Senate File 460 - Reprinted SENATE FILE 460 BY COMMITTEE ON COMMERCE (SUCCESSOR TO SSB 1144) (As Amended and Passed by the Senate March 26, 2025 ) A BILL FOR An Act relating to home inspections, including persons 1 authorized to perform home inspections and requirements for 2 independent home inspection reports, providing penalties, 3 and making penalties applicable. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 SF 460 (2) 91 ss/ns/mb

S.F. 460 Section 1. NEW SECTION . 558A.4A Independent home inspection 1 report —— persons authorized to issue. 2 1. A person shall not issue an independent home inspection 3 report unless the person is a home inspector, a person who 4 holds a license or registration in good standing to perform 5 home inspections in another state, an architect licensed 6 pursuant to chapter 544A, or a professional engineer licensed 7 pursuant to chapter 542B. 8 2. A home inspector shall conduct a home inspection with the 9 degree of care that a reasonably prudent home inspector would 10 exercise, which shall be based on the standards of practice and 11 code of ethics of a national home inspectors association. 12 3. a. A home inspector, employer of a home inspector, or a 13 person who controls or has a financial interest in the employer 14 of a home inspector, who does any of the following commits an 15 unlawful practice under section 714.16, subsection 2, paragraph 16 “a” : 17 (1) Performs or offers to perform for an additional fee any 18 repairs to a structure with respect to which the home inspector 19 has prepared a home inspection report within the preceding 20 twelve months. This subparagraph does not apply to remediation 21 for radon or wood-destroying insects. 22 (2) Inspects for a fee any property in which the home 23 inspector, the employer of the home inspector, or person 24 who controls or has a financial interest in the employer 25 of a home inspector has an interest in the transfer of the 26 property, including but not limited to receipt of a commission 27 as a licensee under chapter 543B, unless the interest in the 28 transfer of the property is disclosed in writing to the buyer 29 before the home inspection is performed and the buyer signs an 30 acknowledgment of receipt of the disclosure. 31 (3) Offers or delivers a commission, referral fee, or 32 kickback to the seller of the inspected property or to a 33 licensee under chapter 543B for either or both of the seller 34 and the buyer for the referral of business to the home 35 -1- SF 460 (2) 91 ss/ns/mb 1/ 6

S.F. 460 inspector, the employer of the home inspector, or person who 1 controls or has a financial interest in the employer of a home 2 inspector. 3 (4) Accepts an engagement to perform a home inspection or 4 to prepare a home inspection report in which the engagement 5 or the fee payable for the inspection is contingent upon 6 the conclusions in the report, preestablished or prescribed 7 findings, or the closing of the transaction. 8 b. Paragraph “a” does not apply to a home warranty company 9 that is affiliated with or retains a home inspector if the home 10 warranty company performs repairs pursuant to claims made under 11 a home warranty contract. 12 c. In addition to any remedies available for a violation 13 of section 714.16, subsection 2, paragraph “a” , the owner 14 of a property on which repairs are performed in violation of 15 paragraph “a” , subparagraph (1), shall be entitled to a full 16 refund of any moneys paid for those repairs, and any promissory 17 note or other obligation to pay given to the person performing 18 those repairs shall be void. 19 4. An independent home inspection report must be in writing 20 and must include all of the following: 21 a. A description of the scope of the inspection, including 22 an identification of the structural elements, systems, and 23 subsystems covered by the report. 24 b. A description of any material defects noted during the 25 inspection, along with any recommendation that certain experts 26 be retained to determine the extent of the defects and any 27 corrective action that should be taken. A material defect that 28 poses an unreasonable risk to people on the property must be 29 conspicuously identified as such. 30 c. All of the following statements, set forth conspicuously: 31 (1) “A home inspection is intended to assist in evaluation 32 of the overall condition of the dwelling. The inspection is 33 based on observation of the visible and apparent condition of 34 the structure and its components on the date of inspection.” 35 -2- SF 460 (2) 91 ss/ns/mb 2/ 6

