Legislature(1999 - 2000)
03/24/2000 01:24 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
March 24, 2000
1:24 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
Representative Pete Kott, Chairman
Representative Joe Green
COMMITTEE CALENDAR
HOUSE BILL NO. 207
"An Act relating to the registration of persons who perform home
inspections; and providing for an effective date."
- MOVED CSHB 207(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 211
"An Act relating to liability for providing managed care services,
to regulation of managed care insurance plans, and to patient
rights and prohibited practices under health insurance; and
providing for an effective date."
- HEARD AND HELD
HOUSE JOINT RESOLUTION NO. 5
Proposing amendments to the Constitution of the State of Alaska
creating a highway fund and a harbor fund.
- BILL HEARING POSTPONED TO 3/31
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
10/21/99 (H) MINUTE(L&C)
2/18/00 (H) L&C AT 3:15 PM CAPITOL 17
2/18/00 (H) Heard & Held
2/18/00 (H) MINUTE(L&C)
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
3/03/00 (H) Heard & Held
3/03/00 (H) MINUTE(L&C)
3/08/00 (H) L&C AT 3:15 PM CAPITOL 17
3/08/00 (H) Moved CSHB 207(L&C) Out of Committee
3/08/00 (H) MINUTE(L&C)
3/15/00 2486 (H) L&C RPT CS(L&C) NT 1DP 3NR
3/15/00 2486 (H) DP: ROKEBERG; NR: HARRIS, BRICE,
HALCRO
3/15/00 2486 (H) FISCAL NOTE (DCED)
3/24/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 211
SHORT TITLE: HEALTH CARE INSURANCE
Jrn-Date Jrn-Page Action
4/22/99 914 (H) READ THE FIRST TIME - REFERRAL(S)
4/22/99 914 (H) L&C, JUD, FIN
5/10/99 (H) L&C AT 3:15 PM CAPITOL 17
5/10/99 (H) HEARD AND HELD
5/10/99 (H) MINUTE(L&C)
10/22/99 (H) L&C AT 10:00 AM ANCHORAGE LIO
10/22/99 (H) MINUTE(L&C)
2/04/00 (H) L&C AT 3:15 PM CAPITOL 17
2/04/00 (H) -- Meeting Canceled --
2/16/00 (H) L&C AT 3:15 PM CAPITOL 17
2/16/00 (H) Heard & Held
2/16/00 (H) MINUTE(L&C)
2/16/00 (H) MINUTE(L&C)
3/03/00 (H) L&C AT 3:15 PM CAPITOL 17
3/03/00 (H) Moved CSHB 211(L&C) Out of Committee
3/03/00 (H) MINUTE(L&C)
3/08/00 2446 (H) L&C RPT CS(L&C) NT 1DP 2DNP 3NR
3/08/00 2446 (H) DP: ROKEBERG; DNP: CISSNA, BRICE;
3/08/00 2446 (H) NR: MURKOWSKI, HARRIS, HALCRO
3/08/00 2446 (H) ZERO FISCAL NOTE (DCED)
3/08/00 2446 (H) REFERRED TO JUDICIARY
3/24/00 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
BILL BRADY, Agent, RE/MAX Properties;
Legislative Chair, Anchorage Board of Realtors;
and President, State Association of Realtors
P.O. Box 110101
Anchorage, Alaska 99511
POSITION STATEMENT: Testified in support of HB 207, Version Q;
emphasized the importance of establishing the board, but expressed
concern about exempting engineers.
ROBERT CARL, President
Active (ph) Inspections, Incorporated
P.O. Box 3654
Palmer, Alaska 99645
POSITION STATEMENT: Testified on HB 207, Version Q, that a good
job was done in rewriting the bill; said he is not as against the
bill as he was previously.
BARBARA GABIER, Program Coordinator
Division of Occupational Licensing
Department of Community & Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Answered question regarding the licensing fee
relating to HB 207.
VINCE MEURLOTT
Building Consultants
596 Arvita Court
Fairbanks, Alaska 99712
POSITION STATEMENT: Testified on HB 207 on behalf of Building
Consultants; had just received Version Q, which he believes is a
little better than the last version, but he still disagrees with
some provisions.
DAVE FEEKEN
100 Trading Bay Drive, Number 6
Kenai, Alaska 99611
POSITION STATEMENT: On behalf of the 400 members of the Alaska
Association of Realtors, testified in support of HB 207, Version Q,
except for one concern about the legal action section.
DAVID R. OWENS, Building Inspector
Owens Inspection Services
P.O. Box 3589
Palmer, Alaska 99645
POSITION STATEMENT: Testified in opposition to HB 207 but hadn't
read Version Q; said the bill isn't fair to all inspectors in
Alaska; emphasized the importance of having a definite standard in
place first.
BRUNO REHBEIN, Home Inspector
PMB 683
3705 Arctic Boulevard
Anchorage, Alaska 99503
POSITION STATEMENT: Testified on HB 207; expressed concerns with
earlier versions and with exemptions of some inspectors, but
believes Version Q is an improvement; suggested that the bill will
make home inspections more invasive and costly, but believes that
some kind of licensure for home inspectors is a good idea.
CHARLES JEANNET, Registered Engineer and Inspector
599 Arvita Court
Fairbanks, Alaska 99712
POSITION STATEMENT: Testifying on HB 207, Version Q, said he has
a bit of a problem with initiating standards for inspections on
existing homes when there aren't yet codes pertaining to those
homes in outlying areas; applauds exemption of engineers; and
doesn't know if it should be the seller who determines whether old
reports should be discarded.
RON JOHNSON
610 Attla Way, Number 6
Kenai, Alaska 99611
POSITION STATEMENT: Testifying on HB 207, Version Q, suggested
letting regulations determine the types of insurance required, as
a protection for the public; pointed out supreme court decision
overturning one-year provision; said a party to a transaction
should include the lender, and engineers should not be exempt.
MARK LEWIS, Registered Civil Engineer and President
of the Alaska Association of Home Inspectors
P.O. Box 211021
Anchorage, Alaska 99521
POSITION STATEMENT: Testified on HB 207; expressed several
concerns and said he preferred Version B to Version Q; emphasized
that engineers should not be exempt.
WILLIAM BRUU, ICBO Inspector and Home Inspector
165 East Parks Highway
Wasilla, Alaska 99654
POSITION STATEMENT: Testified on HB 207, Version Q, on his own
behalf as president of his firm; asked whether the bill limits his
right as an ICBO inspector to file a lien on new construction;
suggested redrafting the legal actions section on page 6; discussed
other issues. On behalf of another inspector, suggested limiting
the life of the report to 90 days or less, or to the person who
contracts for the service.
SHARON MACKLIN, Lobbyist for
the Alaska Professional Design Council
315 Fifth Street, Apartment 8
Juneau, Alaska 99801
POSITION STATEMENT: Testified in support of HB 207, Version Q.
JOHN BITNEY, Legislative Liaison
Alaska Housing Finance Corporation
P.O. box 101020
Anchorage, Alaska 99510-1020
POSITION STATEMENT: Testified in support of HB 207.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Community & Economic Development
PO Box 110806
Juneau, Alaska 99811-0806
POSITION STATEMENT: Testified on HB 207.
ACTION NARRATIVE
TAPE 00-37, SIDE A
Number 0001
REPRESENTATIVE JEANNETTE JAMES called the House Judiciary Standing
Committee meeting to order at 1:24 p.m. Members present at the
call to order were Representatives James, Rokeberg, Murkowski and
Kerttula. Representative Croft arrived as the meeting was in
progress.
HB 207 - LICENSE HOME INSPECTORS
REPRESENTATIVE JAMES announced that the first order of business
would be HOUSE BILL NO. 207, "An Act relating to the registration
of persons who perform home inspections; and providing for an
effective date." She advised members that there was a new proposed
committee substitute (CS), Version Q.
Number 0056
REPRESENTATIVE MURKOWSKI made a motion to adopt the proposed CS,
Version Q [1-LS0132\Q, Lauterbach, 3/24/00], as a work draft.
There being no objection, it was so ordered.
Number 0082
REPRESENTATIVE ROKEBERG, speaking as the sponsor of HB 207,
explained that Version Q goes back to an earlier rendition of the
bill. There had been objections by registered architects and
engineers to some of the language in CSHB 207(L&C), which came out
of the House Labor and Commerce (L&C) Standing Committee.
Therefore, he had decided to remove that language. To his belief,
the problem has been ameliorated in large part, although not
universally. He had redrafted the bill to include the full board
and creation of a commission for home inspectors.
