a home inspection to be conducted before a loan is
arranged. He opined that this legislation "is not the cost driver"
in this situation, "but is a remedial piece of regulatory
legislation."
Representative Rokeberg stressed that this is the only unregulated
component in a real estate transaction. He stated that the backup
material includes evidence of abuses by bad inspectors to which he
attested, the only current recourse is through the court system. He
stated that this bill could be summarized "as a balance of what we
want to do in terms of limiting liabilities as a matter of public
policy over creating a form for redress and grievance on the part
of those who have been harmed and damaged by incompetency." He
countered Mr. Wisdom's statement that a home inspector's two-year
period of liability is one year longer than the contractor's home
liability, as in statute, a three-year period is specified under
Contract law. In addition, he noted that a ten-year State statute
of repose from discoverability "would come into play if there is a
latent defect in the construction of a new home." Therefore, he
contended that the contractor is ultimately the first entity
responsible. However, he continued, this legislation would allow
for action against a home inspector "by the builder if the guy did
not do his job."
Senator Bunde asked for confirmation that new home construction
inspectors, outside of a municipality, are currently regulated and
must comply with some national organization standards.
Representative Rokeberg clarified that an ICBO inspection of a home
that is constructed outside of a municipality is only required if
the home is being financed by AHFC or as specified by a financial
institution. He noted that the ICBO has recently been renamed the
International Code Council (ICC).
Senator Bunde surmised that a person could claim to be a code
inspector just by purchasing a business license.
Representative Rokeberg clarified that in order to inspect AHFC
homes an inspector must pass certification requirements.
Senator Bunde expressed that someone without certification could
conduct non-Alaska Housing home inspections.
Representative Rokeberg concurred.
Senator Hoffman agreed that further regulation of home inspectors
would address some of the problems that home buyers experience.
However, he questioned the benefit of lowering the statute of
limitations from three-years to one-year and repealing the gross
negligence language. He stated that it could be argued that one
reason for lowering the statute of limitations is natural
disasters; however, he stated that this could be resolved by the
specifying that an inspector would not be liable for damages
incurred by those elements as, he stated, prospective homebuyers do
not assume that those damages would be warranted anyway. He asked
what benefits this bill would provide.
Senator Hoffman continued that the bonding language in Section 15
of the bill implies that people would be protected; however, he
observed that the back-up material counters that assumption by
referencing a scenario wherein a home purchased for $117,000 was
subsequently determined to be "worthless," and the homebuyer award
was limited to the $5,000 bonding requirement. He stated that
unless the legislation "required a bond that meant something," the
benefit of this legislation would be minimal. Therefore, he
asserted that the coverage and the protections provided by HB 9
include a bond that is too low, and the limitation of one-year
rather than three-years is inappropriate.
Representative Rokeberg responded that were an individual to
purchase an existing home and not determine within the first year
that "it is broken," then the individual has the problem. He stated
that were an earthquake to occur, the question would be whether the
foundation was cracked before the earthquake when the inspector
inspected it or was it the result of the earthquake after the
inspection. He stated that this is the premise "of narrowing the
scope of the limitation down to a shorter period." He asserted that
defects should become apparent during the first year, and were a
homeowner not to take action within that period of time, it should
not be expected that action could be brought at a later date. He
stated there should be a common sense limitation. He agreed that a
person should be able to bring action against the seller and other
involved persons including the home inspector were
misrepresentation of the quality of the condition of the home a
factor. He asserted that this is the reason that one component of
the bill is the elimination of immunity. He furthered that were a
pattern of bad behavior on the part of the home inspector
determined, then the State would be allowed to revoke the
individual's license. He clarified that, currently, this is not an
option.
Senator Taylor asked the bill's sponsor to list other contractors
such as car mechanics, boat builders, or roof repair contractors,
in the State who are limited to a one-year liability.
Representative Rokeberg declined as he expressed that "the nature
and scope of work" of a home inspector is a non-intrusive, visual
home inspection as opposed to an engineering inspection which would
be undertaken by engineers or other such qualified individuals.
Senator Taylor surmised, therefore, that a person would be required
to hire both a home inspector and an engineer in order to receive a
thorough report.
Representative Rokeberg suggested that, "in order to do it right,
yes." He stated that it would be unreasonable for a $300 visual
scope of work inspection to be liable for thousands of dollars in
damages unless the inspector was grossly rather than simply
negligent. He stated that this is the issue.
