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                                                       PRINTER'S NO. 395

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 359 Session of 2007


        INTRODUCED BY GREENLEAF, RAFFERTY, O'PAKE, WAUGH, COSTA, FERLO,
           WOZNIAK, LOGAN, STACK AND A. WILLIAMS, MARCH 12, 2007

        REFERRED TO CONSUMER PROTECTION AND PROFESSIONAL LICENSURE,
           MARCH 12, 2007

                                     AN ACT

     1  Amending Title 68 (Real and Personal Property) of the
     2     Pennsylvania Consolidated Statutes, further providing for
     3     home inspections; establishing the Pennsylvania Board of Home
     4     Inspectors; and providing for licensure of home inspectors
     5     and for disciplinary proceedings by the Pennsylvania Board of
     6     Home Inspectors.

     7     The General Assembly of the Commonwealth of Pennsylvania
     8  hereby enacts as follows:
     9     Section 1.  Section 7502 of Title 68 of the Pennsylvania
    10  Consolidated Statutes is amended to read:
    11  § 7502.  Definitions and index of definitions.
    12     (a)  Definitions.--The following words and phrases when used
    13  in this chapter shall have the meanings given to them in this
    14  section unless the context clearly indicates otherwise:
    15     "Applicant."  An individual who applies for a license as a
    16  home inspector.
    17     "Board."  The Pennsylvania Board of Home Inspectors
    18  established under section 7504.1 (relating to Pennsylvania Board
    19  of Home Inspectors).


     1     "Bureau."  The Bureau of Professional and Occupational
     2  Affairs in the Department of State.
     3     "Client."  An individual who contracts with a licensee to
     4  obtain a home inspection and subsequent written home inspection
     5  report.
     6     "Direct supervision."  A home inspection performed by a home
     7  inspector who is not a licensee in the presence of and under the
     8  tutelage of a supervising licensee.
     9     "Home inspection."  A noninvasive visual examination of some
    10  combination of the mechanical, electrical or plumbing systems or
    11  the structural and essential components of a residential
    12  dwelling designed to identify material defects in those systems
    13  and components and performed for a fee in connection with or
    14  preparation for a proposed or possible residential real estate
    15  transfer. The term also includes any consultation regarding the
    16  property that is represented to be a home inspection or that is
    17  described by any confusingly similar term. The term does not
    18  include an examination of a single system or component of a
    19  residential dwelling such as, for example, its electrical or
    20  plumbing system or its roof. The term also does not include an
    21  examination that is limited to inspection for or of one or more
    22  of the following: wood destroying insects, underground tanks and
    23  wells, septic systems, swimming pools and spas, alarm systems,
    24  air and water quality, tennis courts and playground equipment,
    25  pollutants, toxic chemicals and environmental hazards.
    26     "Home inspection report."  A written report [on the results
    27  of a home inspection.] prepared by a licensee for compensation
    28  and issued after a home inspection that includes:
    29         (1)  A description or identification of the structure
    30     component, systems and subsystems covered by the report.
    20070S0359B0395                  - 2 -     

     1         (2)  A report on any system or component inspected that,
     2     in the opinion of the licensee, is significantly deficient.
     3         (3)  The licensee's recommendation to seek further
     4     evaluation of an expert in that field or monitor deficiencies
     5     as reported.
     6         (4)  A list of any and all systems or components that
     7     were designated for inspection in the standards of practice
     8     adopted by the board but that were not inspected.
     9         (5)  The reason a system or component was not inspected.
    10     "Home inspector."  An individual who performs a home
    11  inspection, is properly licensed and meets the qualifications of
    12  this chapter.
    13     "License."  A license issued under this chapter to engage in
    14  home inspections.
    15     "Licensee."  A person who performs home inspections and who
    16  is licensed under this chapter as a home inspector.
    17     "National home inspectors association."  Any national
    18  association of home inspectors that:
    19         (1)  Is operated on a not-for-profit basis and is not
    20     operated as a franchise.
    21         (2)  Has members in more than ten states.
    22         (3)  Requires that a person may not become a full member
    23     unless the person has performed or participated in more than
    24     100 home inspections and has passed a recognized or
    25     accredited examination testing knowledge of the proper
    26     procedures for conducting a home inspection.
    27         (4)  Requires that its members comply with a code of
    28     conduct and attend continuing professional education classes
    29     as an ongoing condition of membership.
    30     "Preferred provider relationship."  A referral service
    20070S0359B0395                  - 3 -     

