PA SB359 March 11 2008

[Roy D. Cooke, Sr]

document.write(today_string());Sunday, Apr 13, 2008
Posted on Sat, Apr. 12, 2008
Are home inspector rules beneficial to consumers?




Bills in Kansas and Missouri that would for the first time regulate home inspectors seem at first blush a good thing.
Who wouldn’t argue for more protection for consumers who are making perhaps the biggest purchase of their lives?
Still, there is reason to be cautious when business interests dress efforts to push state legislation in a public cloak of concern for the consumer.
Might there be other motives?
That’s the political situation here, where two of the leading proponents of new regulation are Realtors and trial attorneys.
Kansas is the scene of the most current debate.
Several Missouri bills are moving much slower.
Inspectors opposed to the Kansas legislation claim the efforts are simply clever attempts to shift responsibility for all home defects to the guy who walks in the door after the fact.
Even inspectors supporting the new regulation say they’ve become proactive only to prevent more onerous legislation.
“The trial attorneys and Realtors want to see us regulated,” said Jeff Barnes, head of the Kansas Association of Real Estate Inspectors.
“There was no getting around it. It’s like you know you’re going to get a sponge bath — do you prefer the cute nurse or the big, ugly fat guy?”
Luke Bell, of the Kansas Association of Realtors, however, says that’s not the case at all.
“We actually want to see the consumer protected,” he said.
He said that now anyone off the street can call himself an inspector and lure a homeowner into a false sense of security about a defective home.
But that’s also true, in most cities in Missouri and Kansas, for builders, contractors, repairmen and remodelers.
In fact, far more complaints are lodged each year against largely unregulated remodeling and home-repair contractors than against home inspectors, according to officials in both states.
Even consumer groups, whom you’d expect to press for regulation, are wondering why the push now in the absence of a groundswell of consumer complaints.
“In the 15 years that I have been dealing with homeowners in Kansas, Missouri and across the nation, I have had one complaint against a home inspector,” said Nancy Seats, president of Homeowners Against Deficient Dwellings, who is no shrinking violet when it comes to pointing out shoddy construction.
Callie Denton Hartle, a spokeswoman for Kansas Trial Attorneys, agrees that the legislation is proceeding in the absence of any quantitative tally of consumer complaints.
“If you are going to write a story that depends on statistics and numbers, then you’ll come up short,” she said. But she said that’s the problem — consumers now have nowhere to take complaints.
Maybe. But this is America.
When people have complaints, they seem to find a way to make them known.
In this case, there was no legislative parade of angry consumers.
That doesn’t mean regulation is bad or unneeded.
It just means you don’t want to end up with a poorly constructed law that hurts consumers more than it helps them.
Consumers already can help themselves by getting references and questioning an inspector about his or her training and accreditation.
About 32 states currently regulate inspectors, mainly through registration, a set of standards, a code of ethics and a competency test. About seven states also require them to carry insurance to cover errors and omissions.
It’s hard to argue with the reasonableness of these laws, when evenly applied.
What’s most controversial about Kansas HB 2315 is that it goes a bit further with a provision that prohibits inspectors from limiting their liability to less than $10,000.
Inspectors now can contract with homeowners to set the limits of their liability.
Officials in both states say most complaints seldom rise to more than $1,000 in value.
So, to some inspectors, who usually make $300 or less per inspection, a $10,000 pot makes a handy target for trial attorneys to go after.
What this means, they contend, is that they could end up as the fall guy for shoddy contractors who can’t be found and dishonest sellers who hide defects.
“It puts us on the hook for everybody else’s liability,” argues Kansas City inspector Dan Bowers, who said most veteran inspectors are already accredited by nationally respected organizations.
But proponents dispute that the bill raises liability.
They note that it expressly limits an inspector’s liability for hidden defects, such as mold or poor construction.
Certainly, trial attorneys, Realtors and others involved have legitimate reasons to want to protect homebuyers. Even so, the concerns being raised suggest legislators should ensure the bills truly have consumers’ interests at heart.
Unnecessarily increasing potential litigation can result in liability insurers boosting what they charge inspectors.
That can in turn increase the cost of inspections, winnow the ranks of inspectors and ultimately raise the cost of a home — which is not in the best interest of consumers.
Lately, Kansas lawmakers say they want to give the bill more thought. House and Senate versions, including one that would create a state board, are now in a conference committee.
“We want to be quite careful with how we resolve this,” said Sen. Karin Brownlee, an Olathe Republican.

