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AB-1024 Home Inspector Licensure Act.(2019-2020)

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Date Published: 01/16/2020 09:00 PM
AB1024:v98#DOCUMENT

Amended  IN  Assembly  January 16, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1024


Introduced by Assembly Member Frazier

February 21, 2019


An act to add Section 7195.1 to amend Section 7198 of, to amend and renumber Sections 7195.5, 7195.7, 7196, 7196.1, 7196.2, and 7197 of, to amend, renumber, and repeal Section 7199 of, to add the heading of Article 1 (commencing with Section 7195) and Article 5 (commencing with Section 7198) to Chapter 9.3 of Division 3 of, to add Article 2 (commencing with Section 7195.2), Article 3 (commencing with Section 7196), Article 4 (commencing with Section 7197), and Article 6 (commencing with Section 7199) to Chapter 9.3 of Division 3 of, and to add Sections 7195.1, 7196.4, 7198.1, and 7198.2 to, the Business and Professions Code, relating to contractors. home inspectors.


LEGISLATIVE COUNSEL'S DIGEST


AB 1024, as amended, Frazier. Home inspectors: licensing: Contractors’ State License Board. Inspector Licensure Act.
Existing law regulates a person who performs certain home inspections for a fee in connection with a transfer of real property. Existing law provides that it is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise. Under existing law, contractual provisions that purport to waive this duty, or limit the liability of the home inspector to the cost of the home inspection report, are contrary to public policy and invalid. Existing law prohibits commencement of a legal action for breach of duty arising from a home inspection report more than 4 years from the date of the inspection. Under existing law, certain activities by a home inspector or a company that employs a home inspector constitute unfair business practices.
This bill would enact the Home Inspection Licensure Act, which would revise and recast those provisions, and would make the substantive changes described below operative on and after January 1, 2025.
This bill would require the Department of Consumer Affairs to administer and enforce the provisions of the act. The bill would prohibit a person from acting or holding themself out as a home inspector unless that person has an active license, except as specified. The bill would make a willful violation of this provision a public offense punishable by imprisonment, by a fine not exceeding an unspecified amount, or by both imprisonment and fine. By creating a new crime, the bill would create a state-mandated local program.
This bill would require an applicant for a license to, among other things, submit to the department an original completed application containing specified personal information, proof of completion of a prelicensing education course from an approved provider, and payment of an unspecified application fee. The bill would require a license issued to be valid for 2 years following the date of issuance. The bill would authorize a person to renew their expired license upon the filing of a completed renewal application containing proof of completion of a continuing education course from an approved provider and payment of an unspecified renewal fee, except as specified. The bill would authorize a licensee to apply for an inactive license, and would prohibit the department from requiring an inactive license to be renewed after the licensee pays an unspecified one-time retired license fee.
This bill would authorize the department to enter into a reciprocity agreement with another state that authorizes a home inspector from that state to act or hold themselves out as a home inspector, if the department makes specified determinations and issues a temporary license to that home inspector that is valid for a period not exceeding one year.
This bill would require the department to approve a provider of professional home inspection educational courses that meets certain requirements, and would authorize the department to remove the approval if the course provider has failed to comply with those requirements. The bill would require the department to provide on its internet website certain information regarding every licensee and course provider, as specified.
This bill, instead, would prohibit commencement of a legal action for breach of duty arising from a home inspection report more than 2 years from the date of the inspection. The bill would require a home inspector, before beginning a home inspection, to provide to the client, and to obtain the client’s signature on, an inspection agreement containing specified information. The bill would require a home inspector to provide an inspection report to the client on or before 5 days following the completion of the home inspection, unless a different date is specified in the inspection agreement.
This bill would establish the Home Inspectors License Fund, and would require all fees, fines, and penalties collected pursuant to these provisions to be deposited into the fund, which the bill would make available for administration of these provisions, upon appropriation by the Legislature.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Contractors’ State License Law, provides for the licensure and regulation of contractors by the Contractors’ State License Board in the Department of Consumer Affairs. Existing law requires the board to appoint a registrar of contractors to carry out administrative duties, as provided.

Existing law defines home inspection and establishes a standard of care for persons performing home inspections.

This bill, beginning January 1, 2022, would require a person performing a home inspection, as defined, to be licensed by the Contractors’ State License Board. The bill would authorize the board to establish criteria for licensing home inspectors and establish fees for licensing and renewal. The bill would authorize the registrar to enforce the licensing provisions. The bill would exempt a licensed general contractor, pest control operator, architect, or professional engineer from these licensing provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Home Inspector Licensure Act.