     1  offered by a real estate company, mortgage company, law firm,
     2  individual agent, attorney or other similar entity or individual
     3  when a licensee is recommended over other licensees in exchange
     4  for any direct or indirect consideration therefore, including,
     5  without limitation, the payment of a fee, or where in
     6  consideration of a licensee advertising produced by or for a
     7  person in consideration for recommendations or referrals to
     8  undertake home inspections.
     9     "Residential dwelling."  A structure consisting of at least
    10  one, but not more than four, units, each designed for occupancy
    11  by a single family, whether the unit or units are occupied or
    12  unoccupied.
    13     (b)  Index of other definitions.--The following is a
    14  nonexclusive list of other definitions applying to this chapter
    15  and the sections in which they appear:
    16     "Agent."  Section 7102 (relating to definitions).
    17     "Agreement of transfer."  Section 7102 (relating to
    18  definitions).
    19     "Buyer."  Section 7102 (relating to definitions).
    20     "Material defect."  Section 7102 (relating to definitions).
    21     "Residential real estate transfer."  Section 7103 (relating
    22  to application of part).
    23     "Seller."  Section 7102 (relating to definitions).
    24     Section 2.  Title 68 is amended by adding sections to read:
    25  § 7504.1.  Pennsylvania Board of Home Inspectors.
    26     (a)  Establishment.--The Pennsylvania Board of Home
    27  Inspectors is established to conduct business affairs under the
    28  Bureau of Professional and Occupational Affairs. The purpose of
    29  the board shall be to administer and enforce the provisions of
    30  this chapter, promote initiatives to protect consumers of home
    20070S0359B0395                  - 4 -     

     1  inspection services, create guidelines for the development of
     2  high-level skills in home inspectors and encourage the presence
     3  of a viable home inspection industry within this Commonwealth.
     4     (b)  Composition.--The board shall be composed of seven
     5  members who must be full-time residents of this Commonwealth and
     6  appointed by the Governor in accordance with the following
     7  requirements:
     8         (1)  For purposes of the initial appointments, five of
     9     the members must:
    10             (i)  Be actively engaged in performing home
    11         inspections in this Commonwealth for no less than five
    12         years immediately preceding the member's appointment to
    13         the board.
    14             (ii)  Have completed no less than 100 fee-paid
    15         inspections per year over the five years immediately
    16         preceding appointment to the board.
    17             (iii)  Demonstrate that they have passed a written
    18         examination administered by a national examination
    19         organization that complies with the standards established
    20         by this chapter.
    21     A board member who becomes a home inspector shall obtain the
    22     requisite license in accordance with this chapter, before or
    23     on the six-month anniversary of the effective date of this
    24     section. If a board member does not obtain the requisite
    25     license on or before such date, the board member shall be
    26     considered to have resigned from the board on the six-month
    27     anniversary of the effective date of this section, and the
    28     Governor shall fill the vacancy in accordance with this
    29     section. Thereafter, the home inspector members must be
    30     licensed prior to their appointments.
    20070S0359B0395                  - 5 -     

     1         (2)  One person shall represent the public at large and
     2     shall not be associated with the home inspection, home
     3     building or real estate business other than as a consumer.
     4     This member shall be appointed by the Governor but shall not
     5     be selected from a submitted list of names.
     6         (3)  One person shall be the Commissioner of the Bureau
     7     of Professional and Occupational Affairs or his designee.
     8     (c)  Member selection and service.--
     9         (1)  Appointment of the initial members comprising the
    10     board shall begin on the three-month anniversary of the
    11     effective date of this section, and their respective terms
    12     shall be staggered, as follows:
    13             (i)  Three members for a term of three years.
    14             (ii)  Two members for a term of two years.
    15             (iii)  Two members for a term of one year.
    16         (2)  Except as provided in paragraph (1), all board
    17     members shall serve a term of three years, and no member
    18     shall serve for more than three consecutive terms.
    19         (3)  The Governor may remove a board member at any time
    20     for incompetence, neglect of duty or unprofessional conduct.
    21         (4)  If a vacancy occurs in the membership of the board,
    22     the Governor shall appoint an individual to serve for the
    23     remainder of the unexpired term who has like qualifications
    24     required of the member who created the vacancy.
    25         (5)  Each year the board shall elect a member as
    26     chairperson and vice chairperson. The chairperson and vice
    27     chairperson shall serve in their respective capacities for no
    28     more than one year consecutively and until a successor is
    29     elected. The chairperson shall preside at all meetings at
    30     which the chairperson is present. The vice chairperson shall
    20070S0359B0395                  - 6 -     

