Senate File 96 SENATE FILE BY LARSON Passed Senate, Date Passed House, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing for the regulation and licensing of home 2 inspectors. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1594XS 80 5 av/cf/24 PAG LIN 1 1 Section 1. NEW SECTION. 543E.1 SHORT TITLE. 1 2 This chapter shall be known and may be cited as the "Iowa 1 3 home inspection professional licensing Act". 1 4 Sec. 2. NEW SECTION. 543E.2 DEFINITIONS. 1 5 As used in this chapter, unless the context otherwise 1 6 requires: 1 7 1. "Board" means the home inspection licensing board 1 8 established pursuant to section 543E.3. 1 9 2. "Client" means a person who engages, or seeks to 1 10 engage, the services of a home inspector for the purpose of 1 11 obtaining inspection of and the written evaluation of the 1 12 condition of a residential building. 1 13 3. "Home inspection" means an inspection and written 1 14 evaluation of the following components of a residential 1 15 building: heating system, cooling system, plumbing system, 1 16 electrical system, structural components, foundation, roof, 1 17 masonry structure, exterior and interior components, or any 1 18 other related residential housing component as determined by 1 19 the board by regulation. 1 20 4. "Home inspector" means a person licensed as a home 1 21 inspector pursuant to the provisions of this chapter who 1 22 performs home inspections. 1 23 5. "Home inspector in training" means a person licensed as 1 24 a home inspector in training to become a licensed home 1 25 inspector pursuant to the provisions of this chapter. 1 26 6. "Residential building" means a structure consisting of 1 27 from one to four family dwelling units. 1 28 Sec. 3. NEW SECTION. 543E.3 HOME INSPECTION LICENSING 1 29 BOARD == CREATION == MEMBERSHIP. 1 30 1. A home inspection licensing board is established within 1 31 the professional licensing and regulation division of the 1 32 department of commerce. The board shall consist of five 1 33 members each of which meets all of the following requirements: 1 34 a. Is a resident of the state. 1 35 b. Is a licensed home inspector. 2 1 c. Is a certified member of the Iowa association of home 2 2 inspectors. 2 3 d. Has been actively engaged in the business of making 2 4 home inspections in this state for at least five years. 2 5 e. Has performed not less than five hundred home 2 6 inspections during the five=year period immediately preceding 2 7 the member's appointment. 2 8 2. For a period of one year after the effective date of 2 9 this Act, and notwithstanding any other provisions of this 2 10 chapter to the contrary, the first five home inspectors 2 11 appointed as members of the home inspection licensing board 2 12 shall not be required, at the time of their first appointment, 2 13 to be licensed to perform home inspections. 2 14 3. Members of the board shall be appointed by the governor 2 15 subject to confirmation by the senate. Each board member 2 16 shall be appointed for a term of three years, except that of 2 17 the members first appointed, two shall serve for terms of 2 18 three years, two shall serve for terms of two years, and one 2 19 shall serve for a term of one year beginning and ending as 2 20 provided by section 69.19. Upon expiration of their terms, 2 21 members of the board shall continue to hold office until the 2 22 appointment and qualification of their successors. Any 2 23 vacancy in the membership of the board shall be filled for the 2 24 unexpired term in the manner provided for the original 2 25 appointment. A person shall not serve as a member of the 2 26 board for more than two consecutive terms in addition to any 2 27 unexpired term to which the person has been appointed. 2 28 4. Members of the board are entitled to receive all actual 2 29 expenses incurred in the discharge of their duties within the 2 30 limits of funds appropriated to the board. The administrator 2 31 of the professional licensing and regulation division of the 2 32 department of commerce shall hire and provide staff to assist 2 33 the board with administering this chapter. Each member of the 2 34 board may also be eligible to receive compensation as provided 2 35 in section 7E.6. 