When choosing an inspector
Ask about training, testing and experience.
Ask for references.
Ask about professional accreditation.
Ask for a sample report.
There are three main professional organizations:
•American Society of Home Inspectors: ashi.org
•National Association of Home Inspectors: nahi.org
•National Association of Certified Home Inspectors: nachi.org

[Scott Gilligan, CMI]

Originally Posted by rkie

To all that are going GET RID OF THE E&O REQUIREMENT

Can you give a reason why you would want that removed? Personally, I think it is a good requirement.

[Roy D. Cooke, Sr]

Originally Posted by sgilligan1

Can you give a reason why you would want that removed? Personally, I think it is a good requirement.

I agree get rid of E&O.
This has been hashed over many times and the newer HIs think it is best .
Very few of the older HIs think it is a good thing.
Most of the older established HIs have seen many reason's why it is not a good thing.

[Scott Gilligan, CMI]

Originally Posted by rcooke

I agree get rid of E&O.
This has been hashed over many times and the newer HIs think it is best .
Very few of the older HIs think it is a good thing.
Most of the older established HIs have seen many reason's why it is not a good thing.

If I were to walk in to the meeting and suggest that the E&O requirement be removed, the first thing someone is going to ask is WHY. If someone can give a convincing reason why this should be removed, I will be more than happy to suggest it. I am not going to the meeting and start rattling off a list of things that can not be substanciated like some bank robber making demands to release hostages. Convince me and I will try to convince everyone else that has a stake in this legislature. Be more specific and suggest alternate solutions.

[Gary Farnsworth]

E&O insurance just opens the door for lawsuits. It is big business for attorneys. A quote from one attorney; “You have deep pockets in the form of errors and omissions insurance, and you are going to get sued. So, get used to it. It is a cost of doing business”. Require this insurance in Kansas, and the attorneys will be looking for that new Corvette or island in the Bahamas. Most all home inspection legal cases will get settled, for thousands of dollars, and will never get to court. Look at other states that require the E&O insurance. Real estate is the nations #1 litigate area. It is an epidemic on a national scale. No inspector will be immune from the symptoms of litigation. Even if the inspector is right, and not liable, insurance companies will settle, rather than take their chances in court. It is the legal equivalent of extortion. It creates larger settlements, larger insurance premiums for all inspectors, and higher inspection prices that the consumer will have to pay, or not pay, and most inspectors will just go out of business. Pay your $2,500 deductable, settle for thousands of dollars, watch your insurance rate skyrocket, or get canceled.

[Gary Farnsworth]

You can also check out the book "Inspect and Protect" by Keith Swift, with assistance from Nick Gromiko. A must read.

[Mark R. Long]

Originally Posted by rkie

To all that are going GET RID OF THE E&O REQUIREMENT

The thing is, E&O insurance is already a requirement and has been here in PA for 8 years or so. To try to take that out now, when the purpose of the licensure legislation is to increase the bar, is probably counter productive. I think that there are more important issues to focus on.

[Rick K. Kie]

We have Licensing in NY state without E&O it should be up to the individual company if they want to carry the E&O I agree it opens the dor for lawsuits.
Te realtors say just have your E&O pay for it thats why you have it.

[cduphily]

Originally Posted by rkie

We have Licensing in NY state without E&O it should be up to the individual company if they want to carry the E&O I agree it opens the dor for lawsuits.
Te realtors say just have your E&O pay for it thats why you have it.

The number one way to stay out of court is to give an accurate and honest opinion of every home, explain every deficiency to the client and most importantly answer every question the client has.