     1     preside at meetings in the absence of the chairperson and
     2     shall perform other duties as the chairperson directs. If the
     3     chairperson and vice chairperson are absent from a meeting of
     4     the board when a quorum exists, the members who are present
     5     may elect a presiding officer who shall serve as acting
     6     chairperson until the conclusion of the meeting or until the
     7     arrival of the chairperson or vice chairperson at the
     8     meeting, whichever occurs first.
     9         (6)  The board shall meet at least quarterly each
    10     calendar year at the call of the chairperson or the written
    11     request of a majority of the members of the board. The
    12     chairperson shall establish the date, time and place for each
    13     meeting. A majority of the current members of the board shall
    14     constitute a quorum. The affirmative vote of a majority of
    15     the members appointed to the board shall be necessary for the
    16     board to take official action.
    17         (7)  Each member of the board shall serve on a voluntary
    18     basis but shall be entitled to reimbursement for traveling
    19     expenses and other expenses actually incurred in connection
    20     with the member's duties as established under this chapter.
    21  § 7504.2.  Licensure of home inspectors by board.
    22     (a)  Powers of board.--The board, through the promulgation of
    23  administrative rules and regulations, shall:
    24         (1)  Establish the requirements for and prescribe the
    25     form of licenses, applications and other documents that are
    26     required for home inspectors to be licensed under this
    27     chapter.
    28         (2)  Grant, deny, suspend and revoke approval of
    29     examinations and courses of study regarding home inspections;
    30     establish standards for continuing home inspection education,
    20070S0359B0395                  - 7 -     

     1     including, without limitation, the subject matter and content
     2     of courses of study and the selection of instructors; and
     3     approve other equivalent educational programs and establish
     4     procedures for the issuance of credit upon satisfactory proof
     5     of the completion of these programs.
     6         (3)  Issue, deny, suspend and revoke licenses in
     7     accordance with this chapter.
     8         (4)  Establish and maintain a current list of home
     9     inspectors who are registered or licensed. The list shall be
    10     available for public inspection, including by electronic
    11     means.
    12         (5)  Establish and maintain a current list of national
    13     home inspectors associations approved by the board as meeting
    14     the requirements of this chapter. Any national home
    15     inspectors association approved by the board must provide the
    16     board initially, and upon request, with a list of its members
    17     in this Commonwealth. Once approved, the association shall
    18     notify the board within 30 days when any of its members in
    19     this Commonwealth fail to maintain their membership in the
    20     association or are otherwise not in compliance with the rules
    21     of the association.
    22         (6)  Investigate complaints concerning licensees or
    23     persons the board has reason to believe should be licensees,
    24     including complaints concerning failure to comply with this
    25     chapter or administrative regulations promulgated under this
    26     chapter and, when appropriate, take action in accordance with
    27     this chapter.
    28         (7)  Bring actions in the name of the Commonwealth in an
    29     appropriate court in order to enforce compliance with this
    30     chapter or the administrative regulations promulgated under
    20070S0359B0395                  - 8 -     

     1     this chapter.
     2         (8)  Establish licensure fees in an amount determined by
     3     the board that are reasonably necessary and appropriate for
     4     enforcement.
     5         (9)  Inspect the records of a licensee in accordance with
     6     administrative regulations promulgated by the board.
     7         (10)  Conduct or designate a member or other
     8     representative to conduct public hearings on any matter for
     9     which a hearing is required under this chapter and exercise
    10     all powers granted under this section.
    11         (11)  Adopt a seal containing the words "Pennsylvania
    12     Board of Home Inspectors" and, through the board's secretary,
    13     certify copies and authenticate all acts of the board.
    14         (12)  Use board members, consultants and other persons to
    15     enter into contracts and to authorize expenditures that are
    16     reasonably necessary or appropriate to administer and enforce
    17     this chapter and administrative regulations promulgated under
    18     this chapter.
    19         (13)  Establish continuing education requirements of not
    20     less than 16 hours annually for licensees in accordance with
    21     this chapter.
    22         (14)  Maintain the board's office, files, records and
    23     property in the City of Harrisburg.
    24         (15)  Require all fee-paid home inspections to be
    25     conducted in accordance with the standards of practice of
    26     board-approved national home inspection associations.
    27         (16)  Establish standards of practice for licensees.
    28         (17)  Develop a model home inspection contract meeting
    29     the provisions of this chapter and encourage licensees to use
    30     the model contract.
    20070S0359B0395                  - 9 -     