REPRESENTATIVE ROKEBERG informed fellow members that home
inspection is an integral part of all residential real estate
transactions in Alaska. However, this bill only speaks to those
residences defined as four-plexes or less. For perhaps 90 or 95
percent of the resales of existing homes, home inspectors work with
clients as part of the real estate transaction. However, anybody
can be a home inspector in Alaska. Representative Rokeberg said he
has worked with a large group of people in the state, particularly
in the Anchorage area, over the last year and a half to create an
appropriate amount of regulatory control over this activity in
Alaska, so that consumers are protected, have a means of filing
grievances, and have a forum for redress for any problems that come
up in these transactions.
REPRESENTATIVE ROKEBERG reported that additionally, home inspectors
in the state were, in their contracts, using provisions that
expressly exculpated themselves from liability, leaving that
liability only to the value of a contract. This bill specifically
prohibits that as a matter of public policy. He believes the
liability should be greater than merely the $250-350 in fees
charged by the home inspector. If, in fact, there has been a
breach or omission in a particular inspection, then liability
should run to the home inspector.
Number 0329
REPRESENTATIVE ROKEBERG explained that in working this fine balance
between areas such as Juneau - where home inspections are
predominantly performed by "engineering people" - and the Fairbanks
area - where engineers predominate in a number of home inspections
- it was believed best to exempt engineering professionals from the
constraints of the licensing activities of this bill; he mentioned
the establishment of the board, the regulations to be developed and
the continuing education provisions that apply to home inspectors.
The argument for that, he noted, is that architects and engineers
are trained professionals.
REPRESENTATIVE ROKEBERG pointed out that this is a controversial
issue. Some in the real estate business, in particular, believe an
engineering degree doesn't necessarily correlate with expertise to
be a home inspector. Although most of the engineers doing this
activity are civil engineers, the State of Alaska just has a
designation of "professional engineer" in statute; there is,
however, a differentiation among six different engineering
disciplines in regulation. Noting the drafting difficulties with
that, Representative Rokeberg explained:
We endeavored to draft the bill to only stipulate that a
civil engineer could do this, but we found that it was
extremely difficult. There is language in here that
tries to narrow that focus in terms of the exemption.
Also exempted are real estate appraisers, to the
activities ... allowed under their chapter in the
statute, as well as things like ... pest exterminators
and so forth; we have a request for that addition.
REPRESENTATIVE ROKEBERG acknowledged that this is a balancing act,
to a degree, in trying to achieve the long-range goal of
establishing a licensing board. In his four years as chairman of
the House L&C Committee, he said this is the first new board or
commission that he has been involved in establishing. He explained
that he had felt the need for public protection is so great that it
overweighs the philosophical argument regarding establishing new
government regulations or control; he said these people are
involved in a major portion of the state economy, over 2 billion
dollars' worth of domestic product.
Number 0520
REPRESENTATIVE ROKEBERG directed attention to page 6, starting on
line 8, relating to [proposed] AS 08.57.810, legal actions against
a home inspector. This provision in effect limits the person who
can bring a cause of action against a home inspector to a seller,
an owner of a property or a prospective buyer of the inspected
property. Representative Rokeberg conveyed his intention, as
sponsor, to also limit the validity of the report that is issued to
one year. He noted that these important issues also have generated
some controversy within the industry.
REPRESENTATIVE ROKEBERG explained what happens in a real estate
transaction. The home inspector, usually at the request of a
prospective buyer, will inspect a home. The home inspection
report, then, is usually given to the agent of the buyer, who uses
that in speaking with the seller and/or the seller's agent in
trying to fix problems revealed in the report. Representative
Rokeberg told members:
What happens is you start having a report that's been
issued and purchased by one party being passed around to
as many as four different parties, then gets passed
around to, potentially, a real estate appraiser trying to
put a value on the home or to the lender; in many
instances, the lenders will request these reports. So,
all of a sudden, we have a report that's being circulated
to a large number of people.
And what's been happening is that these reports have
cropped up a year - or two years, three years - later
that may have an influence on a real estate transaction,
and under our current statutes have some ability to be
enforced under our current statute of limitation under
contracts, which is three years, and our statute of
repose, which is ten [years] in the State of Alaska.
So, therefore, to try to cut down this proliferation of
paperwork ... and the liabilities to the home inspector,
the bill has a one-year limitation. And the rationale
behind that is this: When a report and inspection is
done, it's a snapshot of the property or the premises at
a point in time. Any number of things can happen to a
property after that inspection, particularly in a climate
such as Alaska's. The roof, the foundations,
particularly, ... other elements or components of a
building can be substantially changed by the weather and
activities that happen in our northern climate.
Therefore, Madame Chair, it was my opinion that the
public need to restrict the liability that could arise
out of the report; [it] should be limited because we've
taken away the protection that was ostensible in the
contract language to try to limit the liability of
inspectors to the $350 report fee. So, in trying to
balance this whole activity, we felt it would be in the
public interest to have that.
You'll note, on the same page, in subsection (b) of that
section, ... that if there is an omission from the
report, that that omission is not given the same
statutory protection of one year, however. It's only if
there is a misleading or inaccurate element of the report
that the one-year provision comes into play. And if
that, in fact, is a misleading or inaccurate report, it
should come up immediately in the course of the closing
of the real estate transaction - most typically, a seller
defending the veracity of his property, and the fact that
a seller would ask for a reinspection or a revision to
[the] report, and dispute that report; he certainly has
a right to. ...
It is very important to keep in mind: this body, the
legislature, several years ago - to its great, I think,
betterment to the real estate community and the consumers
of this state, and the home buyers of this state - have
mandated a disclosure document be part of every real
estate transaction, ... in closing, in ... Alaska. ...
All sellers of homes in the state ... have a duty,
statutorily, to fill out and provide a buyer a disclosure
report of any problems that may be occurring around ...
the home.
And what happens now is that once a buyer orders a home
inspection report and they give the seller the report,
the seller now is dutybound to take the elements of that
report and revise his disclosure statement in the
strictest interpretation of the law. And that is true.
... Now, whether people are doing that, I'm not so sure.
... But what happens if, in fact, the seller disputes
that report? And that's that issue, ... and that's the
particular thing ... that's in play, but it's in play
immediately. So, ... the resolution of any dispute about
the veracity of the report and its accuracy can be, I
think, ameliorated within the one-year period. So that's
the reason that's in there.
Number 0690
REPRESENTATIVE ROKEBERG mentioned that people doing this now can
apply, during the transition period, to become home inspectors. He
stated:
We have provisions in here for associate home inspectors
that don't have the full training and background, if they
work under the supervision of the home inspectors, so the
industry can grow and flourish, and additional jobs can
be created in here - the same with the engineering
components. I think we've made this bill as easy as
possible in the transitional provisions.
And also, there's additional language here that was
requested by Alaska Housing Finance Corporation (AHFC)
that utilizes the existing home inspectors or so-called
ICBO inspectors, which are integrated underneath this
board. ... These inspectors are those that exist in the
rural areas of the state and inspect all homes that are
financed by Alaska Housing Authority in the rural areas
of the state that may be new construction.
And it does, in the exemption section, exclude all
building officials within a municipality or political
subdivision that has a building authority for home
inspections themselves. ... For example, in Anchorage the
city building official has primacy in looking after the
home inspections for new construction, as well as those
people that work for him are exempt from being licensed
under the statute.
Number 0993
REPRESENTATIVE MURKOWSKI noted that there had been a couple of
iterations in the House L&C Committee, of which she is a member.
She asked whether this proposed CS [Version Q] is similar to what
they had heard in that committee.
REPRESENTATIVE ROKEBERG said yes, with the exception of the changes
in the liability section and some fine-tuning on the exemption
section, "as related to the specificity about engineers acting
within their registration, and the appraisers." He added:
There was some broader language, which is intended to do
the same thing. This requires the engineer/architect to
affix their seal and/or their signature, which we found
out subsequently were ... actually legally the same
thing. You don't have to seal a document if you sign it.
It has the weight of you being a professional engineer.
So, that became somewhat of a redundancy. ... What we're
doing here is ... saying that if you're an architect or
engineer, you're engaging in home inspections, that you
have to sign the report. So your liability runs to your
professional registration. ... But it still allows them
to do that without being licensed.
There's a couple of elements in here that ... have been
changed to give a certain benefit .... There's one
change from -- the one iteration in Labor and Commerce
says that if you are to advertise yourself as a licensed
home inspector, you have to be a licensed home inspector.
