S.F. 460 Section 1. Section 558A.4, subsection 2, paragraph a, Code 1 2025, is amended to read as follows: 2 a. A transferor subject to the requirements of section 3 558.70 shall recommend in writing that the transferee obtain 4 an independent home inspection report from a person authorized 5 to issue an independent home inspection report pursuant to 6 section 558A.4A, subsection 1, to provide full and complete 7 information as required to be disclosed under this section and 8 under rules adopted by the real estate commission pursuant to 9 section 543B.9 . 10 Sec. 2. NEW SECTION . 558A.4A Independent home inspection 11 report —— persons authorized to issue. 12 1. A person shall not issue an independent home inspection 13 report as provided in section 558A.4, subsection 2, unless the 14 person is a home inspector, an architect licensed pursuant to 15 chapter 544A, or a professional engineer licensed pursuant to 16 chapter 542B. 17 2. A home inspector shall conduct a home inspection with the 18 degree of care that a reasonably prudent home inspector would 19 exercise, which shall be based on the standards of practice and 20 code of ethics of a national home inspectors association. 21 3. a. A home inspector, employer of a home inspector, or a 22 person who controls or has a financial interest in the employer 23 of a home inspector, who does any of the following commits an 24 unlawful practice under section 714.16, subsection 2, paragraph 25 “a” : 26 (1) Performs or offers to perform for an additional fee any 27 repairs to a structure with respect to which the home inspector 28 has prepared a home inspection report within the preceding 29 twelve months. This subparagraph does not apply to remediation 30 for radon or wood-destroying insects. 31 (2) Inspects for a fee any property in which the home 32 inspector, the employer of the home inspector, or person 33 who controls or has a financial interest in the employer 34 of a home inspector has an interest in the transfer of the 35 -1- LSB 2328SV (1) 91 ss/ns 1/ 8

S.F. 460 property, including but not limited to receipt of a commission 1 as a licensee under chapter 543B, unless the interest in the 2 transfer of the property is disclosed in writing to the buyer 3 before the home inspection is performed and the buyer signs an 4 acknowledgment of receipt of the disclosure. 5 (3) Offers or delivers a commission, referral fee, or 6 kickback to the seller of the inspected property or to a 7 licensee under chapter 543B for either or both of the seller 8 and the buyer for the referral of business to the home 9 inspector, the employer of the home inspector, or person who 10 controls or has a financial interest in the employer of a home 11 inspector. 12 (4) Accepts an engagement to perform a home inspection or 13 to prepare a home inspection report in which the engagement 14 or the fee payable for the inspection is contingent upon 15 the conclusions in the report, preestablished or prescribed 16 findings, or the closing of the transaction. 17 b. Paragraph “a” does not apply to a home warranty company 18 that is affiliated with or retains a home inspector if the home 19 warranty company performs repairs pursuant to claims made under 20 a home warranty contract. 21 c. In addition to any remedies available for a violation 22 of section 714.16, subsection 2, paragraph “a” , the owner 23 of a property on which repairs are performed in violation of 24 paragraph “a” , subparagraph (1), shall be entitled to a full 25 refund of any moneys paid for those repairs, and any promissory 26 note or other obligation to pay given to the person performing 27 those repairs shall be void. 28 4. An independent home inspection report must be in writing 29 and must include all of the following: 30 a. A description of the scope of the inspection, including 31 an identification of the structural elements, systems, and 32 subsystems covered by the report. 33 b. A description of any material defects noted during the 34 inspection, along with any recommendation that certain experts 35 -2- LSB 2328SV (1) 91 ss/ns 2/ 8