SEC. 2.

 The heading of Article 1 (commencing with Section 7195) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  1. Definitions

SEC. 3.

 Section 7195.1 is added to the Business and Professions Code, to read:

7195.1.
 (a) For purposes of this chapter, the following definitions also apply:
(1) “Application” means an application for a license.
(2) “Course provider” means a provider of educational course related to the professional practice of conducting home inspections.
(3) “Department” means the Department of Consumer Affairs.
(4) “License” means a state license issued by the department under this chapter.
(b) This section shall become operative on January 1, 2025.

SEC. 4.

 Article 2 (commencing with Section 7195.2) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  2. Administration

7195.2.
 The Department of Consumer Affairs shall administer and enforce this chapter.

7195.3.
 Protection of the public shall be the highest priority for the department in exercising its licensing, regulatory, and disciplinary functions pursuant to the Home Inspector Licensure Act. Whenever the protection of the public is inconsistent with other interests sought to be promoted, the protection of the public shall be paramount.

7195.4.
 (a) (1) The department shall provide on its internet website information regarding the status of every licensee and course provider approved by the department in accordance with the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and the Information Practices Act of 1977 (Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code). The public information to be provided on the internet shall include information on suspensions and revocations of licenses, approvals issued by the department, and accusations filed pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) relative to persons or businesses subject to licensure, approval, or regulation by the department. The information shall not include personal information, including home telephone number, date of birth, or social security number. The department shall disclose a licensee’s or approved course provider’s address of record. However, the department shall allow a licensee or course provider to provide a post office box number or other alternate address, instead of their home address, as the address of record. The department may require a licensee or course provider who has provided a post office box number or other alternative mailing address as their address of record to provide a physical business address or residence address exclusively for the department’s internal administrative use and not for disclosure on the internet as the licensee’s or course provider’s address of record.
(2) In addition to the information required by paragraph (1), the department shall provide, on the internet, the continuing education course information provided by a licensee in their application for licensure renewal.
(b) The department shall not provide on the internet identifying information with respect to private reprovals or letters of warning, which shall remain confidential.

7195.5.
 The department may enter into a reciprocity agreement with another state that authorizes a home inspector from that state to act or hold themself out as a home inspector, and to assume or use the title of or any title designation or abbreviation as a licensed home inspector, if the department does all of the following:
(a) Determines that the state provides reciprocal authority for California licensees.
(b) Determines that state’s licensure requirements are equal to or exceed those of this state.
(c) Issues a temporary license to that home inspector upon the terms and conditions as may be determined by the department for a period not exceeding one year.

7195.6.
 (a) The department shall approve a course provider that demonstrates to the satisfaction of the department that they will do all of the following:
(1) Ensure that the instructors teaching qualified education courses are proficient and knowledgeable in the subject matter.
(2) Monitor and evaluate the quality of courses, curricula, instructors, and instructor training.
(3) Maintain records of attendance or independent study and distribute to each participant a certificate of completion that identifies the education provider and documents the subject taught, the date of completion of the education course, and the amount of education credit offered.
(4) Maintain documentation of approved education courses offered for prelicensing and continuing education credit under this article for a period of at least five years from the date the education course was offered.
(5) Provide to the department upon request any documentation of approved education courses for prelicensing and continuing education credit, including records of attendance or independent study.
(b) The department may remove the approval of a course provider that, in the determination of the department, has failed to comply with any of the requirements for approval specified in subdivision (a).

7195.7.
 This article shall become operative on January 1, 2025.

SEC. 5.

 Section 7195.5 of the Business and Professions Code is amended and renumbered to read:

7195.5.7196.6.
 (a) For purposes of improving landscape water use and irrigation efficiency, a home inspection report on a dwelling unit prepared pursuant to this chapter on a parcel containing an in-ground landscape irrigation system, the operation of which is under the exclusive control of the owner or occupant of the dwelling, may include an irrigation system inspection report, prepared by either a home inspector or certified landscape irrigation auditor, that contains all of the following:
(1) Examination of the irrigation system controller, if present, noting observable defects in installation or operation, or both.
(2) Activation of each zone or circuit providing irrigation water to turf grass, noting malfunctions observed in the operation of each of the following:
(A) The irrigation valve.
(B) Visible irrigation supply piping.
(C) Sprinkler heads and stems.
(3) During activation of the system pursuant to paragraph (2), observation of any of the following during the period of operation, in minutes, specified in the report:
(A) Irrigation spray being directed to hardscape.
(B) Irrigation water leaving the irrigated area as surface runoff.
(C) Ponding of irrigation water on the surface of the irrigated area.
(4) Notation whether inspection is limited due to snow, ice, or other site conditions that impede an inspection.
(b) Notwithstanding any other law, a sanction or penalty regarding prohibited hours, days, or effects of operation of a landscape irrigation system shall not be levied upon either the home inspector, the landscape irrigation auditor, the occupant, or the owner of a property by any state or local agency or water purveyor as a consequence of the operation of a landscape irrigation system for the purpose of an irrigation system inspection carried out under this section.
(c) A home inspector is encouraged to provide information or access to information regarding water-efficient landscape irrigation systems within the home inspection report.
(d) To the extent funds are available, the Department of Water Resources, in consultation with the California Real Estate Inspection Association and the Department of Housing and Community Development, shall compile an estimate of the number of properties for which an irrigation system inspection report has been prepared each year, beginning with 2018, for inclusion in an update to the California Water Plan.

SEC. 6.

 Section 7195.7 of the Business and Professions Code is amended and renumbered to read:

7195.7.7196.2.
 A home inspector shall not give an opinion of valuation on a property.

SEC. 7.

 Section 7196 of the Business and Professions Code is amended and renumbered to read:

7196.7196.1.
 It is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise.

SEC. 8.

 Article 3 (commencing with Section 7196) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  3. General Provisions

7196.
 (a) Except as provided in Section 7197.4, a person shall not act or hold themself out as a home inspector, or assume or use the title, designation, or abbreviation as a licensed home inspector unless that person has an active license.
(b) Every advertisement by a licensee shall contain their business name, business address or telephone number, and license number as they appear in the records of the department.
(c) This section shall become operative on January 1, 2025.

SEC. 9.

 Section 7196.1 of the Business and Professions Code is amended and renumbered to read:

7196.1.7196.7.
 (a) Nothing in this chapter shall be construed to allow home inspectors who are not registered engineers to perform any analysis of the systems, components, or structural integrity of a dwelling that would constitute the practice of civil, electrical, or mechanical engineering, or to exempt a home inspector from Chapter 3 (commencing with Section 5500), Chapter 7 (commencing with Section 6700), Chapter 9 (commencing with Section 7000), Chapter 14 (commencing with Section 8500) of Division 3, or Part 3 (commencing with Section 11300) of Division 4.
(b) This chapter does not apply to a registered engineer, licensed land surveyor, or licensed architect acting pursuant to their professional registration or license, nor does it affect the obligations of a real estate licensee or transferor under Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 3 of Division 2 of, or Article 2 (commencing with Section 2079) of Chapter 3 of Title 6 of Part 4 of Division 3 of, the Civil Code.
(c) Except as required to comply with standards set forth in law or regulation, a real estate appraiser licensed under Part 3 (commencing with Section 11300) of Division 4, performing a real estate appraisal, shall not engage in the activity of a home inspector performing a home inspection.

SEC. 10.

 Section 7196.2 of the Business and Professions Code is amended and renumbered to read:

7196.2.7196.5.
 (a) If a home inspector observes any shade of yellow corrugated stainless steel tubing during a home inspection, the home inspector shall include that observation, and the following notification, in the home inspection report:

“Manufacturers of yellow corrugated stainless steel tubing believe that yellow corrugated stainless steel tubing is safer if properly bonded and grounded as required by the manufacturer’s installation instructions. Proper bonding and grounding of this product can only be determined by a licensed electrical contractor.”

(b) For purposes of this section, “corrugated stainless steel tubing” means a flexible, stainless steel pipe used to supply natural gas and propane in residential, commercial, and industrial structures.
(c) The degree of care specified in Section 7196 shall be used in determining whether a home inspector has complied with the requirements of subdivision (a).

SEC. 11.

 Section 7196.4 is added to the Business and Professions Code, to read:

7196.4.
 (a) Before beginning a home inspection, a home inspector shall provide to the client, and shall obtain the client’s signature on, an inspection agreement that includes all of the following:
(1) The standards and work to be performed by the home inspector.
(2) The name and license number of the home inspector.
(3) The following statement:

“THE HOME INSPECTOR WILL NOT DETERMINE, AND THE REPORT PROVIDED UPON COMPLETION OF THE HOME INSPECTION WILL NOT CONTAIN A DETERMINATION OF, WHETHER THE HOME OR COMPONENTS OR SYSTEMS OF THE HOME THAT HAVE BEEN INSPECTED CONFORM TO LOCAL OR STATE BUILDING CODE REQUIREMENTS.”