You can't be an engineer or architect. So, that gives
the licensed home inspector a slight advantage by saying,
"I'm a licensed home inspector," where the engineer and
architect that are doing home inspections can't do that,
but they can say that they're an architect or engineer,
which ... shouldn't be a negative.
So, we're trying to do a balance here to keep everybody
happy. And it was kind of interesting in putting this
whole thing together. I first had two work sessions in
my office in Anchorage over a period of a year where I
brought all the home inspectors together in the Mat-Su
and Anchorage area, or those that were interested in it.
And a number of these folks ... were engineers. And, as
a result, ... they've created a chapter of the American
Association of Home Inspectors. There's about 16 states
have taken up this legislation and passed it now, and
this is one element of it. ...
Number 1165
REPRESENTATIVE ROKEBERG noted that in several iterations of the
bill prior to CSHB 207(L&C), there was E&O [errors and omissions]
insurance. He believes that was deleted in the last version
because of concern about setting a precedent. Perhaps with the
exception of doctors, to which Ms. Reardon could possibly speak, he
doesn't think any statute, board or commission in state law
mandates E&O insurance. Therefore, the desire is to not start that
precedent, even though testimony indicates most people engaged in
this activity do, as a rule, have E&O insurance. Representative
Rokeberg added, "In taking their exculpatory language away from
their contract, I think militates towards them, as a matter of
practice, having E&O insurance, which is available, incidentally,
for this ...."
Number 1209
REPRESENTATIVE KERTTULA requested clarification about what
Representative Rokeberg was saying about the legal action section
on page 6. She specifically asked whether there originally was a
limitation of $350 liability for the report in subsection (a).
REPRESENTATIVE ROKEBERG replied, "That's what they're doing in
their contracts with the ... homeowner or buyer, whoever retains
them as a client. They would put provisions in their contract
limiting their liability to that dollar amount, or the fee."
REPRESENTATIVE KERTTULA commented, "So, then, this one is actually
broadening out ... if it's a statement."
REPRESENTATIVE ROKEBERG affirmed that, adding that there also is a
very specific provision on the bottom of page 7, line 31. He read
from subsection (b) beginning on line 31, which stated:
Contractual provisions that purport to limit the
liability of a home inspector to the cost of the home
inspection report are contrary to public policy and void.
Number 1323
REPRESENTATIVE JAMES asked whether there were further questions of
the sponsor; there was no response. She noted that several people
had signed up to testify, both locally and on teleconference.
Number 1340
BILL BRADY, Agent, RE/MAX Properties; Legislative Chair, Anchorage
Board of Realtors; and President, State Association of Realtors,
testified via teleconference from Anchorage. He noted that David
Feeken, legislative chair from the state association, would testify
from Kenai. Mr. Brady informed members that the Anchorage Board of
Realtors' legislative committee is in favor of this bill, which
they consider consumer protection legislation. He thanked
Representative Rokeberg for the change from Version T [CSHB
207(L&C)] to Version Q, especially regarding the establishment of
a board, which he believes to be highly important because the board
could start regulating the industry and coming forth with
regulations and legislation on that.
MR. BRADY urged passage of this bill as soon as possible. However,
he expressed concern about exempting engineers, which he doesn't
believe to be in consumers' best interests. He explained his
reasoning. Engineers focus on a discipline. If a petroleum
engineer or a mining engineer, for example, retires and wants to
supplement his or her income by becoming a home inspector, Mr.
Brady doesn't believe that person would be qualified. He also
mentioned mandating continuing education to people in the field.
MR. BRADY suggested that perhaps the board, when it organizes,
could "grandfather in" current engineers with some length of
service in home inspections. However, he doesn't believe all
engineers should be exempt in the future. Mr. Brady restated
support for the bill, suggesting that the board could work on the
areas of concern and come to some conclusion. He thanked
Representative Rokeberg and his committee for working with the
industry and the home inspectors to bring this "consumer protection
bill" forward.
Number 1553
REPRESENTATIVE JAMES referred to Mr. Brady's example of mining or
petroleum engineers. She asked whether he believes that those
engineers don't have the experience or the education. She conveyed
her understanding that the [engineering education] is fairly
generic until the specialization stage is reached. She said it
seems that those people would have the ability, even though they
might not have the experience.
MR. BRADY replied that he would have to defer to engineers and home
inspectors, as well as to Representative Rokeberg. He then
restated that structural, mining and petroleum engineers focus on
those particular areas. He doesn't know if the general background
knowledge is great enough to do home inspections, a specific job
that just "popped up" in the last four or five years.
REPRESENTATIVE JAMES thanked Mr. Brady and noted that
Representative Croft had joined the meeting [during Mr. Brady's
earlier testimony].
Number 1648
ROBERT CARL, President, Active (ph) Inspections, Incorporated
testified via teleconference from the Mat-Su LIO (Legislative
Information Office). The way the bill is rewritten, he told
members, he isn't as much against it as previously, but he has
questions. He could see getting rid of the provision holding
liability to the cost of the inspection. Noting that his own
contract had a provision regarding binding arbitration through the
Better Business Bureau, he asked if that still will be allowed.
REPRESENTATIVE ROKEBERG answered, "The bill is silent on that, and
I think it would be allowed."
MR. CARL said he doesn't see the cost of the license in the bill.
As he reads it, it is possible to get three different licenses:
one for new construction, one for real estate and one combination
license. Noting that earlier versions had contained $250,000 in
E&0 insurance, he asked if that had been deleted.
REPRESENTATIVE ROKEBERG affirmed that.
MR. CARL indicated one of his previous concerns was that inspectors
were being mandated to have the deepest pockets. He restated that
he is much more pleased with the bill now.
Number 1752
REPRESENTATIVE ROKEBERG responded that the licensing fees will be
set by the commission or board [to be] established, but also they
are set by statute in the sense that all boards and commissions
have to be self-supporting. He believes that the estimate from
the Division of Occupational Licensing was in the $350 range; the
amount has varied in different fiscal notes for different
iterations of the bill. Representative Rokeberg added, "I don't
expect that there'll be much of a differentiation unless the board
decided to license the associates at a lesser level or something,
if at all, ... in terms of fee."
MR. CARL asked whether that would be for all three licenses or for
each one.
REPRESENTATIVE ROKEBERG replied, "I think so, but that could be
determined by the board." He added that it is over a two-year
period. He requested clarification about the amount from the
Division of Occupational Licensing.
Number 1830
BARBARA GABIER, Program Coordinator, Division of Occupational
Licensing, Department of Community & Economic Development, came
forward. She reported that she had a copy of a previous fiscal
note relating to a bill version that included a board. In that
version, based upon 100 licensees, the amount was approximately
$800 for a two-year period, which would be around $400 a year.
REPRESENTATIVE ROKEBERG commented, "That was the high-side
estimate."
REPRESENTATIVE JAMES confirmed with Mr. Carl that he had heard Ms.
Gabier's response. She then pointed out that determination of the
amount would be based on the cost of the application, which would
be determined by regulation.
Number 1862
VINCE MEURLOTT, Building Consultants, testified via teleconference
from Fairbanks, indicating he had just received Version Q. Mr.
Meurlott expressed appreciation for the work done on this bill; he
believes the new version is a little better than the last one but
still disagrees with some provisions. This still raises the cost
of government without sufficient benefits to the average citizen,
to his belief, and administering this program will require more
time, effort and money than it would first appear to require. He
isn't sure that 50 licensed inspectors will pay into this.
MR. MEURLOTT pointed out that the previous fiscal note didn't
include funding for enforcement costs, which appear to be exactly
what Representative Rokeberg and others are really looking for; he
believes that tracking this down will be a little more expensive
than it might appear on paper. He informed members that he is a
registered engineer. He agreed that most people in Fairbanks have
engineers do their inspections, as he believes is the case in
Juneau.
MR. MEURLOTT contrasted what happens in the Lower 48 versus Alaska.
In the Lower 48, private home inspectors are almost inspecting
housing stock constructed under the watchful eye of a jurisdiction
that enforces the codes; the construction is usually safe, sound
and sanitary from the beginning. Furthermore, inspectors primarily
ascertain whether homes have been properly maintained, and that
appliances and GFIs [ground-fault indicators] function properly.
Checklists include termites, carpenter ants and maintenance of
finishes, and inspectors almost act like insurance agents to
warranty the appliances.