     1         (18)  Create guidelines for mentoring programs and
     2     approved training facilities established pursuant to the
     3     requirements of section 7506 (relating to required
     4     contractual provisions regarding home inspections).
     5         (19)  Exercise all other powers specifically conferred on
     6     the board under this chapter.
     7         (20)  Promulgate rules and regulations to carry out the
     8     effective administration and the requirements of this
     9     chapter.
    10     (b)  Examination requirement.--To be eligible for a license
    11  as a home inspector in this Commonwealth, an applicant must pass
    12  a valid, reliable examination. This examination shall:
    13         (1)  Test competence in home inspection practice.
    14         (2)  Be developed pursuant to accepted psychometric
    15     standards promulgated by the American Educational Research
    16     Association's "Standards for Educational and Psychological
    17     Testing"; the Equal Employment Opportunity Commission's
    18     "Uniform Guidelines for Employee Selection Procedures"; the
    19     Civil Rights Act of 1964 (Public Law 88-352, 78 Stat. 241);
    20     the Americans with Disabilities Act of 1990 (Public Law 101-
    21     336, 104 Stat. 327); and similar applicable standards.
    22         (3)  Be administered and proctored by an approved and
    23     recognized testing organization at a physical location to
    24     ensure both the security and integrity of the examination.
    25  § 7504.3.  Support of board by bureau.
    26     The bureau shall provide the board with:
    27         (1)  Clerical or other assistants, including
    28     investigators, necessary for the proper performance of the
    29     board's duties.
    30         (2)  A place to hold board meetings and hearings.
    20070S0359B0395                 - 10 -     

     1         (3)  Office equipment and office space for board records,
     2     staff and other effects necessary to carry out the
     3     requirements of this chapter.
     4  § 7504.4.  Income and expenditures of board.
     5     (a)  Establishment of revolving fund.--There is hereby
     6  established in the State Treasury a revolving fund for the use
     7  of the board.
     8     (b)  Deposits in fund.--All fees and other money received by
     9  the board in accordance with this chapter shall be deposited in
    10  the revolving fund. No part of this revolving fund shall revert
    11  to the General Fund.
    12     (c)  Use of fund.--The reimbursement of the board's expenses
    13  shall be paid from the revolving fund.
    14  § 7504.5.  Licensure of home inspectors.
    15     (a)  Home inspector license application.--A person applying
    16  for a license as a home inspector shall apply on a written,
    17  notarized form prescribed and provided by the board. Supporting
    18  and other required documents may be submitted by other means as
    19  prescribed by the board. The applicant shall pay the applicable
    20  licensing fee established by the board.
    21     (b)  Licensing requirements.--The board shall establish, from
    22  time to time, rules and regulations pertaining to the licensure
    23  of home inspectors but in any event shall require that a home
    24  inspector be a member, in good standing, of a board-approved
    25  national home inspection association.
    26     (c)  Denial of license.--The board shall deny a license to
    27  any applicant who fails to:
    28         (1)  furnish evidence satisfactory to the board, showing
    29     that the individual:
    30             (i)  is at least 18 years of age;
    20070S0359B0395                 - 11 -     

     1             (ii)  (A)  has graduated from high school, earned a
     2             Pennsylvania or other state's general educational
     3             development diploma; or
     4                 (B)  has actively worked within the business of
     5             home inspection for a minimum of five years; and
     6             (iii)  meets other criteria established by the board.
     7         (2)  verify the information submitted on the approved and
     8     notarized application form; or
     9         (3)  complete a board-approved training program or course
    10     of study involving the performance of home inspections and
    11     pass a valid examination prescribed or approved by the board,
    12     where such study program shall be for no less than 120 hours
    13     of instruction and include no less than 40 hours of actual
    14     in-field training.
    15     (d)  Waivers moving from another jurisdiction.--The licensing
    16  requirements for a home inspector may be waived for a person who
    17  moves to this Commonwealth from another jurisdiction, and the
    18  person may be granted a license as a home inspector if the
    19  person meets all of the following requirements:
    20         (1)  The other jurisdiction grants the same privileges to
    21     licensees of Pennsylvania as the Commonwealth grants to
    22     licensees of that other jurisdiction.
    23         (2)  The person is licensed in the other jurisdiction.
    24         (3)  The licensing requirements of the other jurisdiction
    25     are substantially similar to the requirements of this
    26     chapter.
    27         (4)  The person provides a notarized statement that the
    28     person has studied, is familiar with and will abide by the
    29     provisions of this chapter and the administrative regulations
    30     promulgated by the board.
    20070S0359B0395                 - 12 -     

