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HOME INSPECTORS - STANDARD OF CARE - BREACH OF DUTY
Chapter 338
S.B. No. 258
An Act to add Chapter 9.3 (commencing with Section 7196) to Division
3
of the Business and Professions Code, relating to home inspectors
[Approved with Secretary of State August 17, 1996]
[Filed with Secretary of State August 19,1996]
LEGISLATIVE COUNSEL'S DIGEST
SB 258, O'Connell. Home inspectors.
Existing law does not regulate persons who perform home inspections
for a fee.
This bill would define terms related to paid home inspections, establish
a standard of care for home inspectors, and prohibit certain inspections
in which the inspector or the inspector's employer, as specified, has a
financial interest. The bill would also provide that contractual provisions
seeking to waive the statutory duty of care or limit the liability of a
home inspector to the cost of the home inspection report are contrary to
public policy and invalid. The bill would provide that the time for commencement
of a legal action for breach of duty arising from a home inspection report
shall not exceed 4 years from the date of the inspection.
The people of the State of California do enact as follows:
SECTION 1: It is the intent of the Legislature in enacting this act
to assure that consumers of home inspection services can rely upon the
competence of home inspectors. It is the intent of the Legislature that,
in ascertaining the degree of care that would be exercised by a reasonably
prudent home inspector pursuant to Section 7196 of the Business and Professions
Code, the court may consider the standards of practice and code of ethics
of the California Real Estate Inspection Association, the American Society
of Home Inspectors, or other nationally recognized professional home inspection
association.
SECTION 2: Chapter 9.3 (commencing with Section 7195) is added to Division
3 of the Business and Professions Code, to read:
Chapter 9.3. Home Inspectors
7195. For purposes of this chapter, the following definitions
apply:
(a) "Home inspection" is a noninvasive, physical examination,
performed for a fee in connection with a transfer, as defined
in subdivision (e), of real property , of the mechanical, electrical,
or plumbing systems or the structural and essential components
of a residential dwelling of one to four units designed to identify
material defects in those systems, structures, and components.
"Home inspection" also includes any consultation regarding
the property that is represented to be a home inspection or any
confusingly similar term.
(b) A "material defect" is a condition that significantly
affects the value, desirability, habitability, or safety of the
dwelling. Style or aesthetics shall not be considered in determining
whether a system, structure, or component is defective.
(c) A "home inspections report" is a written report
prepared for a fee and issued after a home inspection. The report
clearly describes and identifies the inspected systems, structures,
or components of the dwelling, and material defects identified,
and any recommendations regarding the conditions observed or recommendations
for evaluation by appropriate persons.
(d) A "home inspector" is any individual who performs
a home inspection.
(e) "Transfer" is a transfer by sale, exchange, installment
land sale contract, as defined in Section 2985 of the Civil Code,
lease with an option to purchase, any other option to purchase,
or ground lease coupled with improvements, of real property or
residential stock cooperative, improved with or consisting of
not less that one nor more than four dwelling units.
7196. 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.
7196.1. (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),
or Chapter 14 (commencing with Section 8500) or Division 3.
(b) This chapter does not apply to a registered engineer, licensed
land surveyor, or licensed architect acting pursuant to his or
her professional registration or license, nor dies 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.
7197. 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:
(a) 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.
(b) 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.
(c) 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.
(d) Accept an engagement to make an inspection or to prepare a
report in which the employment itself or the fee payable for the
inspection in contingent upon the conclusions in the report, preestablished
findings, or the close of escrow.
(e) 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.
7198. Contractual provisions that purport to waive the duty owed
pursuant to Section 7196, or limit the liability of the home inspector
to the cost of the home inspection report, are contrary to public
policy and invalid.
7199. The time for commencement of a legal action for breach of
duty arising from a home inspection report shall not exceed four
years from the date of the inspection.
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