We can't go to any meeting and just give a list of what we want removed. We have to state WHY it should be removed and offer an alternative.
JMHO

[Rick K. Kie]

I think one of my biggest reasons why is because it increases the cost of the Home inspection. If we infact lie on the report or purposly omit something there is a court system and fines. If we break something or someone gets hurt we have insurance for that General Liability. As per most of our agreements we are only liable for the cost of the home inspection anyway.
Why give a customer deep pockets to pick!

[Scott Gilligan, CMI]

Every PA InterNACHI member will receive an email within the next 48 hours. Keep an eye out for it, read over it, and call your Senator.

All other inspectors in the state will shortly receive the same email. Then the Senators are next.

[Scott Gilligan, CMI]

It is pretty obvious the proposed PA home inspector legislation is trying to mimic the existing New Jersey home inspector requirements. I have pulled together some interesting statistics from the U.S. Census Bureau to do a side by side comparison of the two states.

Pennsylvania total square miles (2000 census) = 44,816.61
New Jersey total square miles (2000 census) =7,417.34

Pennsylvania housing units (2006 census) = 5,453,228
New Jersey housing units (2006 census) = 3,472,643

Pennsylvania persons per square mile (2006 census) = 274.0
New Jersey persons per square mile (2006 census) = 1,134.5

Let’s do some math here!

PA total square miles (44,816.61) divided by New Jersey total square miles (7,417.34) = 6.04
Pennsylvania is 6.04 times larger than New Jersey.

If I divide the total housing units by the total square miles it should give me the housing units per square mile though out the entire state. Granted this does not take into consideration that some areas are more densely populated compared to others, but it serves the purpose to make my point here.

Pennsylvania = 121.678 Housing Units per square mile
New Jersey = 468.179 Housing Units per square mile

New Jersey has 384% more housing units per square mile compared to Pennsylvania. It’s more densely populated as we can see.

When you take into consideration the metropolitan, suburbs, and rural areas of the state, there will be some area that do not have the volume of real estate transactions per year for an inspector to meet the 100 inspections per year for 5 year requirement. I’m sure if we did a county by county breakdown of the real estate transactions in Pennsylvania we would see how drastic a point this is trying to make.

The purpose of the proposed Pennsylvania home inspector legislation is to provide consumer protection. The way the proposed Bill is written, it will effectively put a lot of small inspection companies out of business because they can not produce the volume of inspections required to be grandfathered into the proposed licensure requirements. This means that fewer inspectors will be servicing larger areas for consumer needs. Home inspection prices will drastically increase to accommodate for extra travel expenses. Currently compliant home inspectors that are forced into taking pricey educational requirements will have to pass on these costs to their clients. If home inspection prices get to a level that is considered a major financial burden to the consumer, many will forgo having a home inspection done before making a purchase.

This in my opinion is not consumer protection in my opinion!

Consumer protection should be about setting a minimum standard that every home inspection must include. It should not be based on the assumption that quality is automatically going to come from the quantity of inspections someone has performed.

My personal suggestion is to:

• Establish a board with advisory capabilities only
• Establish a State minimum standards of practice
• Establish a required education criteria for home inspectors that would accept classroom training, online courses, and correspondence courses that meet an agreed upon minimal course content.

-OR-
The continuing education hour requirements can be raised for existing home inspectors.

• Keep the current 100 inspection minimum that many currently compliant home inspectors operate under.

[Rick K. Kie]

The home inspectors would be better off if they mimicked NYS new home inspection law.
The PA E&O requirement also raises the costs of the inspections. You can build a house or completly remodel one without it, but you can't inspect one.

[Joseph Hagarty, CMI]

Originally Posted by rkie

The home inspectors would be better off if they mimicked NYS new home inspection law.
The PA E&O requirement also raises the costs of the inspections. You can build a house or completly remodel one without it, but you can't inspect one.

You can also Build a Home without Licensing, Training, Insurance, etc...as the State places No Requirements on Building Contractors or Trades.

[cduphily]

Reminder for all:

stakeholders’ meeting on SB359 (home inspectors) on May 8th at 10:30 a.m. in Room 14E of the Capitol Building’s East Wing.