3 1 5. The board shall annually elect from among its members a 3 2 chairperson and a vice chairperson and may appoint a 3 3 secretary, who need not be a member of the board. 3 4 6. The board shall meet at least twice each year to 3 5 conduct its business and may hold additional meetings as 3 6 necessary to discharge its duties. 3 7 Sec. 4. NEW SECTION. 543E.4 POWERS OF THE BOARD. 3 8 The board shall do all of the following: 3 9 1. Administer and enforce the provisions of this chapter. 3 10 2. Issue and renew licenses to home inspectors and home 3 11 inspectors in training pursuant to this chapter. 3 12 3. Suspend, revoke, or fail to renew the license of a home 3 13 inspector or a home inspector in training pursuant to this 3 14 chapter. 3 15 4. Establish standards for the initial and continuing 3 16 education of home inspectors. 3 17 5. Adopt and publish a code of ethics, standards of 3 18 practice, and reporting requirements for home inspectors. 3 19 6. Establish and collect fees for examination, licensure, 3 20 renewal of licensure, and other services related to the 3 21 regulation and licensure of home inspectors performed by the 3 22 board. 3 23 7. Establish training and experience requirements for 3 24 licensure as a home inspector. 3 25 8. Establish rules for handling complaints from the public 3 26 concerning home inspectors or the performance of home 3 27 inspections. 3 28 9. Establish reporting requirements for home inspections 3 29 performed by home inspectors. 3 30 Sec. 5. NEW SECTION. 543E.5 LICENSURE REQUIRED. 3 31 A person shall not engage in the performance of a home 3 32 inspection for compensation unless licensed in accordance with 3 33 this chapter. 3 34 Sec. 6. NEW SECTION. 543E.6 ELIGIBILITY FOR LICENSURE AS 3 35 HOME INSPECTOR. 4 1 To be eligible for licensure as a home inspector, an 4 2 applicant shall fulfill all of the following requirements: 4 3 1. Be of good moral character. 4 4 2. Successfully complete high school or its equivalent. 4 5 3. Acquire the training and experience required by the 4 6 board. 4 7 4. Pass the national home inspector examination or the 4 8 American society of home inspectors examination. An applicant 4 9 may meet this requirement by passing the national home 4 10 inspector or American society of home inspectors examination 4 11 prior to the effective date of this Act. 4 12 5. Be engaged as a licensed inspector in training for at 4 13 least one year, and perform at least two hundred fifty home 4 14 inspections for compensation in compliance with the standards 4 15 of practice and code of ethics of this chapter. 4 16 Sec. 7. NEW SECTION. 543E.7 REQUIREMENTS FOR LICENSURE 4 17 AS A HOME INSPECTOR IN TRAINING. 4 18 To be eligible for licensure as a home inspector in 4 19 training, an applicant shall fulfill all of the following 4 20 requirements: 4 21 1. Be of good moral character. 4 22 2. Successfully complete high school or its equivalent. 4 23 3. Pass an approved course of study, as prescribed by the 4 24 board. 4 25 4. Perform at least ten home inspections in the presence 4 26 of and under the direct supervision of a home inspector. 4 27 5. Pass the national home inspector examination or the 4 28 American society of home inspectors examination. An applicant 4 29 may meet this requirement by passing the national home 4 30 inspector or American society of home inspectors examination 4 31 prior to the effective date of this Act. 4 32 Sec. 8. NEW SECTION. 543E.8 WHEN NOT APPLICABLE. 4 33 The provisions of this chapter shall not apply to: 4 34 1. A person who is employed by the government or a 4 35 governmental subdivision or agency and performs a home 5 1 inspection that is within the official duties and 5 2 responsibilities of the person. 5 3 2. A person who performs a home inspection, if the 5 4 inspection will be used solely by a financial institution to 5 5 monitor the progress of construction of a residential 5 6 building. 5 7 3. A person who is a real estate broker or salesperson as 5 8 defined in section 543B.3 or 543B.5 when that person is acting 5 9 within the scope of that person's license pursuant to chapter 5 10 543B. 5 11 4. A person who is performing home inspections for the 5 12 purpose of meeting the requirements of section 543E.7 in order 5 13 to qualify for licensure as a home inspector in training. 