Senator Taylor commented that currently, State statute limits the
responsibility to the cost of the contract. This, he declared,
would limit the amount awarded to the cost of the inspection or the
amount of the bond rather than actual damages. He declared that
this is "a sham created by the realtors some years ago" who sought
for the creation of "a middle person" who would be sued rather than
the realtor." He stated that home inspectors are the "middlemen".
Senator Taylor stated that, it is being asserted by the sponsor,
who is a realtor, that hiring a home inspector is insufficient and
that an engineer should be hired to properly inspect a home.
Senator Taylor stated that this legislation would require a
licensed, bonded, and certified inspector to be hired for every
home transaction and subsequently, it would require a certified
State engineer to be hired to ensure that both the home inspector
and engineer would be sued instead of the realtor. He ascertained
that furthermore, in order to avoid other lawsuits, the realtors
association created the inspection report that specifies what must
be inspected. He expressed that "this is appalling" as it is
increasing the cost of buying a home for everyone in the State. He
asserted that the largest expenses of a home sale would be those
associated with bank requirements, the realtor, title reports and
home inspectors. He stated that, at least, this bill would remove
the gross negligence clause for home inspectors; however, he
expressed that the one-year statute of limitations is unreasonable.
Representative Rokeberg expressed that this situation is not unique
to the State but is rather "a national phenomena" and it is good
public policy to protect homebuyers in the State.
Senator Taylor countered that narrowing the statute of limitations
from three-years to one-year would not protect the buyer.
Co-Chair Green asked the location of the statute of limitations
language in the bill.
Senator Taylor informed that it is referenced in Sec. 17,
subsections (1) and (2) on page ten, lines five through nine.
Representative Rokeberg responded to Senator Taylor's comments by
stating that this legislation would protect the buyer by removing
home inspector immunity in certain instances while granting them
limitations on immunity in others, in order to reflect the scope of
the job they are performing. He stated that the inspection is a
fairly limited affair and should be appropriately reflected in
context. He stated that this is a component of commerce, and the
desire is to have it "move smoothly" while protecting the consumer.
Senator Taylor again asked how the consumer would be protected.
Representative Rokeberg responded that lowered inspection costs
would result.
Senator Taylor questioned how lowered fees would protect the
consumer, as at the same time, the consumer must give up two of
three years to file a lawsuit.
Representative Rokeberg commented that another consideration is the
availability and price of E&O insurance to the practitioners.
Amendment #3: This amendment changes the bill's title by deleting
language on page 1, lines 6-8 that reads "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;"
Additionally, the amendment deletes all material in Sec. 41, Sec.
42, on page 22, lines 21 25; as well as accompanying technical
language in Sec. 47 on page 24, line 17. This language reads as
follows.
Sec. 41. AS 18.56.300(c) is repealed.
Sec. 42. The uncodified law of the State of Alaska is
amended by adding a new section to read:
APPLICABILITY. The change made by sec. 42 of this Act
applies to causes of action that accrue on or after July 1,
2005.
Sec. 47. Sections 41 and 42 of this Act take effect July
1, 2005.
Co-Chair Green moved for the adoption of Amendment #3.
Senator Bunde objected.
Co-Chair Green explained that this amendment would change the
bill's title by removing language pertaining to damages caused by
gross negligence or intentional misconduct. Additionally, she
stated that the amendment addresses concerns voiced by Mr. Owens in
his testimony.
Representative Rokeberg stated that arguments supporting the
amendment would be that it would grant private home inspectors
immunity from lawsuits, as are municipal code inspectors currently.
He voiced concern regarding the lack of available E&O insurance for
new home construction inspectors; which, he noted is available for
existing home inspections. In opposition to the amendment, he
shared that the amendment would allow for simple negligence. He
reiterated that the intention of the bill is to remove some
immunity while imposing other regulations.
Senator Taylor stated that this amendment would "make a bad bill
atrocious." He stated that it would not protect the consumer
because the one-year statute of limitations would continue to be
included in the bill. In addition, the amendment would repeal the
language that would allow for simple negligence while allowing the
continuance of a gross negligence standard comparable to that of a
public building official. He stated that this does not benefit the
consumer but does benefit someone in the inspection business. He
stated that were he in the home inspection business, he too, would
"probably advocate for no liability to be placed on the business
that I am practicing." However, he declared, as a matter of public
policy, this is not in the best interest of Alaskans.
