SENATE, No. 335
STATE OF NEW JERSEY
PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION
By Senator MARTIN
An Act providing for the licensing and regulation of home inspectors, supplementing Title 45 of the Revised Statutes.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "Home Inspection Professional Licensing Act."
2. As used in this act, except as expressly or by clear implication otherwise intended:
"Board" means the Board of Home Inspectors established by section 3 of P.L. , c. (C. )(pending before the Legislature as this bill).
"Certificate of condition" means a written report of an evaluation of the structural elements and mechanical systems of a residential building by a home inspector pursuant to a contract.
"Client" means any person who engages, or seeks to engage, the services of a home inspector for the purpose of obtaining inspection of and written report upon the condition of a residential building.
"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.
"Home inspector" means any person licensed as a home inspector by the Board pursuant to the provisions of P.L. , c. (C. )(pending before the Legislature as this bill).
"Home inspection business" means the inspection of the condition of the structural elements and mechanical systems of residential buildings, the preparation of reports thereon for clients of the home inspector, and the provision of warranties thereon as authorized by P.L. , c. (C. )(pending before the Legislature as this bill). A home inspection shall consist of an on-site visual inspection of the accessible structural elements and mechanical systems of a residential building for the purpose of identifying any defect affecting the structural soundness and functional efficiency of any such elements or systems, or determining the absence of such defects to the extent such determination is feasible. An inspection shall, where practicable, include test operation of any systems in the manner and under conditions in which they would be operated in ordinary daily use by residents of the structure.
"Real estate broker" means a person licensed by the State to engage in the business of a real estate broker.
"Real estate salesperson" means a person licensed by the State to engage in the business of a real estate salesperson.
"Residential building" means a structure consisting of one to four dwelling units that has been occupied as such prior to the time when a home inspection is requested or contracted for in accordance with P.L. , c. (C. )(pending before the Legislature as this bill).
"Structural elements and mechanical systems" includes:
a. Foundations, basements and first-floor structures, including structural members and assemblies, foundation components, grading and drainage.
b. Walls, exterior and interior; ceilings; window and door assemblies; stairways, exterior and interior; and porches, decks, balconies and railings.
c. Roofing, including ventilation systems.
d. Electrical systems, including type of service supplied to the structure, including amperage, wiring materials and workmanship, and type and sufficiency of overload protection and safety provision.
e. Interior plumbing system, including source of water supply (quality thereof not being within the purview of system inspection), method of waste disposal (adequacy or efficiency thereof not being within the purview of system inspection); material, workmanship and functionality of supply and waste lines, and operation of water shutoff valves and drainage cleanout access points; arrangements for hot-water heating (including, where applicable, connection with heating system).
f. Heating and air conditioning, including energy source or sources, type and location of equipment, including automatic or manual controls, and heating or cooling outlets in each habitable room; flue pipes, chimneys and fireplaces.
"Warranty" means a written guarantee provided by a home inspector as authorized by section 6 of P.L. , c. (C. )(pending before the Legislature as this bill).
3. There is hereby established in the Division of Consumer Affairs of the Department of Law and Public Safety the Board of Home Inspectors. The board shall consist of five members, of whom one shall be the Director of the Division of Consumer Affairs, or the director's designee, and the other four shall be appointed by the Governor with the advice and consent of the Senate. Two of the appointed members shall be home inspectors, and the other two shall be chosen on the basis of their knowledge and experience in the field of home construction but shall not be home inspectors. Appointed members shall serve for terms of four years, except that one of the first two home inspector members appointed shall serve for a term of two years, and the first two members appointed who are not home inspectors shall serve for terms of one year and three years. Vacancies among appointed members shall be filled in the same manner as the original appointment was made, but for the unexpired term only. Appointed members shall serve without compensation, but shall be entitled to reimbursement for actual expenses necessarily incurred in the performance of their duties as members. The director's designee may be any subordinate officer in the division. The designation shall be in writing and filed with the secretary of the board. The director shall appoint the secretary of the board from among the permanent staff of the division. Neither the director, the director's designee, nor the secretary of the board, shall receive any additional compensation from the State by reason of their services on or to the board.
For the purposes of the first appointments under this section, the determination of whether a person is a home inspector shall be in the discretion of the appointing authority, who may deem any person to be a home inspector if the appointing authority has reason to believe that that person is qualified for a license as such and would have received such a license if the board and the licensing procedure established by P.L. , c. (C. )(pending before the Legislature as this bill) had been in effect prior to the making of those appointments.
4. No person other than a home inspector licensed pursuant to P.L. , c. (C. )(pending before the Legislature as this bill) shall give, purport to give, or hold out as qualified to give a certificate of condition, as defined in P.L. , c. (C. )(pending before the Legislature as this bill), or any certificate or assurance represented to be equivalent thereto.
