Title: An act relating to the licensing of home inspectors.

Brief Description: Requiring the licensing of home inspectors.

Sponsors: Senators Spanel, Brandland and Kohl-Welles.

Brief History:

Committee Activity: Labor, Commerce, Research & Development: 2/12/07, 2/27/07 [DPS, DNP].

SENATE COMMITTEE ON LABOR, COMMERCE, RESEARCH & DEVELOPMENT

Majority Report: That Substitute Senate Bill No. 5788 be substituted therefor, and the substitute bill do pass.Signed by Senators Kohl-Welles, Chair; Keiser, Vice Chair; Clements, Ranking Minority Member; Franklin, Hewitt, Murray and Prentice.

Minority Report: Do not pass.Signed by Senator Holmquist.

Staff: Jennifer Strus (786-7316)

Background: Home inspectors are not required to be registered, certified, or licensed in this state. Many home inspectors are licensed by the Washington State Department of Agriculture (WSDA) to perform structural pest inspections.

Summary of Bill: Beginning on July 1, 2008, no person can advertise or hold him or herself out as a home inspector or conduct home inspections without first being licensed by the state Department of Licensing (DOL).

Qualifications for Licensure: To become licensed as a home inspector, an applicant must meet the following qualifications: (1) be of good moral and ethical character; (2) possess a high school diploma or its equivalent; (3) complete 120 hours of live classroom education; (4) perform 20 parallel, on-site home inspections under the supervision of a licensed home inspector, who does not charge a fee for the supervision; (5) pass an examination; and (6) be legally authorized to do business in Washington.

Home inspections are defined as a visual analysis of a building and its carports and garages, any reasonably accessible installed components and operation of the building systems for the following components of a building of four residential units or less: heating and electrical system; structural components, cooling and plumbing systems; foundation; roof covering; exterior and interior components and site aspect as they affect the building. Home inspection also includes an inspection for wood destroying organisms.

Grandfather Clause: On July 1, 2008, any person who has been actively engaged in conducting home inspections for at least two years may apply for a license without first meeting the exam or instruction requirements. The person must pass the written exam before his or her license can be renewed.

Licensing Board: A state home inspector licensing board is created consisting of eight members appointed by the Director of DOL. Of the eight members, four must be actively engaged as home inspectors immediately before their appointment to the board; two must be licensed real estate agents; one must be currently teaching in a home inspector certification program; and one must be a member of the general public. The composition of the home inspector members must be representative of the occupational distribution of home inspectors in the state.

A home inspector must have the following qualifications to be appointed to the board: (1) five years experience as a home inspector in Washington; (2) licensed as a home inspector in this state; and (3) has performed 250 home inspections in this state.

Board members are entitled to compensation for each day spent conducting official business and to travel reimbursement.

Licensing Board's Authority: The board has the authority to do the following: establish rules, including board organization and assignment, for adoption by the Director; establish minimum qualifications for licensing applicants; approve the method by which exams will be administered; approve adoption or recognition of exams to be used by DOL; set the time and place for exams with approval of DOL; and establish and review standards of professional conduct, practice and ethics for adoption by DOL.

Written Exams: The board will determine where and when the licensing exams will be held, with the DOL Director's approval. The scope of the exam is directed to an applicant's ability to conduct a home inspection in a manner to ensure the safety of life, health and property. If a candidate fails an exam, he or she may apply for reexamination.

License Length and Renewal: The licenses are issued for two years and expire on the last day of the month during which the license was issued. Any license not renewed is considered expired and any home inspection activity that occurs during this time is considered a violation of this bill.

Continuing Education Requirements: Before a home inspection license will be renewed, the applicant must present satisfactory evidence that he or she has completed 20 hours of instruction annually in courses approved by the board.

Reciprocity: The Director of DOL may issue a license to a person who is a licensed home inspector in another state if the person's qualifications meet the licensing requirements of this state.

Exclusions from Inspections: The home inspector is not required to determine the following when conducting a home inspection: (1) the condition of systems or components not readily accessible; (2) remaining life of any system; (3) strength, adequacy, effectiveness, or efficiency of any system or component; (4) cause of any condition or deficiency; (5) methods, materials, or costs of corrections; (6) future conditions; (7) compliance with regulatory requirements; and (8) presence of environmental hazards.

In conducting the home inspection, home inspectors are not required to enter any area that will likely be dangerous to the inspector or damage the property, its systems or components, and underfloor crawl spaces or attics that are not readily accessible.

Written Reports: All licensed home inspectors must provide a written report, within five days of completing the report, to each person for whom the inspector performs a home inspection.

Insurance: All active home inspectors must carry errors and omissions insurance to cover their home inspector activities. They must also carry general liability insurance.

Prohibited Activities/Unprofessional Conduct: From the time the inspection is conducted until the house upon which the inspection was conducted is sold, the home inspector may not advertise or solicit to perform any repair services on any item in the home whether or not listed in the report.