S.F. 460 (2) “The results of this home inspection are not intended 1 to make any representation regarding the presence or absence 2 of latent or concealed defects that are not reasonably 3 ascertainable in a competently performed home inspection. No 4 warranty or guarantee is expressed or implied.” 5 (3) “If the person conducting your home inspection is not 6 a licensed structural engineer or other professional whose 7 license authorizes the rendering of an opinion as to the 8 structural integrity of a building or its other component 9 parts, you may be advised to seek a professional opinion as to 10 any defects or concerns mentioned in the report.” 11 (4) “The home inspection report is not to be construed as an 12 appraisal and may not be used as such for any purpose.” 13 5. Except as otherwise required by law, a home inspector 14 shall not deliver a home inspection report to any person other 15 than the client of the home inspector without the client’s 16 consent. The seller shall have the right, upon request, to 17 receive without charge a copy of a home inspection report from 18 the person for whom it was prepared. 19 6. A home inspector shall not express either orally or 20 in writing an estimate of the cost to repair a defect found 21 during a home inspection, except that such an estimate may be 22 included in an independent home inspection report if all of the 23 following apply: 24 a. The report identifies the source of the estimate. 25 b. The estimate is stated as a range of costs. 26 c. The report states that the parties should consider 27 obtaining an estimate from a contractor who performs the type 28 of repair involved. 29 7. A home inspector shall maintain insurance against errors 30 and omissions in the performance of a home inspection and 31 general liability, with coverages of not less than one hundred 32 thousand dollars per occurrence and five hundred thousand 33 dollars in the aggregate, and with deductibles of not more than 34 two thousand five hundred dollars. 35 -3- SF 460 (2) 91 ss/ns/mb 3/ 6

S.F. 460 a. Except as provided in paragraph “b” , a home inspector 1 shall maintain insurance under this subsection for at least one 2 year after the latest home inspection report the home inspector 3 delivers. 4 b. Paragraph “a” does not apply to a home inspection report 5 that was delivered prior to the effective date of this Act. 6 8. A buyer shall be entitled to rely in good faith, without 7 independent investigation, on a written representation that a 8 person is a home inspector, a person who holds a license or 9 registration in good standing to perform home inspections in 10 another state, an architect licensed pursuant to chapter 544A, 11 or a professional engineer licensed pursuant to chapter 542B. 12 9. A contract with a person to provide a home inspection 13 shall not limit the liability of the person providing the home 14 inspection for gross negligence or willful misconduct, or waive 15 or modify a provision of this section. However, the scope of a 16 home inspection, the services to be performed, and the systems 17 and conditions to be inspected or excluded from inspection may 18 be defined by a contract between the person providing the home 19 inspection and the client. 20 10. a. A home inspector who does not maintain insurance in 21 violation of subsection 7 or who falsely represents that the 22 person is a home inspector, a person who holds a license or 23 registration in good standing to perform home inspections in 24 another state, an architect licensed pursuant to chapter 544A, 25 or a professional engineer licensed pursuant to chapter 542B, 26 is guilty of the following: 27 (1) For a first offense, a simple misdemeanor. 28 (2) For a second or subsequent offense, a serious 29 misdemeanor. 30 b. A person who violates a provision of subsection 4 is 31 guilty of a simple misdemeanor punishable by a fine not to 32 exceed five hundred dollars. 33 11. For purposes of this section: 34 a. “Home inspection” means a noninvasive visual examination 35 -4- SF 460 (2) 91 ss/ns/mb 4/ 6

S.F. 460 of some combination of the mechanical, electrical, or plumbing 1 systems or the structural and essential components of a 2 residential dwelling, that is intended to identify material 3 defects in those systems and components and is performed for 4 a fee in connection with or in preparation for a proposed or 5 possible residential real estate transfer. “Home inspection” 6 includes a consultation regarding the property that is 7 represented to be a home inspection or that is described by a 8 similar term. “Home inspection” does not include an examination 9 of a single system or component of a residential dwelling or an 10 examination that is limited to inspection for or of one or more 11 of the following: 12 (1) Wood-destroying insects. 13 (2) Underground tanks and wells. 14 (3) Septic systems. 15 (4) Swimming pools and spas. 16 (5) Alarm systems. 17 (6) Air and water quality. 18 (7) Tennis courts and playground equipment. 19 (8) Pollutants. 20 (9) Toxic chemicals and environmental hazards. 21 b. “Home inspection report” means a written report of the 22 results of a home inspection. 23 c. “Home inspector” means a member in good standing of a 24 national home inspectors association, or a person supervised 25 by a member in good standing of a national home inspectors 26 association who agrees to be responsible for the contents of 27 any home inspection report produced by the person. 28 d. “National home inspectors association” means a national 29 association of home inspectors that meets all of the following 30 requirements: 31 (1) Operates on a nonprofit basis and does not operate as a 32 franchise. 33 (2) Has members in more than ten states. 34 (3) Requires that a person shall not become a full member 35 -5- SF 460 (2) 91 ss/ns/mb 5/ 6

S.F. 460 unless the person has performed or participated in more than 1 one hundred home inspections and has passed a psychometrically 2 sound examination testing knowledge of the proper procedures 3 for conducting a home inspection. 4 (4) Requires that its members comply with a code of conduct 5 and attend continuing professional education classes as an 6 ongoing condition of membership. 7 -6- SF 460 (2) 91 ss/ns/mb 6/ 6