MR. MEURLOTT pointed out that in Alaska, however, there is a great
value in having engineers do the job. For structural areas, many
"nonengineer types" cannot calculate a [required] beam or joist, or
evaluate soil conditions. Furthermore, most of the training
available to the construction community "here" has been only with
regard to thermal and energy efficiency. Even the contractors
don't really get structural training that they can hang on to. Mr.
Meurlott said he routinely finds poorly constructed roofs, for
example, that a nonengineer could not properly evaluate, "because
I've come behind them several times."
MR. MEURLOTT also expressed some concern about the changes
regarding disclosures. He doesn't personally feel too bad about
the reports being circulated years later. Although a report is a
snapshot at a particular time, it still helps somebody three years
down the road to recognize that a problem may still exist or that
a correction has been made. Therefore, he believes that the added
disclosure language is not that favorable.
Number 2081
MR. MEURLOTT expressed confusion because the title of the bill
appears to limit it to housing under AHFC.
REPRESENTATIVE ROKEBERG clarified that the bill is for "the ICBO
[International Conference of Building Officials]-type Alaska
Housing Finance" and all home inspectors who are not licensed or
registered engineers or architects that undertake to do home
inspections. "So this gentleman would be exempt from being
licensed," he said of Mr. Meurlott. "He could continue doing his
activities, but he'd be exempt from his license."
Number 2153
DAVE FEEKEN testified via teleconference from Kenai on behalf of
the 400 members of the Alaska Association of Realtors, indicating
his organization had worked closely with the sponsor on this
legislation over the last couple of years. Mr. Feeken expressed
"total support" for passage of HB 207 but pointed out one concern
regarding the legal actions section. He mentioned that a couple of
issues discussed that morning "in our meeting" related to the
definition of a seller, owner or prospective buyer on page 6, lines
12 and 13. It is becoming a national trend to obtain this
inspection prior to when the property actually is on the market
because it in the seller's best interest, from a negotiating
standpoint, to give some idea of what will be on the report. His
organization has concerns because there isn't a prospective buyer
when some of these inspections are coming forward.
Number 2207
MR. FEEKEN turned attention to subsection (b), regarding omissions.
He asked whether his understanding is correct that the one-year
[provision] doesn't apply to that.
REPRESENTATIVE ROKEBERG agreed that is how it is drafted now.
MR. FEEKEN referred to Representative Rokeberg's mention that there
is mandatory property disclosure on the part of the seller. He
informed members that if there is an existing report, the seller is
generally including that in the property disclosure statement, as
the engineer from Fairbanks had indicated. Mr. Feeken said he
understands the intention there of clarifying that the report is a
snapshot of that property, that day, at that point, and understands
the desire to not be liable for changes in the property's condition
two or three years later. However, the reality of the business is
that the old reports are ending up as part of the mandatory
property disclosure statement.
MR. FEEKEN concluded by saying he thinks this licensing bill is
going in the right direction and may be ahead of a national
requirement that would be imposed by the FHA [Federal Housing
Administration], which has attempted this three times in the last
three years. Mr. Feeken noted that he had served on the
legislative committee of the national association of realtors for
about ten years. He surmised that this type of legislation will
become mandatory at the state level; otherwise, states will lose
the ability to have FHA loans, which in Alaska may be 90 percent or
more of the loans, as the FHA is the underwriter on most Alaska
housing loans.
Number 2290
DAVID R. OWENS, Building Inspector, Owens Inspection Services
(Palmer), testified via teleconference from Anchorage, noting that
he has been a building inspector since 1983; ten of his years as a
building inspector were with the Municipality of Anchorage. Mr.
Owens informed members that he is opposed to this bill; he
acknowledged that he wasn't addressing the latest version, which he
had just received, and indicated some of his concerns may have been
addressed.
MR. OWENS explained that he doesn't believe the bill is fair to all
inspectors in this business because it just regulates a small part
of the inspectors. Furthermore, there is no definite standard in
Alaska to inspect to; he believes it is very important to have that
first. Mr. Owens suggested this needs to go back to the drawing
board, to come out with a basic, simple bill that works. He said
that he supposes just looking at existing houses would be okay
because there is some need in that area. However, it is really
unfair that "the commercial inspectors, the guys that do rebar,
concrete work, structural steel" don't have to have any
requirements or E&O insurance.
Number 2358
BRUNO REHBEIN, Home Inspector, testified via teleconference from
the Mat-Su LIO, noting that he has a home inspection service "in
the valley"; although he has only done that for a year and a half,
he has been involved in building homes for over 20 years. Pointing
out that he had just received Version Q, Mr. Rehbein said he
believes the changes improve the bill. He had been concerned about
"the engineering concerns of the previous testimony," as well as
the fact that commercial inspectors aren't involved in this
licensing or the requirements.
MR. REHBEIN surmised that if this goes through, housing inspections
would become more invasive, with increased scrutiny, documentation
and costs. Other than that, however, he thinks it is basically a
good idea to have some kind of licensure for home inspectors,
except that he is also a little concerned about exempting building
officials and municipal inspectors. He asked, "If I go into
Anchorage and do a home inspection on an existing home that was
previously done by a municipality, where's my knowledge on what
they require, and where's their knowledge on what the state
requires?"
Number 2435
CHARLES JEANNET, Registered Engineer and Inspector, testified via
teleconference from Fairbanks. He first inquired about the
reference to AHFC in the title.
REPRESENTATIVE ROKEBERG answered that it is the way legislation is
drafted under the drafting manual under the single-subject rule in
the state constitution. The title in essence puts the public on
notice. The first portion of the title has to do with licensure of
home inspectors, and the second portion [has to do with AHFC].
TAPE 00-37, SIDE B
Number 0001
REPRESENTATIVE ROKEBERG explained that the title "goes away" after
passage of a bill.
MR. JEANNET informed members that in general he concurs with the
comments made by Mr. Owens in that he has a bit of problem with
trying to initiate standards for inspections on existing homes when
there aren't yet codes pertaining to those homes in outlying areas.
In that one regard, the cart is in front of the horse. Many
properties have been constructed without any reference to codes or
inspections; by establishing some sort of standard of practice and
"siccing a bunch of inspectors on those homes," he sees this as
escalating the costs for the sellers of those homes.
MR. JEANNET turned attention to the exemption of engineers. He
told members that he applauds the efforts "to take the engineers
out from under this bill." He believes that engineers should know
whether or not they are qualified to do an inspection and will act
accordingly. They also have an existing board and code of ethics
to which they are answerable. If an engineer is practicing in a
manner contrary to his or her area of expertise, that existing
board can deal with that.
MR. JEANNET told members that this bill appears to fly in the face
of the current state disclosure laws. For instance, if a seller
doesn't agree with a previous engineer's report or inspection
report, he believes that the seller can, in essence, tear up that
report; if that buyer goes away, then a new buyer could go along
without that former report being disclosed. In fact, it may even
be illegal to disclose that former report, which Mr. Jeannet sees
as a problem. He asked whether he is reading that correctly.
Number 0118
REPRESENTATIVE ROKEBERG answered that he wouldn't agree with Mr.
Jeannet's interpretation. He elaborated:
If a seller is aware that there is a problem with this
home, it has nothing to do with this report. If they
became aware of it by the report, that's one form of
communication. It's the report itself that doesn't
survive. It's not the knowledge. The knowledge ... is
[an] evidentiary fact. So the two may be connected as a
communication but not connected in fact.
MR. JEANNET replied that as he sees it, however, it is left up to
the opinion of the seller as to whether that former report or the
deficiencies noted in it are legitimate. That is where he believes
the problem is. If a problem had been noted by a former inspector,
then he doesn't think it should be left up to the seller to
determine whether that needs to be addressed.
REPRESENTATIVE ROKEBERG responded that the state law says that the
seller has to fill out the disclosure form, which has nothing to do
with the home inspection report. Those are two separate documents.
Number 0160
MR. JEANNET pointed out a real-life example that had occurred
within the last 30 days in Fairbanks. He had been asked to look at
a home that another inspector had looked at only two or three weeks
previously. He was told by the real estate agent that the former
report was null and void, the buyer had gone by the wayside, there
was a new buyer, and Mr. Jeannet didn't even need to look at that
former report. However, Mr. Jeannet had insisted upon looking at
the report. As it turned out, some issues were brought out in that
report because of snow and other conditions present at the time
when the other inspector had looked at the home; the inspector had
been able to observe some things that later, when the snow had been
removed and conditions were different, Mr. Jeannet wouldn't have
been able to see.