S.F. 460 be retained to determine the extent of the defects and any 1 corrective action that should be taken. A material defect that 2 poses an unreasonable risk to people on the property must be 3 conspicuously identified as such. 4 c. All of the following statements, set forth conspicuously: 5 (1) “A home inspection is intended to assist in evaluation 6 of the overall condition of the dwelling. The inspection is 7 based on observation of the visible and apparent condition of 8 the structure and its components on the date of inspection.” 9 (2) “The results of this home inspection are not intended 10 to make any representation regarding the presence or absence 11 of latent or concealed defects that are not reasonably 12 ascertainable in a competently performed home inspection. No 13 warranty or guarantee is expressed or implied.” 14 (3) “If the person conducting your home inspection is not 15 a licensed structural engineer or other professional whose 16 license authorizes the rendering of an opinion as to the 17 structural integrity of a building or its other component 18 parts, you may be advised to seek a professional opinion as to 19 any defects or concerns mentioned in the report.” 20 (4) “The home inspection report is not to be construed as an 21 appraisal and may not be used as such for any purpose.” 22 5. Except as otherwise required by law, a home inspector 23 shall not deliver a home inspection report to any person other 24 than the client of the home inspector without the client’s 25 consent. The seller shall have the right, upon request, to 26 receive without charge a copy of a home inspection report from 27 the person for whom it was prepared. 28 6. A home inspector shall not express either orally or 29 in writing an estimate of the cost to repair a defect found 30 during a home inspection, except that such an estimate may be 31 included in an independent home inspection report if all of the 32 following apply: 33 a. The report identifies the source of the estimate. 34 b. The estimate is stated as a range of costs. 35 -3- LSB 2328SV (1) 91 ss/ns 3/ 8

S.F. 460 c. The report states that the parties should consider 1 obtaining an estimate from a contractor who performs the type 2 of repair involved. 3 7. A home inspector shall maintain insurance against errors 4 and omissions in the performance of a home inspection and 5 general liability, with coverages of not less than one hundred 6 thousand dollars per occurrence and five hundred thousand 7 dollars in the aggregate, and with deductibles of not more than 8 two thousand five hundred dollars. 9 a. Except as provided in paragraph “b” , a home inspector 10 shall maintain insurance under this subsection for at least one 11 year after the latest home inspection report the home inspector 12 delivers. 13 b. Paragraph “a” does not apply to a home inspection report 14 that was delivered prior to the effective date of this Act. 15 8. A buyer shall be entitled to rely in good faith, without 16 independent investigation, on a written representation that a 17 person is a home inspector, an architect licensed pursuant to 18 chapter 544A, or a professional engineer licensed pursuant to 19 chapter 542B. 20 9. A contract with a person to provide a home inspection 21 shall not limit the liability of the person providing the home 22 inspection for gross negligence or willful misconduct, or waive 23 or modify a provision of this section. However, the scope of a 24 home inspection, the services to be performed, and the systems 25 and conditions to be inspected or excluded from inspection may 26 be defined by a contract between the person providing the home 27 inspection and the client. 28 10. a. A home inspector who does not maintain insurance in 29 violation of subsection 7 or who falsely represents that the 30 person is a home inspector, an architect licensed pursuant to 31 chapter 544A, or a professional engineer licensed pursuant to 32 chapter 542B, is guilty of the following: 33 (1) For a first offense, a simple misdemeanor. 34 (2) For a second or subsequent offense, a serious 35 -4- LSB 2328SV (1) 91 ss/ns 4/ 8

S.F. 460 misdemeanor. 1 b. A person who violates a provision of subsection 4 is 2 guilty of a simple misdemeanor punishable by a fine not to 3 exceed five hundred dollars. 4 11. For purposes of this section: 5 a. “Home inspection” means a noninvasive visual examination 6 of some combination of the mechanical, electrical, or plumbing 7 systems or the structural and essential components of a 8 residential dwelling, that is intended to identify material 9 defects in those systems and components and is performed for 10 a fee in connection with or in preparation for a proposed or 11 possible residential real estate transfer. “Home inspection” 12 includes a consultation regarding the property that is 13 represented to be a home inspection or that is described by a 14 similar term. “Home inspection” does not include an examination 15 of a single system or component of a residential dwelling or an 16 examination that is limited to inspection for or of one or more 17 of the following: 18 (1) Wood-destroying insects. 19 (2) Underground tanks and wells. 20 (3) Septic systems. 21 (4) Swimming pools and spas. 22 (5) Alarm systems. 23 (6) Air and water quality. 24 (7) Tennis courts and playground equipment. 25 (8) Pollutants. 26 (9) Toxic chemicals and environmental hazards. 27 b. “Home inspection report” means a written report of the 28 results of a home inspection. 29 c. “Home inspector” means a member in good standing of a 30 national home inspectors association, or a person supervised 31 by a member in good standing of a national home inspectors 32 association who agrees to be responsible for the contents of 33 any home inspection report produced by the person. 34 d. “National home inspectors association” means a national 35 -5- LSB 2328SV (1) 91 ss/ns 5/ 8