     1     (e)  Advertising without license.--An individual shall not
     2  advertise nor claim to be a licensee and shall not conduct home
     3  inspection services for compensation without first obtaining a
     4  license issued by the board.
     5     (f)  Ownership of licenses.--All licenses issued by the board
     6  shall remain the property of the board.
     7     (g)  Information change notification.--A licensee shall
     8  notify the board within 30 days of any change of:
     9         (1)  name;
    10         (2)  name under which the licensee conducts business;
    11         (3)  business address; or
    12         (4)  lapse, change or cancellation of insurance coverage.
    13     (h)  License renewal.--A licensee may renew the license in
    14  accordance with the rules and regulations promulgated by the
    15  board which shall include the following provisions:
    16         (1)  The home inspector shall furnish evidence showing
    17     successful completion of the continuing education
    18     requirements of this chapter, pay the renewal fee established
    19     by the board and show proof of professional liability
    20     insurance as required by section 7509 (relating to liability
    21     insurance).
    22         (2)  The board shall send a renewal notice to each
    23     licensee at least 60 days prior to the expiration of the
    24     license. The notice shall inform the licensee of the need to
    25     renew and the requirement to submit an application and to pay
    26     the renewal fee. If the board fails to send the notice of
    27     expiration within such time period, the licensee shall not be
    28     subject to a sanction for failure to renew. If the board
    29     later sends the renewal notice to the licensee, the licensee
    30     must submit a complete application and renewal fee to the
    20070S0359B0395                 - 13 -     

     1     board within 45 days of the receipt of the renewal notice or
     2     be subject to a sanction for failure to renew.
     3         (3)  Renewal fees shall be paid with a draft, money
     4     order, cashier's check, certified or other personal check,
     5     or, if payment is made in person, the payment may be made in
     6     cash. If the board receives an uncertified personal check for
     7     the renewal fee and if the check does not clear the bank, the
     8     board may refuse to renew the license.
     9         (4)  Before the end of each license period, the licensee
    10     shall complete the continuing education required by the
    11     board.
    12     (i)  Inactive licenses.--The board may, through the
    13  promulgation of rules and regulations:
    14         (1)  Establish an inactive license for licensees who do
    15     not actively perform home inspections but wish to maintain
    16     the license. This inactive status shall not exceed a term of
    17     three years.
    18         (2)  Reduce license and renewal fees for inactive
    19     licenses.
    20         (3)  Waive the insurance requirements established in
    21     section 7509 for inactive licenses except that the inactive
    22     licensee must maintain insurance tail coverage for the first
    23     year of inactivity.
    24  § 7504.6.  Nonresident home inspectors.
    25     (a)  Nonresident licensing.--A nonresident individual who the
    26  board determines meets the requirements of this chapter and
    27  files a written consent may be licensed as a home inspector.
    28     (b)  Nonresident consent form.--A nonresident applicant shall
    29  file with the board a written and notarized consent stating
    30  that, if licensed:
    20070S0359B0395                 - 14 -     

     1         (1)  The applicant agrees to the commencement of any
     2     action arising out of the conduct of the applicant's business
     3     in this Commonwealth in the county in which the events giving
     4     rise to the cause of action occurred.
     5         (2)  The applicant:
     6             (i)  agrees to provide to the board the name and
     7         address of an agent to receive service of process in this
     8         Commonwealth; or
     9             (ii)  consents to the board acting as the applicant's
    10         agent for the purpose of receiving service of process if:
    11                 (A)  an agent's name and address have not been
    12             filed with the board or the agent's name and address
    13             on file with the board are incorrect; and
    14                 (B)  the applicant agrees that service of process
    15             in accordance with the Pennsylvania Rules of Civil
    16             Procedure is proper service and subjects the
    17             applicant to the jurisdiction of Pennsylvania courts.
    18  § 7504.7.  Continuing education of home inspectors.
    19     The board shall promulgate rules and regulations concerning
    20  the continuing education required for the renewal of a home
    21  inspector license and shall:
    22         (1)  Establish procedures for approving organizations
    23     that provide continuing education.
    24         (2)  Prescribe the content, duration and organization of
    25     continuing education courses that contribute to the
    26     competence of home inspectors.
    27  § 7504.8.  Registration or licensing of home inspectors by
    28             political subdivisions.
    29     No agency or political subdivision of this Commonwealth,
    30  other than the board, shall impose the following on individuals
    20070S0359B0395                 - 15 -     