5 14 Sec. 9. NEW SECTION. 543E.9 HOME INSPECTIONS NOT 5 15 REQUIRED. 5 16 This chapter shall not be construed to require a home 5 17 inspection to be performed on a residential property in this 5 18 state. 5 19 Sec. 10. NEW SECTION. 543E.10 ISSUANCE OF HOME INSPECTOR 5 20 LICENSE == RECIPROCITY. 5 21 Upon payment of a fee and submission of a written 5 22 application to the board, the board shall issue a home 5 23 inspector license to any person who holds a valid home 5 24 inspector license issued under the laws of another state if 5 25 the board determines that the other state has standards that 5 26 are substantially equivalent to those of this state. 5 27 Sec. 11. NEW SECTION. 543E.11 LICENSURE OF PRACTICING 5 28 HOME INSPECTORS. 5 29 During the first three hundred sixty days after the 5 30 effective date of this Act, the board shall issue, upon 5 31 application, a home inspector license to a person who does all 5 32 of the following: 5 33 1. Meets the requirements of section 543E.6, subsections 5 34 1, 2, and 4. 5 35 2. Has engaged in the performance of home inspections for 6 1 compensation for at least three years prior to the effective 6 2 date of this Act. 6 3 3. Has performed at least three hundred home inspections 6 4 for compensation that conform to the standards of practice and 6 5 code of ethics set forth by the board pursuant to this 6 6 chapter. 6 7 Sec. 12. NEW SECTION. 543E.12 FEES FOR HOME INSPECTION 6 8 LICENSURE. 6 9 1. The board shall set fees for licenses, renewals of 6 10 licenses, or other services provided by the board pursuant to 6 11 this chapter. Licenses shall be issued for a period of two 6 12 years and shall be renewable biennially, except that the board 6 13 may, in order to stagger the expiration dates of licenses 6 14 issued, provide that those licenses first issued or renewed 6 15 after the effective date of this Act shall expire on a date 6 16 fixed by the board. 6 17 2. Fees and penalties shall be established and collected 6 18 by the board in an amount necessary to pay the administrative 6 19 costs of sustaining the board and administering this chapter. 6 20 Licensing fees set under this chapter shall be comparable to 6 21 those established by other licensing boards. 6 22 3. All fees and penalties imposed by the board shall be 6 23 paid to the board and shall be transmitted to the treasurer of 6 24 state who shall deposit the fees and penalties in the general 6 25 fund of the state. 6 26 Sec. 13. NEW SECTION. 543E.13 DENIAL, SUSPENSION, OR 6 27 REVOCATION OF HOME INSPECTOR LICENSE. 6 28 The board may deny, suspend, or revoke a home inspector 6 29 license or a home inspector in training license upon a 6 30 determination by the board that the licensee has done any of 6 31 the following: 6 32 1. Failed to fulfill any of the requirements in section 6 33 543E.6. 6 34 2. Disclosed information concerning the results of a home 6 35 inspection without the approval of a client or the client's 7 1 representatives. 7 2 3. Accepted compensation from more than one client for the 7 3 same service without the consent of all clients for whom the 7 4 service is being performed. 7 5 4. Accepted commissions or allowances, directly or 7 6 indirectly, from other parties dealing with a client of the 7 7 licensee in connection with work for which the licensee is 7 8 responsible. 7 9 5. Failed to promptly disclose information to a client 7 10 about a business interest of the licensee that might 7 11 constitute a conflict of interest for a licensee in performing 7 12 a home inspection for a client. 7 13 Sec. 14. NEW SECTION. 543E.14 PRACTICE OF ARCHITECTURE 7 14 OR ENGINEERING PROHIBITED. 7 15 A person licensed as a home inspector pursuant to this 7 16 chapter shall not engage in the practice of architecture or 7 17 the practice of professional engineering. 7 18 Sec. 15. NEW SECTION. 543E.15 ERRORS AND OMISSIONS == 7 19 INSURANCE REQUIRED. 