In addition to the unprofessional conduct delineated in the Uniform Regulation of Business and Professions Act, the following also constitute unprofessional conduct for which the Director of DOL may take action: (1) violating any provision of this chapter; (2) not meeting the licensing qualifications; (3) failure to comply with an assurance of discontinuance; and (4) committing an act or failing to act both of which are customarily regarded as contrary to accepted professional conduct by home inspectors.

Due Process Penalties: If the DOL Director has determined, after an investigation, that a home inspector has committed unprofessional conduct, the Director may do any combination of the following: (1) revoke the license; (2) suspend the license for a fixed or indefinite term; (3) restrict or limit the home inspector's practice; (4) issue a civil fine of not more than $5,000 for each violation; (6) have a peer approved by the Director monitor the home inspector's practice; (7) reprimand or censure the home inspector; (8) probation; (9) withhold a license request; (10) refund of fees billed to and collected from the consumer; or (11) other corrective action. Any of these actions may be stayed by the Director.

Pest Inspections: WSDA and DOL must determine the best method by which to transfer the structural pest inspection program from WSDA to DOL and report back to the Legislature with recommendations no later than December 15, 2007.

EFFECT OF CHANGES MADE BY RECOMMENDED SUBSTITUTE AS PASSED COMMITTEE (Labor, Commerce, Research & Development): The licensing program is moved from DOL to the Department of Labor and Industries. To qualify to become licensed without a prior exam, a person must have been engaged in home inspections for two years and must have been licensed as a structural pest inspector for that two-year period. The makeup of the advisory board is slightly changed: five home inspectors; one licensed real estate broker; one home inspector certification program teacher; and one member of the general public. Qualification to become a licensed home inspector is changed. The applicant must: file an application; pay the fee; prove that 20 education points have been met, passed the exam; and currently licensed as a structural pest inspector. The following methods are listed by which the applicant can obtain the 20 education points: ten for a completed, three-credit hour minimum class with passing grade; one point for each completed three-hour minimum class with passing grade in construction, remodeling, engineering, architecture, building design, building technology or real estate; one point for each completed "ride-along" inspection; and one point for each completed three-hour minimum class in other programs approved by the board. Certain experiences can be substituted for some point requirements. Each licensee must complete 30 hours of continuing education every two years. If one has the proper insurance required to be a structural pest inspector, no additional insurance is required.

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: The public has a right to know that people providing home inspection services know what they are doing. The bill does not list the qualifications of the person supervising the parallel on-site inspections that an applicant must do to be licensed and it should say that. It also might be hard to get home inspectors to supervise applicants because those applicants will someday be in competition with the supervisor. It is very important to make sure home inspectors know what they are doing because they are the only one involved in a real estate deal that is paid to give an unbiased opinion. There is a need to make sure these folks are credible and competent to do that work. There is no reason to unify the home inspector license and the structural pest inspection license. Home inspectors should be required to be members of a nationally recognized home inspector certification group. The advisory board should be made up of just home inspectors and not have any real estate agents on it. There should be an immunity clause in the statute that protects the home inspector from disgruntled people one year after the inspection has occurred.

CON: The legislative advisory group has been meeting for a little over a year. All major national groups are represented on this group. The Legislature should allow this group to continue working to see if they can come up with a compromise that everyone can live with. The bill is seriously flawed. A home inspector can retake an exam and never have to take the class due to the grandfather clause. Having dual license under one agency is opposed. There should be two licenses. The DOL Director shouldn't have all the power in the penalty phase. The state does not need to require anymore than belonging to a national home inspector organization if the goal is to provide a group of qualified professionals.

OTHER: The bill parallels the American Society of Home Inspectors (ASHI) model bill and distinctly detracts from consumer protection. If the bill was serious about wood destroying organisms it would be mentioned in the bill. This bill supports collusion with real estate agents. There should be a bi-partisan committee convened to fully vet this issue.

Persons Testifying: PRO: Senator Spanel, prime sponsor; Sandy Hartman, Washington Legislative Advisory Group; Tom Knapp, World Inspection Network Home Inspections; Justin Nickelsen, Nickelsen Home Inspections; Paul Luczyk, Washington Home.

CON: Joanne Mackintosh, ASHI; Dave Richardson, Cascade Inspections, Inc.; Reid Guthrie, The Home Detective.

OTHER: Rene LaMarche, Carrenden, Inc.

Signed in, Unable to Testify & Submitted Written Testimony: PRO: Duane Roundy, AAA Inspection Services; Bryce MacKintosh, Hugh Kelso, Washington Home Inspector Legislative Advisory Group; Stan Bowman, American Institute of Architects Washington Council; Michael O'Handley, Editor: The Inspector's Journal.

CON: George Sharrett, Sound Choice Home Inspections; Art Losey, citizen.