     1  licensed under this chapter:
     2         (1)  A registration or licensing requirement for
     3     conducting home inspections.
     4         (2)  A license fee to obtain any local license, except
     5     that this prohibition shall not prevent any local government
     6     from imposing an occupational license tax on any person
     7     operating as a home inspector within the jurisdiction of the
     8     local government.
     9  § 7504.9.  Disciplinary proceedings by board.
    10     (a)  Disciplinary actions.--The board shall take disciplinary
    11  action against or impose sanctions on a licensee for failing to
    12  comply with any provision of this chapter or any rules and
    13  regulations promulgated to carry out this chapter as follows:
    14         (1)  The board may summarily suspend a license for up to
    15     90 days before a final adjudication or during an appeal of
    16     the board's determination if the board finds that the
    17     licensee represents a clear and immediate danger to the
    18     public's health, safety, financial interest or to property if
    19     allowed to perform home inspections. The summary suspension
    20     may be renewed at a hearing before the board for up to 90
    21     days.
    22         (2)  If the board:
    23             (i)  Determines that an individual is not licensed
    24         under this chapter and is engaged in or believed to be
    25         engaged in activities for which a license is required
    26         under this chapter, then the board shall issue an order
    27         to that individual requiring the individual to show cause
    28         why the individual should not be ordered to cease and
    29         desist from the activities. The show cause order shall
    30         set forth a date, time and place for a hearing at which
    20070S0359B0395                 - 16 -     

     1         the individual shall appear and show cause why the
     2         individual should not be subject to licensing under this
     3         chapter.
     4             (ii)  After a hearing, determines that the activities
     5         in which the individual is engaged are subject to
     6         licensure under this chapter, the board may issue a cease
     7         and desist order that identifies the individual and
     8         describes activities that are the subject of the order.
     9         (3)  A cease and desist order issued under this section
    10     shall be enforceable in the Commonwealth Court.
    11     (b)  Violations of chapter.--An individual is in violation of
    12  this chapter when the individual commits any of the following:
    13         (1)  Performs or offers to perform home inspections for
    14     compensation without being licensed as a home inspector and
    15     without being exempt from licensure under this chapter.
    16         (2)  Presents as the individual's own license, the
    17     license of another.
    18         (3)  Intentionally gives false or materially misleading
    19     information to the board or to a board member in connection
    20     with a licensing matter.
    21         (4)  Impersonates another licensee.
    22         (5)  Uses an expired, suspended, revoked or an otherwise
    23     restricted license.
    24     (c)  Fee or compensation.--The board shall add to any penalty
    25  imposed the amount of any fee or other compensation earned by
    26  the individual in the commission of the violation. Each
    27  transaction involving an unauthorized activity as described in
    28  this chapter shall constitute a separate violation.
    29     (d)  Legal advice.--The Department of State shall act as the
    30  legal adviser for the board and provide any legal assistance
    20070S0359B0395                 - 17 -     

     1  necessary to carry out this chapter.
     2     (e)  Revocation or suspension of license.--The board shall
     3  adopt provisions to revoke or suspend a license pending
     4  investigation for any of the following:
     5         (1)  A conviction in any jurisdiction of a misdemeanor
     6     involving moral turpitude or of a felony. A plea of nolo
     7     contendere shall be considered a conviction.
     8         (2)  An action demonstrating untrustworthiness,
     9     incompetence, dishonesty, gross negligence, material
    10     misrepresentation, fraud or unethical conduct in any dealings
    11     subject to the provisions of this chapter or the rules and
    12     regulations promulgated by the board.
    13         (3)  Use of advertising or solicitation that is false,
    14     misleading or otherwise deemed unprofessional by the board.
    15     All advertisements, contracts, correspondence and other
    16     documents utilized by a home inspector shall prominently
    17     include the home inspector's name and registration number as
    18     a licensee according to this chapter.
    19         (4)  Habitual or excessive use of intoxicants or illegal
    20     drugs.
    21         (5)  Failure to supervise adequately and in accordance
    22     with rules governing direct supervision an unlicensed
    23     inspector performing home inspections under the supervision
    24     of the licensed home inspector.
    25         (6)  Any other reason deemed necessary by the board.
    26     Section 3.  Sections 7505(b) and (c) and 7506 of Title 68 are
    27  amended to read:
    28  § 7505.  Consumer remedies.
    29     * * *
    30     (b)  Prohibited acts.--Any of the following acts engaged in
    20070S0359B0395                 - 18 -     