7 20 1. Every licensee under this chapter who is engaged in the 7 21 performance of home inspections shall secure, maintain, and 7 22 file with the board proof of error and omissions insurance in 7 23 an amount of at least five hundred thousand dollars per 7 24 occurrence. 7 25 2. Errors and omissions insurance obtained by a licensee 7 26 in compliance with subsection 1 shall contain a provision that 7 27 cancellation or failure to renew the insurance shall not be 7 28 effective without at least ten days' notice of intention to 7 29 cancel or not renew the insurance given to the board in 7 30 writing by the licensee. 7 31 Sec. 16. NEW SECTION. 543E.16 LIMITATION OF ACTIONS. 7 32 1. An action to recover damages arising out of an act or 7 33 omission of a home inspector in connection with the 7 34 performance of a home inspection can only be commenced within 7 35 one year from the date the home inspection was performed. 8 1 2. An action to recover damages arising out of an act or 8 2 omission of a home inspector in connection with the 8 3 performance of a home inspection shall only be brought by the 8 4 client for whom the home inspection was performed. 8 5 Sec. 17. NEW SECTION. 543E.17 RULES. 8 6 The board shall adopt rules pursuant to chapter 17A and 8 7 consistent with this chapter for the administration and 8 8 enforcement of this chapter and may prescribe forms to be used 8 9 under this chapter. 8 10 EXPLANATION 8 11 This bill provides for the regulation and licensing of home 8 12 inspectors of residential real estate consisting of from one 8 13 to four family dwelling units. The bill creates a home 8 14 inspection licensing board within the professional licensing 8 15 and regulation division of the department of commerce whose 8 16 members are appointed by the governor subject to confirmation 8 17 by the senate. 8 18 The bill provides that the home inspection licensing board 8 19 is responsible for the issuance and renewal and suspension and 8 20 revocation of home inspector licenses; for adopting ethics, 8 21 standards of practice, and reporting requirements for home 8 22 inspectors; for establishing and collecting fees for 8 23 examination, licensure, and other services related to the 8 24 regulation and licensure of home inspectors performed by the 8 25 board; for establishing licensure requirements; and for 8 26 establishing complaint procedures for handling complaints 8 27 about home inspections from the public. 8 28 The bill requires that a person who performs home 8 29 inspections for compensation must be licensed in accordance 8 30 with the bill. The bill sets forth eligibility requirements 8 31 for licensure as a home inspector or as a home inspector in 8 32 training. 8 33 The bill specifies that the requirements of the bill are 8 34 not applicable to government employees performing home 8 35 inspections within their official duties, persons performing 9 1 home inspections for a financial institution to monitor new 9 2 house construction, persons acting as real estate brokers or 9 3 salespersons, or persons performing home inspections in order 9 4 to qualify for licensure as a home inspector in training. 9 5 The bill provides for reciprocity with other states that 9 6 issue home inspector licenses pursuant to similar licensing 9 7 requirements. The bill also provides that practicing home 9 8 inspectors for at least three years prior to the effective 9 9 date of the bill can be issued licenses during the first 360 9 10 days after the bill's effective date by meeting certain 9 11 conditions. 9 12 The bill sets forth the conditions under which the board 9 13 may deny, suspend, or revoke a home inspector license or home 9 14 inspector in training license. The bill also prohibits a 9 15 licensed home inspector from practicing architecture or 9 16 professional engineering. 9 17 The bill requires that a licensee under the chapter obtain 9 18 errors and omissions insurance and provide proof of such 9 19 insurance to the home inspection licensing board. 9 20 The bill requires actions to recover damages arising out of 9 21 an act or omission of a home inspector to be filed within one 9 22 year from when the home inspection was performed by the client 9 23 for whom the home inspection was performed. 9 24 LSB 1594XS 80 9 25 av/cf/24.1