5. No contract of sale of a residential building shall prevent a prospective buyer from obtaining an inspection and certificate of condition prior to the execution of the deed or other conveyance pursuant to that contract. Any contract of sale violating the terms of this section shall be unenforceable as against the prospective buyer.
6. Any home inspector issuing a certificate of condition may in writing warrant its accuracy and integrity to the client to whom it is issued, which warranty shall extend for 18 months from the date on which the inspection on which it is based was made, or for 12 months after the sale of the property on which it was issued, whichever comes first. For the security of such warranties and providing against other liabilities, the board shall from time to time establish and enforce a minimum of insurance coverage that every licensed home inspector shall be required to purchase against liability for any negligence or inaccuracy in the inspection or certificate, or any other breach of a warranty under this section, or a contract required pursuant to section 7 of P.L. , c. (C. )(pending before the Legislature as this bill).
7. No home inspection shall be commenced unless all elements and conditions of the inspection are contained in a written contract signed in triplicate by the home inspector and client. One copy shall be retained by the home inspector, one by the client, and one shall be mailed to the board. The cost to the client for the inspection and report shall be indicated in the contract, and the cost and coverage of a warranty, if any, shall also be indicated in the contract. In order for a valid certificate of condition to issue, the contract shall provide for a home inspection covering the structural elements and mechanical systems of the building to be inspected.
8. a. If a home inspector contracts with more than one client for a home inspection report on the same residential building, the reports shall not differ in their content with respect to any element or system reported on unless such difference is justified by a material change in the condition of that element or system in the interim between different inspections.
b. No home inspector shall purport to offer or sell insurance on the elements and systems inspected under a home inspection contract.
c. No home inspector or anyone acting on the inspector's behalf shall give or offer to give any commission or inducement whatsoever for the referral of a client by a real estate broker or salesperson, nor shall any such broker or salesperson request or accept any such commission or inducement.
9. a. The board shall periodically make available to real estate brokers and salespersons a listing of all licensed home inspectors in the State. The list shall be on a county-by-county basis and shall list the names and business addresses of each home inspector. The board may charge a fee for this service commensurate with the cost of maintaining, updating, and disseminating the list.
b. Real estate brokers and salespersons shall inform prospective buyers that home inspection services are available, and may make available to them the list provided under subsection a. of this section. At the request of a buyer, real estate brokers and salespersons may recommend a home inspector or home inspectors, but no such recommendations shall establish or tend to establish any liability on the part of such a broker or salesperson.
10. Application for a license shall be made in writing under oath, on a form provided by the board, and shall include the following information:
a. If an individual:
(1) Full name;
(2) Residence and business address;
(3) Name and duration of all businesses engaged in during the previous five years; and
(4) Experience in the home inspection business.
b. If a partnership:
(1) Name and address of the partnership;
(2) Name, residence, and business address of each partner; and
(3) Business experience of each partner during the previous five years.
c. If an association:
(1) Name and address of the association;
(2) Name, residence, and business address of each of the officers, directors, and managers;
(3) Business experience during the previous five years of each officer, director, and manager; and
(4) Name, residence, and business addresses of all members who have 10% or more control of the association.
d. If a corporation:
(1) Name of the corporation, date and place of incorporation;
(2) Name, residence, and business address of each director and officer of the corporation;
(3) Business experience during the previous five years of each director and officer;
(4) Name, residence, and shareholding of all shareholders owning 10% or more of the outstanding shares; and
(5) Number of shares of each class of stock issued and outstanding.
11. In all cases, the application shall also include:
a. The full name, residence, and age of each agent of the home inspection business, exclusive of ministerial office employees.
b. Whether any person making application has been convicted in any State or Federal court of a crime, the record of which has not been expunged, annulled, and sealed, or forgery, fraud, obtaining money under false pretenses, embezzlement, extortion, larceny, burglary, breaking and entering, robbery, bribery, criminal conspiracy to defraud or other like offense or offenses including violations of P.L. , c. (C.) (pending before the Legislature as this bill) or has entered the plea of nolo contendere or non vult to any indictment, allegation or complaint alleging the commission of such offenses.
The record of conviction or the entry of the plea in any court of this State or of any other state or of the United States shall be sufficient warrant for the refusal, suspension or revocation of a license except as provided in P.L.1968, c.282 (C.2A:168A-1 et seq.).
12. No home inspector shall be licensed unless the board is satisfied that the home inspector or one or more of the agents of the home inspection business, collectively, are qualified pursuant to the provisions of P.L. , c. (C. )(pending before the Legislature as this bill) and any other rules and regulations promulgated thereunder by the board.