     1  by a home inspector, an employer of a home inspector or another
     2  business or person that controls or has a financial interest in
     3  the employer of a home inspector shall be deemed to be an unfair
     4  or deceptive act or practice as defined by section 2(4)(i)
     5  through (xxi) of the Unfair Trade Practices and Consumer
     6  Protection Law:
     7         (1)  Performing or offering to perform for an additional
     8     fee any repairs to a structure with respect to which the home
     9     inspector, the employer of the home inspector or such other
    10     business or person has prepared a home inspection report
    11     within the preceding 12 months, except that this paragraph
    12     shall not apply to remediation for radon or wood destroying
    13     insects.
    14         (2)  Inspecting for a fee any property in which the home
    15     inspector, the employer of the home inspector or such other
    16     business or person has any financial interest or any interest
    17     in the transfer of the property, including, without
    18     limitation, engaging in a pay-to-play scheme in which the
    19     home inspector pays or receives a direct or indirect
    20     consideration for receiving leads toward providing home
    21     inspection services, or receipt of a commission as an agent,
    22     unless the financial interest or interest in the transfer of
    23     the property is disclosed in writing to the buyer before the
    24     home inspection is performed and the buyer signs an
    25     acknowledgment of receipt of the disclosure.
    26         (3)  Offering or delivering any commission, referral fee
    27     or kickback to the seller of the inspected property or to an
    28     agent for either or both of the seller and the buyer for the
    29     referral of any business to the home inspector, the employer
    30     of the home inspector or such other business or person.
    20070S0359B0395                 - 19 -     

     1         (4)  Accepting an engagement to perform a home inspection
     2     or to prepare a home inspection report in which the
     3     employment itself or the fee payable for the inspection is
     4     contingent upon the conclusions in the report, preestablished
     5     or prescribed findings or the closing of the transaction.
     6         (5)  Participation, by any real estate broker or agent,
     7     directly or indirectly, in a pay-to-play scheme in which the
     8     home inspector pays or receives a direct or indirect
     9     consideration for receiving leads toward providing home
    10     inspection services.
    11         (6)  When there is a home warranty company which is
    12     wholly or appreciably owned or affiliated with a real estate
    13     brokerage company, failing to disclose to the consumer such
    14     affiliation prior to contracting with the consumer for home
    15     inspection services.
    16     [(c)  Exception.--A home warranty company that is affiliated
    17  with or retains the home inspector does not violate subsection
    18  (b) if the home warranty company performs repairs pursuant to
    19  claims made under a home warranty contract.]
    20     * * *
    21  § 7506.  Required contractual provision regarding home
    22             inspections.
    23     Except as provided in this section, a provision of an
    24  agreement of transfer regarding the right of the buyer to obtain
    25  a home inspection report and providing for the consequences, if
    26  any, shall provide that the home inspection be performed by a
    27  licensee. [full member in good standing of a national home
    28  inspection association in accordance with the ethical standards
    29  and code of conduct or practice of that association, provided
    30  that a home inspection performed by a person who has not
    20070S0359B0395                 - 20 -     

     1  attained full membership in a national home inspection
     2  association satisfies the requirements of this section if the
     3  person is:
     4         (1)  licensed or registered as a professional engineer
     5     under the act of May 23, 1945 (P.L.913, No.367), known as the
     6     Engineer, Land Surveyor and Geologist Registration Law;
     7         (2)  licensed or registered under the act of December 14,
     8     1982 (P.L.1227, No.281), known as the Architects Licensure
     9     Law; or
    10         (3)  supervised by a full member in good standing of a
    11     national home inspection association who agrees to be
    12     responsible for the home inspection report by signing the
    13     report.]
    14  A home inspection performed by a person who has not attained
    15  licensure satisfies the requirements of this section if the
    16  person is directly supervised by a licensee who agrees to be
    17  responsible for the home inspection by signing the report.
    18     Section 4.  Section 7507 of Title 68 is amended by adding a
    19  subsection to read:
    20  § 7507.  Contracts with home inspectors.
    21     * * *
    22     (c)  Information brochure.--At the time of the signing of the
    23  first written contract to purchase, a real estate broker or
    24  salesperson shall distribute an informational brochure,
    25  published by the board, educating the consumers about the home
    26  inspection process and this chapter and providing the consumer
    27  with directions on how to find a licensed home inspector.
    28     Section 5.  Section 7509(a) of Title 68 is amended and the
    29  section is amended by adding a subsection to read:
    30  § 7509.  Liability insurance.
    20070S0359B0395                 - 21 -     