MR. JEANNET emphasized that in that instance, the disclosure
statements had already been filled out, prior to even listing the
home. His only tip-off had been the comments [in the report] from
that previous engineer who had looked at the place. Under this
bill, in contrast, Mr. Jeannet wouldn't have been able to demand to
look at the previous report, and he believes that perhaps the
seller would have been prohibited from providing it to him.
REPRESENTATIVE ROKEBERG disagreed. He said that if the seller
becomes aware, under the state real estate disclosure statute, that
there is any deficiency, then he must modify the disclosure report.
"And if he's not, he's subject to the problem, not the home
inspector or you," Representative Rokeberg added.
MR. JEANNET specified that he would rather have an engineer tell
him that there isn't a problem, rather than having the seller say,
"I have no problems."
REPRESENTATIVE ROKEBERG responded:
He can show you the report. The fact pattern you've
described has almost nothing to do with this bill. ...
We're talking about the validity of the grounds to sue
somebody. That doesn't mean the report doesn't still
exist ... or the seller became aware of a defect. If the
seller's aware of a defect, ... the disclosure law is
what applies, not this bill. So I'm not sure how ... the
fact pattern you described to the committee would be
affected by this bill.
Number 0267
MR. JEANNET explained that he had brought it up because in
Representative Rokeberg's introduction of the bill before the
committee, he had mentioned three- and four-year-old reports that
may come somehow cloud the issue of old deficiencies regarding the
property, and that may somehow inappropriately hinder the sale.
Mr. Jeannet restated that he doesn't know if it should be the
seller who makes the call as to whether those old reports should be
discarded.
Number 0300
RON JOHNSON testified via teleconference from Kenai, specifying
that he was speaking primarily on his own behalf, although he
formerly was a member of the real estate commission. Referring to
page 5, line 1, Mr. Johnson questioned what the type of insurance
requirement of the home inspector has to do with any member of the
public being covered or protected. He suggested eliminating that
and letting regulations determine what types of insurance are
required. He believes it needs to be addressed as a protection for
the public, rather than property damage, liability and injury; he
cannot see the logic behind that. He also asked what the liability
insurance does for him, as a member of the public.
REPRESENTATIVE ROKEBERG replied, "If the inspector damages you or
does something wrong by his activities, then he's got liability
insurance. Or he damages your property perhaps."
Number 0360
MR. JOHNSON said he would accept Representative Rokeberg's
interpretation. He then turned attention to page 6, line 8. He
told members that it seems that a party to a transaction would
include the lender. A lender makes the loan based upon the home
inspector's report; if that report proves to be incorrect or has
omissions, and if the purchaser "walks and leaves the lender
holding the bag," then it seems that the lender is a party to the
transaction who should be included.
MR. JOHNSON brought members' attention to page 6, line 14,
paragraph (2), which said, "within one year after the date of the
written report." He recalled that the supreme court in 1994 had a
decision against the real estate commission relative to the one-
year date; he suggested that somebody may want to research that
decision. Mr. Johnson concluded by saying he doesn't believe that
engineers should be exempt.
Number 0432
REPRESENTATIVE ROKEBERG requested clarification about the one-year
provision.
MR. JOHNSON answered that the real estate commission had a ruling
relative to "the surety fund discovery of damage." The real estate
commission was challenged in the superior court, then in the
supreme court, where the one-year portion of that was overturned.
In response to Representative Rokeberg's question as to whether
that was related to the condition of the property, Mr. Johnson
explained that the reasoning behind the decision was that "if you
found the flaw, you had one year to act on it, or two years from
the transaction, and the supreme court said, 'No, there should be
two years in either case.'" Mr. Johnson suggested looking at that
decision and weighing it against the language in this bill in order
to avoid getting into that supreme court argument relative to this
law [HB 207] in the future.
REPRESENTATIVE ROKEBERG stated the intention of making the report
only good for a year, not the cause of action. "That's the
distinction we're trying to make," he added.
MR. JOHNSON said he can see that there is a good reason for the
report being good for a year. However, it seems that because of
the similarity, that supreme court case might be used against this
legislation.
Number 0522
MARK LEWIS, Registered Civil Engineer and President of the Alaska
Association of Home Inspectors, testified via teleconference from
Anchorage, specifying that his organization is the Alaska chapter
of the American Society of Home Inspectors that Representative
Rokeberg had mentioned in his opening remarks. Mr. Lewis said he
had worked with Representative Rokeberg on this for a while. He
had reviewed Version B [1-LS0132\B, Lauterbach, 3/16/00] earlier
that week but had just received Version Q.
MR. LEWIS specified that in representing the local association of
home inspectors, there are a couple of concerns. First, if
engineers are exempt, the license fee will increase; a side issue
is that most houses don't need a complete engineering evaluation,
although there are definitely exceptions to that. In his personal
opinion, which he believes is shared by a number of people, the
purpose of a home inspection is simply to identify whether there
are major concerns, and then to recommend further evaluation, as
necessary, depending on whether the type of problem is structural,
plumbing-related and so forth.
MR. LEWIS next referred members to page 5, line 25, which read
[beginning on line 24], "In addition to other relief, the court may
impose a civil penalty of not more than $250 for each violation."
Mr. Lewis said this law parallels in some sense the engineering
statutes; he suggested increasing the penalty to make it more
consistent because these are not $50 or $100 items but potentially
are $50,000, $100,000 or $300,000 issues. The penalty for
noncompliance with the law, to his belief, should be increased
because $250 is not that much.
Number 0637
MR. LEWIS informed members that some big issues relate to page 6
regarding legal actions against a home inspector. The wording has
changed in paragraph (a)(1) from Version B, provided earlier that
week, to Version Q. He favors the language in Version B, which
said, "by the person who contracted and paid for the report",
rather than Version Q, which says, "by a person who was a seller,
owner, or prospective buyer of the inspected property at the time
the inspection was performed".
MR. LEWIS explained that although perhaps the latter is a little
more clear, he has a problem with being liable to somebody he
hadn't talked to. He believes liability should be limited to the
person who paid for the report, not to anybody in the transaction,
because he isn't doing an inspection and writing a report for
everybody else; he is writing it for a specific client, and his
fiduciary responsibility is to that individual or those
individuals, not to everybody else in the process, especially other
potential buyers. Mr. Lewis pointed out that the phrase
"prospective buyer" is unclear because a property may have multiple
prospective buyers. One who happens to be looking for houses at
the same time that the inspection report was done could argue that
he or she was a prospective buyer at the time but perhaps just
didn't know about it. He believes that should be addressed.
MR. LEWIS turned attention to subsection (b) on page 6, brand-new
that week, which read:
(b) A person may not bring an action against an
individual licensed or registered under this chapter
based on omissions in a written home inspection report
prepared by the inspector unless the action is brought by
a person who was a seller, owner, or prospective buyer of
the inspected property at the time the inspection was
performed.
As a representative of the inspectors locally, Mr. Lewis said he is
fully against that. It is unlimited. Furthermore, he is
frustrated because this goes against the approach that he thought
had been worked out through discussions with Representative
Rokeberg regarding what is reasonable in the whole are of legal
actions against the home inspector.
Number 0787
MR. LEWIS highlighted a further difference between Version B and
Version Q, relating to AS 08.57.090, found on page 4 in both
versions. Version Q says "licensed home inspector" or "licensed
home inspectors" in various subsections, whereas Version B had said
"home inspector" or "home inspectors." Mr. Lewis asked what the
difference is. Noting that he wears two hats [home inspector and
civil engineer], he said he believes it is easy to confuse a home
inspection with an engineering evaluation. He thinks those are two
different things, which engineers need to keep in mind; if they
want to do home inspections, he proposed that they not be called
home inspectors.
MR. LEWIS told members that the argument he keeps hearing in
testimony is that a licensed, registered engineer will "hopefully"
know what he or she is doing, and "should" know that, and that an
existing board can deal with problems. Speaking with what he terms
a "slightly hostile position" because of all the changes, Mr. Lewis
said this is just joint regulation of one product provided to the
public with two different boards, and there is no set of standards
that the engineering board has developed; it is all up to
engineers. Mr. Lewis restated his original position, which he said
he has held all along: engineers should not be exempt from this
law, nor should the board that regulates engineers also regulate
home inspections. He doesn't believe the product is the same. "If
you're so good at home inspection and you're an engineer, then it
would not be that hard to get licensed," he added.