The board may require any applicant for a license to complete satisfactorily an examination devised or approved by it as an adequate indicator of the qualifications required of a home inspector. For this purpose, the board may by rule approve examinations administered by recognized professional societies, such as the American Society of Home Inspectors.
13. Every person making application for a license shall pay to the board at the time of making application and every other year thereafter upon license renewal a fee of $200 for its principal place of business and $100 for each additional place of business.
14. No abatement in the amount of the license fee shall be made if the license is surrendered, canceled or revoked prior to the expiration of the period for which such license was issued. Every license shall expire on the last day of the twenty-fourth calendar month following the calendar month in which the license was issued; provided, however, the board may, in order to stagger the expiration dates of licenses, issue or renew licenses which shall expire on a date fixed by the board, not sooner than six months nor later than 29 months after the date of issue, and the fee for these licenses shall be in amounts proportionately less or greater than the fee fixed in section 13 hereof.
15. The license shall not be transferable or assignable, by operation of law or otherwise. Each license shall specify the location of the office or branch and shall be conspicuously displayed therein. If the location is changed, a new license shall issue without charge. No home inspector shall engage in the home inspection business under any other name or at any location other than that designated in the license, or under any business name which includes the term "home inspection business" unless it is in fact a bona fide home inspection business.
16. Prior to actually employing any individual who shall come into personal contact with the public during a home inspection, a home inspector shall file with the board a supplemental application supplying additional information in every respect necessary to satisfy the requirements of P.L. , c. (C. )(pending before the Legislature as this bill). There shall be paid a filing fee of $5 to the board for the filing of each application in addition to an annual license fee of $10 for each inspector or agent. Each individual home inspector shall be provided with an official identification card by the board which must be carried by the inspector and presented upon request.
17. A home inspector's license may be suspended or revoked by the board, after due notice and opportunity to be heard given to the licensee, for any willful or persistent violation of a licensee's duties and obligations under P.L. , c. (C. )(pending before the Legislature as this bill). A licensee may surrender his license at any time by delivering the license to the board with written notice that he thereby surrenders the license, but the surrender shall not affect the licensee's civil or criminal liability for acts committed prior to the surrender.
18. The board shall, after consultation with recognized professional associations of the home inspection business, and with recognized leaders of that profession, devise, adopt and promulgate, and may from time to time revise, a code of ethical standards and practices to govern the conduct of licensed home inspectors in the performance of their work, and shall adopt a schedule of penalties for the neglect or violation of those standards and practices; but no licensee shall be punished, whether by fine or by revocation or suspension of license without due notice and opportunity to be heard on any such alleged violation.
19. a. Any dispute between a home inspector and a client or any other person arising out of the terms of P.L. , c. (C. )(pending before the Legislature as this bill) or of any contract, certification, warranty or other instrument or agreement made or entered into pursuant to the requirements or authorizations of P.L. , c. (C.) (pending before the Legislature as this bill), and any complaint touching upon the competence or integrity of any person licensed as a home inspector by the board in connection with the performance of duties and responsibilities as a home inspector shall in the first instance be referred to the board for resolution or appropriate disciplinary action. No legal proceedings shall be had on any such matter before the board has rendered its decision, or until 90 days have elapsed from the time when the complainant or party to the dispute has notified the board in writing of the existence of the dispute or complaint.
b. The board shall make all necessary and proper rules and regulations to govern the form and manner of submission of such matters to its decision, in accordance with the rules laid down for the hearing of contested cases under the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
c. In deciding upon any such dispute or complaint, the Board may, in accordance with general rules which it shall adopt:
(1) Order any licensed inspector to perform or omit any act or proposed act the performance or omission of which forms the basis for dispute or complaint.
(2) Order any licensed inspector to compensate a client for any monetary loss or damage arising out of the inspector's neglect or failure to comply with the terms of an inspection contract, or for loss or damage arising under the terms of a warranty given by the inspector.
(3) Penalize a licensed inspector by monetary fine, in accordance with schedules established by rule, for violation of any of the provisions of P.L. , c. (C. )(pending before the Legislature as this bill), or of the code of ethical conduct and practices promulgated pursuant to section 18 of P.L. , c. (C. )(pending before the Legislature as this bill).
(4) Suspend or revoke the license of an inspector for any flagrant, willful or persistent violation of the terms of P.L. , c. (C. )(pending before the Legislature as this bill), or of the code of ethical conduct and practices.
20. The board is hereby authorized to adopt and promulgate, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), all rules and regulations necessary or expedient to the timely and effective implementation of the provisions and purposes of this act.
21. This act shall take effect on the first day of the sixth month next following enactment, except that sections 3 and 20 shall take effect immediately.
Provides for licensing and regulation of home inspectors.