A roll call was taken on the motion.
IN FAVOR: Senator Olson and Co-chair Green
OPPOSED: Senator Taylor, Senator Bunde, Senator Stevens, and Co-
chair Wilken.
ABSENT: Senator Hoffman
The motion FAILED (2-4-1)
Amendment #3 FAILED to be adopted.
Amendment #4: This amendment changes language in Sec.17, on page
10, as follows.
On page 10, line 5, the words "one year." are inserted following
the word "within". The amended language reads as follows.
Sec. 08.18.085. Legal actions against home inspector. (a)
Notwithstanding contrary provisions of AS 08.18.081 or AS
09.10, a person may not bring an action against an individual
registered under this chapter based on a home inspection
report unless the action is commenced within one year.
Furthermore, the following language on page 10, lines 6 - 9, is
deleted.
(1) two years after the date of the home inspection
report if the report related to a new home; and
(2) one year after the date of the home inspection
report if the report related to an existing home.
In addition, on page 10, line 10, the words "limitations" and
"apply" are deleted and replaced with "limitation" and "applies,"
and on page 10, line 14, the word "limitations" is replaced with
"limitation". The amended language reads as follows.
(b) The limitation in (a) of this section applies to all
actions based on a home inspection report, regardless of
whether the action is based on breach of contract, personal
injury or death, property damage, or another source of
liability except that (a) of this section is not applicable to
an action based on gross negligence or intentional misconduct
by the home inspector. The limitation may not be waived by
contract.
Co-Chair Green moved for the adoption of Amendment #4.
Co-Chair Wilken objected for explanation.
Co-Chair Green explained that the amendment would reduce the length
of time that action could be brought against a home inspector to
one-year after the date of the new home inspection rather than two-
years as specified in the proposed bill. She stated that this
change would align that new home inspection time frame with the
limitations for existing home inspections as well as aligning with
the standard builder's warranty.
Co-Chair Wilken summarized that the amendment would require that
all action must be brought within a one-year timeframe, regardless
of whether it involves a new or existing home.
Representative Rokeberg agreed. He stated that the question is
whether a new home should require a longer liability period than
required for an existing home. He stated that while he supports
Senator Taylor's stated position on this, it would not negate his
support of the legislation.
Senator Taylor voiced opposition to the amendment as he questioned
why one group of contractor's liability period should be limited to
one-year while other contractor groups would retain a three-year
liability timeframe. He opined that the home inspector job does not
require this level of protection. However, he stated that were this
amendment rejected, the bill would provide a one-year statute of
limitations on existing home inspections and a two-year limitation
on new homes, which he voiced, "is backwards."
A roll call was taken on the motion.
IN FAVOR: Co-chair Green, Senator Stevens, Senator Bunde, and
Senator Olson
OPPOSED: Senator Taylor and Co-chair Wilken
ABSENT: Senator Hoffman
The motion PASSED (4-2-1)
Amendment #4 was ADOPTED.
In response to a question from Senator B. Stevens, Co-chair Wilken
specified that Amendments #1 and #2 were adopted in the previous
meeting.
Co-Chair Wilken asked the sponsor to explain the Department of
Community and Economic Development's fiscal note #4, dated January
29, 2003, which indicates that the State would expend $66,100 and
collect $66,100 from receipt-supported services. He asked why a
change in revenue of $126,200 is projected when these items would
negate each other.
Representative Rokeberg explained that start-up costs would be
incurred during the first year of implementation.
Senator B. Stevens referred the Committee to the fiscal note's
analysis, which specifies that revenue would be collected every
other year.
Co-chair Wilken stated that the State would collect for two years
and expend annually; therefore he stated that the fiscal impact
would be net zero at the end of FY 05.
Representative Rokeberg reminded that the initial year would
include start-up expenses.
REGINA MANTEUFEL testified via teleconference from Anchorage and
urged the State to develop an Internet website that would identify
contractors and subcontractors along with bond information and
complaints about those entities. She voiced support for the statute
of limitations to remain at three-years. Additionally she opined,
that to protect the consumer, the State should require a contractor
to provide a homeowner with a listing of the subcontractors who
worked on the project.
Co-Chair Wilken ordered the bill HELD in Committee.
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