Number 0918
MR. LEWIS asked whether an engineer who signs a report is liable
under the AELS [architects, engineers and land surveyors] laws
under Chapter 48 [of Title 8] of the Alaska Statutes. Noting that
the argument he has heard for exemption of engineers and architects
is based on qualifications, he asked how that makes them exempt
from liability insurance. He doesn't believe there is an answer,
he said, because AELS laws in Chapter 48 don't require insurance,
whereas this law [HB 207] does. There would be home inspectors
covered [under HB 207], whereas an engineer may not have insurance.
Mr. Lewis reiterated that engineers should not be exempt, for a
number of reasons. He thinks in some ways this [bill] goes against
protecting the public and the home buyer, which is what it was
originally intended to do. Noting that he had other issues, Mr.
Lewis nonetheless said he would stop there.
Number 1035
WILLIAM BRUU, ICBO Inspector and Home Inspector, testified via
teleconference from the Mat-Su LIO, representing himself as
president of his firm. Referring to page 6, lines 2-7, he asked
whether that can be interpreted as limiting his right as an ICBO
inspector to file a lien on new construction for services rendered
to the property that haven't been paid for.
REPRESENTATIVE ROKEBERG said he would review the bill regarding
that.
REPRESENTATIVE JAMES asked whether Julia Coster, Assistant Attorney
General with the Department of Law, who had been online earlier,
had heard that question. [She was then told by the teleconference
moderator that Ms. Coster had had to leave.]
Number 1096
MR. BRUU next referred members to page 6, line 8, regarding legal
actions against the home inspector. He suggested redrafting those
two paragraphs so that the definition of the limits of the home
inspector's liability is addressed in one section and the life of
the report is addressed in a second section.
REPRESENTATIVE JAMES asked whether anyone had answers for Mr. Bruu;
none were offered.
MR. BRUU noted that he himself had used the lien laws in the past
to take and ensure payment for his services for inspections on new
construction only; it doesn't apply to existing construction. He
added that if ICBO inspectors are going to be licensed under the
bill, there is a need to make sure that their capability to ensure
payment is not limited.
REPRESENTATIVE JAMES commented, "I'm not sure we can specifically
eliminate that opportunity."
Number 1172
REPRESENTATIVE ROKEBERG stated that this says one must be licensed
to be able to do the lien. An engineer doing home inspections may
not be able to do it. He suggested, therefore, that engineers who
don't want to be included might want to rethink that position.
MR. BRUU surmised that it will probably end up being tested in
court. He pointed out that one other inspector, who no longer was
at the Mat-Su LIO, had conveyed the following suggestion: On the
liability, the life of the report should be limited to 90 days or
less, or to the person who contracts for the service.
Number 1265
SHARON MACKLIN, Lobbyist for the Alaska Professional Design
Council, came forward to testify, noting that the Alaska
Professional Design Council is a trade association of architects,
engineers, land surveyors and landscape architects. She stated:
We are in support of the bill. We've worked very closely
with Representative Rokeberg and his staff on this bill,
and feel that it addresses our concerns that are
primarily on page 8 [Version Q], the exemption for
licensed architects and engineers.
MS. MACKLIN agreed that Juneau is a community that doesn't have
home inspectors, and where many engineers do home inspections; she
has heard that it is true in Fairbanks as well, "although it sounds
like there are some ICBO-licensed or certified home inspectors
there." She restated support for the legislation.
Number 1324
REPRESENTATIVE CROFT asked whether those categories should be
exempt from the entire bill or just the licensing requirement,
assuming they are qualified because of being engineers or
architects. For example, should they also be exempt from the
insurance or inspection report requirements?
MS. MACKLIN answered that the issue of [E&O] insurance was brought
up in one bill version, requiring architects or engineers who do
home inspections to carry, to her recollection, $250,000 [of
insurance]. She said she couldn't remember exactly why that was
deleted, but discussions with engineers who do home inspections now
have revealed that they carry E&O insurance for everything and
would be covered under their existing insurance.
REPRESENTATIVE CROFT pointed out that the exemption on page 8 is
only an exemption from licensure. It doesn't affect the
requirement of the form of the report, or the content. He
requested confirmation.
MS. MACKLIN said she didn't know.
REPRESENTATIVE ROKEBERG offered his opinion that if one isn't under
the licensure, one's standard of practice is not regulated.
REPRESENTATIVE CROFT noted that the report section says, "before
performing a home inspection, a licensee shall provide." Alluding
to engineers and architects, he stated, "So, they're not a
licensee, so they're not under it."
Number 1398
REPRESENTATIVE ROKEBERG stated that he wants to make sure that
those engineers and architects who are performing home inspections
don't get any of the benefits or restrictions contained in this
bill. They are exempt from this bill. Furthermore, engineers and
architects cannot advertise themselves as licensed home inspectors.
MS. MACKLIN responded, "And we are comfortable with that."
REPRESENTATIVE ROKEBERG added that he doesn't believe that the one-
year report limitation would apply to them, either. He then asked,
"Ms. Macklin, if we were not to exempt the engineers and
architects, would your clients support this bill?"
MS. MACKLIN said no.
Number 1463
REPRESENTATIVE JAMES remarked that she feels a little uncomfortable
setting up a bureaucracy of home inspectors that don't have to have
engineering qualifications or any real qualifications except for
some testing or classes, and then putting engineers out in another
area by themselves. She herself makes quite comfortable with
engineers making these reports, she added.
REPRESENTATIVE KERTTULA pointed out that engineers would also be
exempt from getting any compensation for breach of contract unless
they also had the home inspector license.
REPRESENTATIVE ROKEBERG replied that they should be licensed, but
of their own volition.
REPRESENTATIVE KERTTULA indicated she wants to be clear that the
engineers are comfortable with that.
REPRESENTATIVE JAMES commented that from her perspective, it
appears to create a conflict in that engineers are currently doing
[home inspections] and would be unhappy if they weren't exempt from
this proposed law. She asked:
Does that mean they aren't going to do it anymore? Or,
if they are going to do it, they're not going to be
following the rules? Or they're not going to be able to
have any of the benefits? ... It doesn't seem to me like
it ... meets the proper intentions of what we're hoping
to fix.
Number 1580
REPRESENTATIVE ROKEBERG answered that one key issue and conflict
within the bill is trying to reconcile those who are in the
business, those who receive the service, and those who are
architects and engineers. Engineers and architects, who already
are regulated under the [AELS] board, don't wish to be regulated in
this manner. If they wish to be licensed under this chapter, they
can do so, but they are exempt at their own request, by and large.
It happens that a couple of small benefits in the bill accrue to
those who are licensed and pay their fees. Representative Rokeberg
said he agree with the realtors and would like to see [architects
and engineers] licensed under the bill, but the political realities
are not there.
Number 1690
REPRESENTATIVE CROFT emphasized the distinction between exemption
from a licensure provision and exemption from other provisions.
For the former, it makes sense that engineers and architects would
be exempt from being under a different board with a whole set of
bureaucracy. For the latter, he isn't so concerned about the
insurance part, if it is true that they cover their own insurance.
However, on page 6 [beginning on line 20], "Inspection report
required", it talks about the notice that must be provided, and [on
page 7] it has the "Prohibited acts" section. Those are, in his
opinion, the heart of the consumer protection aspect, making sure
that the report says certain things and that certain things aren't
done, including acts relating to a conflict of interest. Although
understanding completely why there wouldn't be a whole new test,
licensure and all that [for architects and engineers],
Representative Croft said he doesn't understand why the exemptions
apply to some of the standards of the report.
REPRESENTATIVE JAMES agreed with the need for assurance that the
people doing this are qualified. She also agreed with the need for
a board of approval so that the public has someplace to go to
complain about someone's license, for example. As for engineers,
she feels that they are qualified by virtue of "their education and
their application," and that their own license - which is superior
to what this would be - would inhibit them, under their own board,
from doing something they are not qualified to do. Besides, it
seems this is one thing they would be qualified to do. However,
Representative James indicated, even if engineers are exempt from
having the [home inspector's] license, they ought not to be exempt
otherwise for consistency and efficiency.
Number 1869
REPRESENTATIVE ROKEBERG said he understands exactly what
Representative James is saying, but it had created a huge dilemma
in terms of legislative drafting and implementation. He explained:
What we would do is we'd set up the board as we've done
in this bill, but then we'd have to turn around and take
the engineering chapter and modify that again, and then
direct that other board to set these standards up, and
these standards of practices up, I think. And ... that's
the way it would have to be to work correctly, to keep
the exemption in. In other words, ... we'd have a bunch
of nonengineers telling the engineers how to do their
business. And that's the political and the practical
dilemma when you draft like that.