S.F. 460 association of home inspectors that meets all of the following 1 requirements: 2 (1) Operates on a nonprofit basis and does not operate as a 3 franchise. 4 (2) Has members in more than ten states. 5 (3) Requires that a person shall not become a full member 6 unless the person has performed or participated in more than 7 one hundred home inspections and has passed a recognized 8 or accredited examination testing knowledge of the proper 9 procedures for conducting a home inspection. 10 (4) Requires that its members comply with a code of conduct 11 and attend continuing professional education classes as an 12 ongoing condition of membership. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill prohibits a person from issuing an independent 17 home inspection report, defined in the bill, unless the person 18 is a home inspector, defined in the bill, an architect licensed 19 pursuant to Code chapter 544A (licensed architects), or a 20 professional engineer licensed pursuant to Code chapter 542B 21 (professional engineers and land surveyors). 22 The bill requires a home inspector to perform a home 23 inspection, defined in the bill, with the degree of care that a 24 reasonably prudent home inspector would exercise, which shall 25 be based on the standards of practice and a code of ethics of a 26 national home inspectors association. The bill makes a home 27 inspector, an employer of a home inspector, or a person having 28 a financial interest in the employer of a home inspector (1) 29 offering to repair an issue identified in a home inspection 30 report for a fee, (2) inspecting for a fee a property in which 31 the person has an interest in the transfer, (3) offering a 32 fee, commission, or kickback to a seller for a referral for an 33 inspection, or (4) accepting payment for a particular result 34 of a home inspection, an unfair practice. An unfair practice 35 -6- LSB 2328SV (1) 91 ss/ns 6/ 8

S.F. 460 is punishable as provided by law, including by a civil penalty 1 not to exceed $40,000. This prohibition does not apply to 2 a home warranty company that is affiliated with or retains a 3 home inspector if the home warranty company performs repairs 4 pursuant to claims made under a home warranty contract. 5 The bill requires a home inspection report to include 6 certain elements. A home inspection report must include a 7 description of the scope of the report, a list of material 8 defects found during the home inspection, and certain 9 statements about the contents of the report. A home inspector 10 who fails to include a necessary element in a home inspection 11 report is guilty of a simple misdemeanor punishable by a fine 12 not to exceed $500. 13 The bill provides limited circumstances under which a home 14 inspection report may be disclosed to a person other than the 15 person who commissioned the report. The bill prohibits a home 16 inspection report from including an estimate as to repair costs 17 unless the report identifies the source of the estimate, the 18 estimate is stated as a range, and the home inspector suggests 19 that the parties consult a professional in the quoted repair. 20 The bill prohibits a contract to provide a home inspection 21 from limiting the liability of the person providing the home 22 inspection for gross negligence or willful misconduct, or 23 waiving or modifying a provision of the bill. 24 The bill requires a home inspector to maintain insurance 25 against errors and omissions in the performance of a home 26 inspection and general liability, with coverages of not less 27 than $100,000 per occurrence and $500,000 in the aggregate, 28 and with deductibles of not more than $2,500. The bill makes 29 a failure to maintain insurance required by the bill, or a 30 false representation as a person authorized to perform home 31 inspections, a simple misdemeanor for a first offense and a 32 serious misdemeanor for a second or subsequent offense. A 33 simple misdemeanor is punishable by confinement for no more 34 than 30 days and a fine of at least $105 but not more than $855. 35 -7- LSB 2328SV (1) 91 ss/ns 7/ 8