(b) An inspection report shall be provided to the client by the date set forth in the inspection agreement and, in the event that the agreement does not set forth a date by which the report shall be provided to the client, the home inspector shall provide the report to the client on or before five days following the completion of the home inspection.
(c) This section shall become operative on January 1, 2025.

SEC. 12.

 Section 7197 of the Business and Professions Code is amended and renumbered to read:

7197.7196.3.
 (a) It is an unfair business practice for a home inspector, a company that employs the inspector, or a company that is controlled by a company that also has a financial interest in a company employing a home inspector, to do any of the following:
(1) To perform or offer to perform, for an additional fee, any repairs to a structure on which the inspector, or the inspector’s company, has prepared a home inspection report in the past 12 months.
(2) Inspect for a fee any property in which the inspector, or the inspector’s company, has any financial interest or any interest in the transfer of the property.
(3) To offer or deliver any compensation, inducement, or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company.
(4) Accept an engagement to make an inspection or to prepare a report in which the employment itself or the fee payable for the inspection is contingent upon the conclusions in the report, preestablished findings, or the close of escrow.
(b) A home protection company that is affiliated with or that retains the home inspector does not violate this section if it performs repairs pursuant to claims made under the home protection contract.
(c) This section shall not affect the ability of a structural pest control operator to perform repairs pursuant to Section 8505 as a result of a structural pest control inspection.
(d) Paragraph (1) of subdivision (a) shall not affect the ability of a roofing contractor who holds a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, to perform repairs pursuant to the contractor’s inspection of a roof for the specific purpose of providing a roof certification if all of the following conditions are met:
(1) Different employees perform the home inspection and the roof inspection.
(2) The roof inspection is ordered prior to, or at the same time as, the home inspection, or the roof inspection is completed before the commencement of the home inspection.
(3) The consumer is provided a consumer disclosure before he or she authorizes they authorize the home inspection that includes all of the following:
(A) The same company that performs the roof inspection and roof repairs will perform the home inspection on the same property.
(B) Any repairs that are authorized by the consumer are for the repairs identified in the roofing contractor’s roof inspection report and no repairs identified in the home inspection are authorized or allowed as specified in the roof inspection.
(C) The consumer has the right to seek a second opinion.
(4) For purposes of this subdivision, “roof certification” means a written statement by a licensed C-39 Roofing Contractor who has performed a roof inspection, made any necessary repairs, and warrants that the roof is free of leaks at the time that the certification is issued and should perform as designed for the specified term of the certification.

SEC. 13.

 Article 4 (commencing with Section 7197) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  4. Licensure

7197.
 (a) An applicant for a license shall submit to the department an original completed application package that contains the following:
(1) Name, residence address, mailing address if different from residence address, and telephone number of the applicant.
(2) Date of birth and social security number of the applicant.
(3) Proof of completion of a prelicensing education course from a course provider approved by the department pursuant to Section 7195.6.
(4) Payment of a fee as specified in Article 6 (commencing with Section 7199).
(b) An applicant for licensure as a home inspector shall submit to the Department of Justice fingerprint images and related information required by the Department of Justice via LiveScan for the purposes of allowing the department to obtain information as to the existence and content of a record of state or federal convictions and state or federal arrests and also information as to the existence and content of a record of state or federal arrests for which the Department of Justice establishes that the person is free on bail or on their own recognizance pending trial or appeal. If the applicant is located out of state, then the applicant shall include their fingerprint card with the application package and the department shall submit the fingerprint cards to the Department of Justice for the purposes of this subdivision.

7197.1.
 (a) As a condition of the issuance, reinstatement, reactivation, or continued valid use of a license under this chapter, a licensee shall maintain a policy or policies of insurance against liability imposed on or against it by law for damages arising out of claims based upon acts, errors, or omissions arising out of the home inspection services they provide.
(b) The limit of liability under the policy or policies of insurance required under this section shall not be less than twenty-five thousand dollars ($25,000) per occurrence.

7197.2.
 The department shall review all applications. The department shall approve an application and shall issue a “Certificate of Licensure” if all of the following are met:
(a) The application is complete and in the proper form.
(b) The department is satisfied that all statements on the application are true.
(c) The applicant has submitted payment of a fee as specified in Article 6 (commencing with Section 7199).
(d) The applicant is eligible in all other aspects to be licensed as a home inspector.