MS. MACKLIN responded to Representative Croft's comments regarding
protection of the public. She said there is some language in the
"board of registration for architects and engineers law" that
revolves around conflict of interest and whom a person gets paid
by; a few things seem to overlap, but she hasn't had time to review
it in-depth. She suggested that might be something to look at.
Number 1961
REPRESENTATIVE JAMES asked what Ms. Macklin believes that the
engineers and architects, who are exempt under the bill, will do
when they do inspections. Will they do their own reporting? Will
it have any connection whatsoever with what others are doing?
MS. MACKLIN answered that she hadn't talked to any engineers who do
home inspections about that specifically. However, she assumes
that if new forms come out for home inspections that are required
by this board of registration for home inspectors, then the design
professionals who are doing home inspections would want to utilize
the same forms and comply.
Number 2035
REPRESENTATIVE MURKOWSKI echoed the concern that this allows two
different standards to be out there for home inspectors, depending
on whether the person is a licensed home inspector or an architect-
engineer. In response to Representative Rokeberg's statement that
this is difficult to draft, she suggested that although the
licensure requirement is exempt, the bill could still have
provisions so that an architect doing home inspections would be
required to comply with a particular provision such as the
reporting.
REPRESENTATIVE ROKEBERG disagreed. He asked who would enforce it.
An architect or engineer cannot be put under the auspices of the
home inspectors' board if they are exempt, he said. And if the
expectation is regulation by the engineering and architectural
board, then the legislature would be "intruding into their chapter
and telling them what to do." He added, "We would have to modify
their section of the law and mandate, to their board, that they
should change their regulatory scheme in which to enforce it."
Number 2193
REPRESENTATIVE CROFT noted that the bill contains some important
disclosure restrictions. He suggested the possibility of saying
that [engineers and architects] are bound by the form of the report
and the prohibited acts, and that any violation would be referred
to the engineers' and architects' own board for action.
REPRESENTATIVE ROKEBERG stated that as a matter of public policy,
this legislation is being drafted as an incentive for engineers and
architects to become licensed home inspectors. "They don't want to
be home inspector licensees, but I would like them to be, and,
therefore, there is an intention here," he added. "Also, I think
we've heard testimony that the cost of licensure will go up without
those people that are conducting this business [if] they don't join
the group that's to be regulated as home inspectors."
Number 2313
REPRESENTATIVE JAMES replied that she had thought the purpose of
the bill was to make some rules and regulations regarding how these
inspection reports would be done, and that the board would provide
the public somewhere to go in the event that the [inspectors] don't
do it that way. That is the reason for the licensing. She asked
whether she had missed something.
REPRESENTATIVE ROKEBERG answered, "No, that's what it does." She
asked John Bitney for his comments.
Number 2358
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation (AHFC), came forward, noting that AHFC is addressed in
Sections 4 and 5 of the bill. He explained that state law since
1992 has required that in order for AHFC to purchase the mortgage
on a home newly constructed after 1992, [the home] has to have a
home inspection in order to qualify. Section 4 references the ICBO
and other options. Regardless of whether the inspection is done by
the ICBO, the "International Association of Electrical," or an
engineer-architect, Mr. Bitney said, there is a specific five-step
process in the statute. That will continue, and there will be "a
required form, if you will, in the documents, when we purchase a
loan."
MR. BITNEY explained that AHFC is asking, with this legislation,
that if a program is going to be put in place - which AHFC supports
doing - then the statute would reflect that these people can do
that inspection; then, after the transition period is completed,
the other types of inspection [ends mid-speech because of tape
change; however, Mr. Bitney had sent a letter dated March 22, 2000,
which stated in part: "AHFC would like HB 207 to allow licensed
home inspectors to approve home[s] for mortgages that can be
purchased by the corporation. Sections 4 and 5 of the draft would
make this change to current law."]
TAPE 00-38, SIDE A
MR. BITNEY expressed concern that someone doing a home inspection
without a license but who "had an ICBO" would be in conflict with
the statute as envisioned here. Mr. Bitney informed the committee
that AHFC supports HB 207 because it will improve consumer
protection. Currently, the incentive to have an inspection comes
from the buyer - in order to obtain a report on the condition of
the home - or is tied to some sort of requirement regarding the
financing.
Number 0063
MR. BITNEY explained that when something goes wrong, there is no
clear delineation for the purchaser regarding who is responsible
for a problem. He has looked at homes in the Interior, as recently
as last week, in which an out-of-state buyer has assumed that
Alaska is similar to states where the building inspector is almost
a Mafia don in terms of authority on the construction process of a
home. This is not the case in Alaska, however, as people find out
when something goes wrong on the home. Therefore, it becomes a
question of who is responsible. The AHFC does not believe it has
liability due to the reports. However, the reference in statute
regarding the AHFC's recognition of the ICBO certificate leads
people to want AHFC to step up to the plate and call these
certificate agencies, on a national level, to force them to come
forward, or to get the builder to come forward. Mr. Bitney stated
that AHFC is supporting HB 207 because it levels the playing field
to some degree and provides a much clearer delineation for the home
buyer when something does go wrong.
Number 0286
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Community & Economic Development, turned attention to
whether the report requirements should apply to engineers while
still exempting them from the licensure law. If the committee
decides to do that, Ms. Reardon said, it is better, from her
perspective, to give the AELS board the responsibility for
determining whether an engineer had [performed properly], rather
than having the home inspector board first decide whether the
engineer had violated something and then referring it to the
engineering board.
MS. REARDON explained her rationale. She agrees that with two
boards applying the same statute, there would be the potential to
end up with two standards. Therefore, it would be best to have the
board governing the license - rather than another board - making
the decision; otherwise, there might be a two-step disciplinary
process. If the desire is to have each board govern "its own,"
then the clearer the language can be made on page 6 regarding what
has to be in the report, the better; "the less room for subjective
interpretation, the better," she added.
REPRESENTATIVE ROKEBERG commented that Ms. Reardon had encapsulated
some of the frustrations in putting this bill together. He
believes that one board cannot be intruded upon by creating another
board and having cross-regulations. That is not a workable
situation, and therefore there is an intention to provide an
incentive to those people on one board to become dual members.
Number 0535
REPRESENTATIVE CROFT noted that his wife is an architect. He said
it seems [architects] could be required to get a license and to
meet the standards of this, but perhaps they would be waived in as
prequalified and therefore wouldn't have to take a test. If an
individual wants to be an architect or engineer, and also wants to
be a home inspector, the individual would have to obtain the [home
inspector] license; then the individual would be waived in, based
on the assumption that he or she is doing a good job.
REPRESENTATIVE JAMES commented that if she herself were an
architect or engineer who had to pay $800 every two years for a
license, along with others who don't have nearly the education, she
would feel kind of out of place.
REPRESENTATIVE KERTTULA noted that she had worked with occupational
licensing at the Office of the Attorney General. She agreed with
Ms. Reardon that one would not want to have one board referring
back to another, nor would one want to mix up the two professions.
She believes that everyone wants protections in place regarding
what the report entails. Representative Kerttula said there needs
to be those requirements going back to the architects and engineers
so that everyone knows what the report is going to be. However,
she isn't sure how to accomplish it.
REPRESENTATIVE JAMES remarked that it seems there are several
processes here. First is the delineation of what is included in a
home inspection report in order to qualify for the financing
requirement of the house. She added, "These are the
qualifications. And these are the folks that can do it. And in
order to be licensed as this inspector, this is what you have to
do, and when you get to be that, you have to follow these rules."
Number 0698
REPRESENTATIVE ROKEBERG noted that some prior versions of HB 207
had included a checklist regarding what should be in the report.
Substantial testimony was taken, however, regarding not being too
specific because of the need for flexibility about what should be
included in the report. He indicated that it was agreed that the
board, by regulation, would establish a report while recognizing
certain flexibilities. Therefore, he did not believe this should
be stipulated in statute.
REPRESENTATIVE ROKEBERG next responded to Representative Kerttula's
comments. He said the marketplace will start differentiating among
the architect, engineer, home inspector and licensed home
inspector. He is relying on the marketplace to make those
distinctions; it would require a certain amount of time to sort
itself out. Furthermore, with the home inspector board in place,
there will be discussions between the two boards and thus changes
would take place on a natural basis over the years.