     1     (a)  [Required insurance.--A home inspector shall maintain
     2  insurance against errors and omissions in the performance of a
     3  home inspection and general liability, with coverages of not
     4  less than $100,000 per occurrence and $500,000 in the aggregate
     5  and with deductibles of not more than $2,500.] Professional
     6  liability coverage.--Every licensee who is engaged in home
     7  inspections shall secure, maintain and file with the Secretary
     8  of State proof of a certificate of liability coverage, which
     9  terms and conditions shall be determined by the Secretary of
    10  State in consultation with the board. Every proof of liability
    11  coverage required to be filed with the Secretary of State shall
    12  provide that cancellation or nonrenewal of the policy shall not
    13  be effective unless and until at least ten days' notice of
    14  intention to cancel or nonrenew has been received in writing by
    15  the Secretary of State.
    16     * * *
    17     (c)  All required insurance coverage shall:
    18         (1)  Be issued by an insurance company or other legal
    19     entity authorized to transact insurance business in this
    20     Commonwealth.
    21         (2)  Identify the Commonwealth as an additional insured.
    22         (3)  Provide that cancellation and nonrenewal of the
    23     insurance policy is not effective until the board receives no
    24     less than ten days' prior written notice of the expiration or
    25     earlier termination. Home inspectors shall direct their
    26     insurance company to send a notice of cancellation directly
    27     to the board.
    28         (4)  Contain any other terms and conditions established
    29     by the board.
    30     Section 6.  Section 7510 of Title 68 is amended to read:
    20070S0359B0395                 - 22 -     

     1  § 7510.  Reliance by buyer.
     2     (a)  Reliance.--A buyer shall be entitled to rely in good
     3  faith, without independent investigation, on a written
     4  representation by a home inspector that the home inspector is[:
     5         (1)  licensed or registered as a professional engineer
     6     under the act of May 23, 1945 (P.L.913, No.367), known as the
     7     Engineer, Land Surveyor and Geologist Registration Law;
     8         (2)  licensed or registered under the act of December 14,
     9     1982 (P.L.1227, No.281), known as the Architects Licensure
    10     Law; or
    11         (3)  a full member in good standing of a national home
    12     inspection association.]
    13  licensed to conduct home inspections in this Commonwealth.
    14     (b)  Display of license number.--The home inspector shall
    15  display his assigned license number on all promotional,
    16  marketing and advertising materials provided to the general
    17  public.
    18     (c)  License requirement.--No person shall conduct a home
    19  inspection or represent a qualification to conduct a home
    20  inspection for compensation unless that person is licensed as a
    21  home inspector under this chapter.
    22     (d)  Business entities.--A business entity may not:
    23         (1)  provide or offer to provide home inspection services
    24     unless each of the home inspectors employed by the business
    25     entity satisfies all the requirements of this section; or
    26         (2)  use, in connection with the name or signature of the
    27     business entity, the title "home inspector" to describe the
    28     business entity's services unless each home inspector
    29     employed by the business entity satisfies all the
    30     requirements of this chapter.
    20070S0359B0395                 - 23 -     

     1     Section 7.  Section 7511 of Title 68 is amended by adding a
     2  subsection to read:
     3  § 7511.  Penalties.
     4     * * *
     5     (c)  Unauthorized practice.--Any person subject to an
     6  administrative order issued by the board directing the cessation
     7  of any activity for which a license is required or suspending or
     8  revoking a license previously issued and who directly or
     9  indirectly:
    10         (1)  engages in the business of home inspection;
    11         (2)  holds himself out to the public as being able to
    12     engage in the business of home inspection without a license;
    13         (3)  engages in the business of home inspection after
    14     having his license revoked or suspended; or
    15         (4)  without a license to engage in the business of home
    16     inspection, directly or indirectly employs, permits or
    17     authorizes an unlicensed person to engage in the business of
    18     home inspection;
    19  commits a summary offense and on the first conviction thereof
    20  shall be sentenced to pay a fine of not more than $1,000, or,
    21  upon a second or subsequent conviction thereof, shall be
    22  sentenced to pay a fine of not more than $2,500. Each violation
    23  of this chapter shall be deemed a separate offense.
    24     Section 8.  For one year from the effective date of this
    25  section, an applicant who meets all of the requirements of 68
    26  Pa.C.S. Ch. 75 and this section may be licensed as a home
    27  inspector without having to complete a board-approved training
    28  program or course of study involving the performance of home
    29  inspections. The applicant must:
    30         (1)  Be at least 18 years of age.
    20070S0359B0395                 - 24 -     

     1         (2)  Have graduated from high school or earned a
     2     Pennsylvania or other state's general educational development
     3     diploma.
     4         (3)  Have passed a written examination to test competence
     5     in home inspection practice that was developed pursuant to
     6     accepted psychometric standards and was administered and
     7     proctored by an approved and recognized testing organization
     8     at a physical location to ensure both the security and the
     9     integrity of the examination.
    10         (4)  Have completed no less than 100 fee-paid inspections
    11     per year over the five years immediately preceding.
    12         (5)  Furnish evidence showing successful completion of
    13     not less than 16 hours of verifiable continuing education
    14     during the past year.
    15         (6)  Show proof of professional liability insurance
    16     consistent with 68 Pa.C.S. § 7509.
    17     Section 9.  This act shall take effect in 120 days.









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