7197.3.
 (a) A license issued shall be valid for two years following the date of issuance.
(b) (1) Except as provided in paragraphs (2) and (3), a person may renew their expired license upon the filing of a completed application for renewal containing proof of completion of continuing education courses from a course provider approved by the department pursuant to Section 7195.6 and payment of a renewal fee in the amount specified in Article 6 (commencing with Section 7199).
(2) If a license is renewed more than 30 days after its expiration, the licensee, as a condition prior to renewal, shall also pay a late delinquency fee as set forth in Article 6 (commencing with Section 7199).
(3) A license that has expired and has not been renewed for a period of 12 months or longer shall be terminated.
(c) (1) A licensee may apply to the department for an inactive license at any time while their original license is current and active or eligible for renewal and it is not suspended, revoked, or otherwise punitively restricted by the department or subject to disciplinary action.
(2) The department shall not require an inactive license to be renewed after the licensee pays a one-time retired license fee as provided in Article 6 (commencing with Section 7199).
(3) A person with an inactive license may return to active status if the person does both of the following:
(A) Submits a complete and proper form, as determined by the department, on or before five years from the date of expiration of the original license.
(B) Pays all accrued and unpaid renewal fees to bring the license current, including any delinquency fees.

7197.4.
 The provisions of this article do not apply to a person who, prior to January 1, 2022, has completed all of the following:
(a) Passed an accredited home inspector examination as determined by the authority within the past five years.
(b) Obtained two years of home inspection experience.
(c) Provided a minimum of 500 home inspections for compensation.

7197.5.
 This article shall become operative on January 1, 2025.

SEC. 14.

 The heading of Article 5 (commencing with Section 7198) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  5. Offenses and Enforcement

SEC. 15.

 Section 7198 of the Business and Professions Code is amended to read:

7198.
 Contractual provisions that purport to waive the duty owed pursuant to Section 7196, 7196.1, or limit the liability of the home inspector to the cost of the home inspection report, are contrary to public policy and invalid.

SEC. 16.

 Section 7198.1 is added to the Business and Professions Code, to read:

7198.1.
 (a) Any person who willfully violates Section 7196 is guilty of a public offense punishable by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code, or in a county jail for not more than one year, by a fine not exceeding (____) dollars ($____), or by both the imprisonment and fine.
(b) This section shall become operative on January 1, 2025.

SEC. 17.

 Section 7198.2 is added to the Business and Professions Code, to read:

7198.2.
 (a) A legal action for breach of duty arising from a home inspection report shall not be commenced more than two years from the date of the inspection.
(b) This section shall become operative on January 1, 2025.

SEC. 18.

 Section 7199 of the Business and Professions Code is amended and renumbered to read:
7199.

The time for commencement of a

7198.3.
 (a) A legal action for breach of duty arising from a home inspection report shall not exceed be commenced more than four years from the date of the inspection.
(b) This section shall become inoperative on and after January 1, 2025, and as of that date is repealed.

SEC. 19.

 Article 6 (commencing with Section 7199) is added to Chapter 9.3 of Division 3 of the Business and Professions Code, to read:
Article  6. Revenue

7199.
 (a) The Home Inspectors License Fund is hereby established within the State Treasury. Moneys in the fund shall be used, upon appropriation by the Legislature, by the department for the administration of this chapter.
(b) All moneys, including fines or penalties imposed under this chapter, collected pursuant to this chapter shall be deposited into the fund.

7199.1.
 (a) The department shall establish regulatory fees based upon the reasonable regulatory cost of enforcing and administering this chapter.
(b) The application fee for a license under this chapter shall not exceed (____) dollars ($____).
(c) The renewal fee for a license under this chapter shall not exceed (____) dollars ($____).
(d) The delinquent renewal fee for a license under this chapter shall not exceed (____) dollars ($____).
(e) The one-time retired license fee for a license under this chapter shall not exceed (____) dollars ($____).

7199.2.
 This article shall become operative on January 1, 2025.

SEC. 20.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SECTION 1.Section 7195.1 is added to the Business and Professions Code, to read:
7195.1.

(a)Beginning January 1, 2022, a person who performs home inspections, as defined in Section 7195, shall obtain a license from the Contractors’ State License Board.

(b)The Contractors’ State License Board shall establish criteria for licensing home inspectors under this section, including setting reasonable fees for licensing and renewal.

(c)The registrar shall have the authority to enforce these licensing requirements.

(d)This section shall not apply to a person performing home inspections who is a licensed general contractor, pest control operator, architect, or professional engineer.