REPRESENTATIVE JAMES asked if one could have this lesser education
as a home inspector and charge less for a home inspection than a
licensed engineer performing a home inspection would charge. She
further asked whether people would, then, turn to home inspectors
and forego including engineers.
REPRESENTATIVE ROKEBERG explained that currently the marketplace is
in equilibrium regarding the charges for the scope of work between
the engineer home inspector and the nonengineer home inspector.
The market has basically set those prices. He pointed out that an
engineer has to make a more detailed inspection of the foundation,
roof members or component parts; in order to do so, the engineer
actually raises his/her fee schedule. The home inspector cannot do
that and "almost, in essence, has to refer to a structural
engineer," which happens now. However, Representative Rokeberg
said, there was significant testimony that although an engineer may
be trained at a university, he/she is not trained as a home
inspector.
REPRESENTATIVE ROKEBERG suggested that probably some of the best
home inspectors are engineers with 20 years' background in
construction, and who know the business. Moreover, some very
competent home inspectors are not engineers but have been in
construction and other allied areas for years. He remarked, "We
all know that the college of hard knocks is the best master's
degree you can probably get." Representative Rokeberg said that
Mr. Lewis, an engineer and a home inspector, therefore wants to
include engineers in this because he believes they need better
education - which is not received as an engineer - in performing
home inspections.
Number 1028
REPRESENTATIVE CROFT referred to the section on page 6 regarding
legal actions against home inspectors. He indicated his belief
that the desire is not allow a suit to be brought based on a report
that is over one year old. Therefore, he offered Amendment 1:
Page 6, line 10,
Delete "statements made in" and "unless"
Page 6, line 11,
Delete "the action is brought"
Insert "that is more than one year old"
Page 6
Delete lines 12-19
REPRESENTATIVE ROKEBERG objected. He clarified that he didn't
object to Representative Croft's concept. However, he would like
to limit those who can bring an action to the seller, owner and
prospective buyer as well as whoever purchased the report.
REPRESENTATIVE JAMES asked if Representative Rokeberg would be
willing to separate the amendment into two parts.
REPRESENTATIVE ROKEBERG said he wasn't sure that it could be
divided.
Number 1193
REPRESENTATIVE CROFT offered to change Amendment 1 so that the
first two changes would remain the same, but the last change would
only delete lines 14-19. After some discussion, Representative
Croft returned to the initial iteration of Amendment 1.
REPRESENTATIVE JAMES pointed out that initially that provision, AS
08.57.810, says "A person may not". She suggested that the
language could be changed to read, "Only a person who was a seller,
owner or perspective buyer ... may bring an action ... and cannot
be based on a written home inspection report that is more than one
year old."
Number 1328
REPRESENTATIVE ROKEBERG withdrew his objection to Amendment 1.
Therefore, there being no objection, Amendment 1 was adopted.
REPRESENTATIVE JAMES suggested that in order to get this
satisfactorily drafted, the committee should list the points
desired and place a conceptual amendment before the committee.
Asking whether it captures the intent, she stated:
If we want to have the ideas are that the inspection
report cannot be more than a year old and that the person
who brings the action ... cannot be anyone other than a
seller, an owner, a prospective buyer or the purchaser of
the report.
REPRESENTATIVE ROKEBERG said that would [satisfy] what he is
looking for.
REPRESENTATIVE CROFT said he would like to discuss the idea.
Number 1403
REPRESENTATIVE ROKEBERG made a motion to adopt Representative
James' aforementioned suggestion as a conceptual amendment.
REPRESENTATIVE MURKOWSKI commented that everything has to be a
conceptual amendment.
REPRESENTATIVE CROFT surmised that there is agreement on the point
that the report [must not be more than] a year old; now the
discussion is regarding who can [bring action].
REPRESENTATIVE JAMES said she believes if those points can be
agreed upon conceptually, then the drafter can replace the entire
section with the language [of the conceptual amendment].
REPRESENTATIVE CROFT mentioned that problems arise when one
attempts to predict all of the possible factual situations. He
stressed that there may be people affected by this other than those
mentioned.
REPRESENTATIVE ROKEBERG said that may be true. Upon review of
other parties that he wanted to "cut off," he expressed the need to
"cut off" the successive home buyer. Representative Rokeberg
emphasized the need for [one who can bring suit] to be a party to
the transaction at the time of the report.
REPRESENTATIVE JAMES suggested that if [the report] is determined
to be incorrect at a later time, certainly the lender is a party to
the transaction and thus should be included. This language does
not include the lender, however.
Number 1537
REPRESENTATIVE MURKOWSKI suggested the following language, "a party
to the transaction at the time the inspection was performed," which
would seem to include everyone of concern.
REPRESENTATIVE ROKEBERG answered that would work for him.
Number 1551
REPRESENTATIVE KERTTULA expressed concern that someone who really
wasn't a party at the immediate time still could really get taken
in by the report, if it were somehow incorrect.
REPRESENTATIVE ROKEBERG interjected that there is a restriction in
the bill such that the report cannot br circulated without the
permission of whoever paid for it. He pointed out that circulation
of these reports too soon is one problem in the industry.
REPRESENTATIVE KERTTULA related her understanding, then, that the
person whom action is brought against is the person who circulated
the report. She agreed that may have been solved.
Number 1598
REPRESENTATIVE CROFT referred to page 7, lines 16-22. He said
there could be a situation in which a month later, and with the
permission of the person that did the report, the report is shown
to a subsequent client, who would not be a party to the transaction
that made the report. He indicated that use of the language
"affected party" would be appropriate language.
REPRESENTATIVE ROKEBERG pointed out that an affected party could be
someone who wasn't part of the first deal and becomes privy to the
court later and indirectly. He specified that he wanted to "cut
off" those people.
REPRESENTATIVE CROFT emphasized, "Well, they could get it under
your own bill .... There's a procedure to disclose this to people
that were not party to the original [report]."
REPRESENTATIVE ROKEBERG replied that such could happen with
consent, which he believes is acceptable.
REPRESENTATIVE JAMES surmised, then, that the consent would have to
be given by the person who paid for the report.
REPRESENTATIVE ROKEBERG affirmed that and said that is already in
the legislation.
Number 1693
REPRESENTATIVE CROFT suggested language could be inserted in AS
08.57.810 saying, "a person may not bring an action based on a
report that is more than one year old or that was unlawfully
disclosed".
REPRESENTATIVE ROKEBERG indicated agreement with that language.
REPRESENTATIVE JAMES informed the committee of a message from Mark
Lewis regarding the need to insert the word "original" in order to
refer to the original purchaser of the report. Mr. Lewis also had
suggested that "home inspection" be redefined in the bill.
Number 1765
REPRESENTATIVE CROFT turned to the amendment before the committee
that would eliminate subsection (a) from AS 08.57.810. The
amendment would read as follows:
A person may not bring an action against individual
licensed or registered under this chapter based on a
written home inspection report prepared by the inspector
that is more than one year old or unlawfully disclosed.
REPRESENTATIVE JAMES clarified that the language on page 6, lines
12-19, would be deleted.
REPRESENTATIVE ROKEBERG announced that he didn't object to that
amendment.
[There being no objection, it was so ordered and the language read
by Representative Croft (under Number 1765) was adopted. It was
later suggested that this amendment overrode Amendment 1, adopted
earlier.]
Number 1818
REPRESENTATIVE ROKEBERG referred to page 5, line 25, which imposes
a civil penalty of not more than $250; he said that seems to be a
pecuniary amount. Therefore, he asked if Ms. Reardon could
recommend an amount.
MS. REARDON said she assumes that this amount is for each violation
and as such could build up to be more than $250. She said she
didn't have an opinion on this.
Number 1873
REPRESENTATIVE ROKEBERG moved that the penalty amount be changed to
$500. There being no objection, it was so ordered.
Number 1885
REPRESENTATIVE KERTTULA moved to report CSHB 207 [version 1-
LS0132\Q, Lauterbach, 3/24/00], as amended, out of committee with
individual recommendations and the accompanying zero fiscal note.
There being no objection, it was so ordered and CSHB 207(JUD) was
reported from the House Judiciary Standing Committee.
HB 211 - HEALTH CARE INSURANCE
Number 1904
REPRESENTATIVE JAMES announced that she would bring up HOUSE BILL
NO. 211, "An Act relating to liability for providing managed care
services, to regulation of managed care insurance plans, and to
patient rights and prohibited practices under health insurance; and
providing for an effective date." [HB 211 was held.]
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:30 p.m.
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