Legislature(2003 - 2004)
05/05/2003 09:02 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE CS FOR CS FOR HOUSE BILL NO. 9(L&C) "An Act relating to the registration of individuals who perform home inspections; relating to regulation of contractors; relating to registration fees for specialty contractors, home inspectors, and associate home inspectors; relating to home inspection requirements for residential loans purchased or approved by the Alaska Housing Finance Corporation; relating to civil actions by and against home inspectors and to civil actions arising from residential unit inspections; repealing a law that limits liability for damages based on a duty to inspect a residential unit to damages caused by gross negligence or intentional misconduct; and providing for an effective date." This was the third hearing for this bill in the Senate Finance Committee. REPRESENTATIVE NORM ROKEBERG, the bill's sponsor, voiced appreciation to the Committee for the thorough discussions that the Committee has conducted on this legislation. Co-Chair Wilken clarified that SCS CS HB9 (FIN) Version 23-LS0029\U with three adopted amendments is before the Committee. Co-Chair Green moved to report the committee substitute for HB 9 from Committee with individual recommendations and accompanying fiscal notes. Senator Taylor objected. AT EASE 9:31 AM / 9:32 AM Co-Chair Wilken clarified that Amendment 23-LS0029\U.1, Amendment 23-LS0029\U.2, and Amendment 23-LS0029\U.4, were previously adopted and would be incorporated into the Version "U" committee substitute. Senator Taylor voiced concern that "the shifting of the statute of limitations to one year" would modify the "normal civic system to provide a different standard for one group of people." He puzzled as to the reason that a one-year statute of limitations would be specifically identified for the home inspector profession as opposed to the standard three-year statute of limitations for other construction related entities such as plumbers and electricians. Representative Rokeberg responded that the intent of this language is to prevent "the shift of liability from one element of a real estate transaction to a home inspector without due cause." He continued that the one-year statute of limitations timeframe has been identified for home inspectors for several reasons including the fact that while liability insurance is available for Existing Home Inspectors, it is unavailable for New Home inspections. Furthermore, he noted that the liability is limited to $350. Representative Rokeberg explained that in a new home construction, the responsibility for a defect would be, as first recourse, the contractor or other construction entities. However, he attested, in an existing home inspection, were a defect to surface after one year from the date of the home inspection report, other factors such as owner neglect, natural disasters, the weather, or other unforeseen events could be responsible for the defect. In this situation, he noted that the seller or the real estate agent might not have disclosed pertinent information. Senator Taylor asked for further clarification regarding available insurance coverage. Representative Rokeberg reaffirmed that insurance is not available to home inspectors for new construction; however, he stated that insurance is available to the building contractor. He noted that the cost of that insurance has increased dramatically in recent years. Senator Taylor stated that the home inspector's report is a "critical element" in the new home construction process and without that report, financial and construction requirements could not be finalized. He argued that the effect of this legislation would be that, after one year, were it determined that the home inspector was the negligent party, the home owners would not have any recourse as the home inspector would be exempt from a lawsuit. He declared that the unavailability of insurance coverage for new home construction for home inspectors should not dictate a change in State policy. Senator Taylor asked how a real estate transaction occurring six months after a home inspection was completed would fare under this legislation, specifically whether the liability would be limited to the remaining six months. Representative Rokeberg responded that provisions in the bill limit the validity of a home inspection report to 180 days. He noted that the one-year timeframe would allow the dwelling to be exposed to the various seasonal weather-related elements to test "the integrity" of the structure. He asserted that the one-year timeframe is sufficient as that "it would be unfair to have liability attached" to a home inspector who "only charges" approximately $350 for a visual report, after that timeframe because any defeats should become apparent in that year. Senator Olson asked whether the sponsor would be opposed to an amendment that would change the statute of limitations. Representative Rokeberg reminded that Amendment #4 changed the two- year statute of limitations for new home construction liability to one-year. Senator Taylor asked the location of the language regarding the validity dates of the home inspection report in the bill. Representative Rokeberg stated that this language is included in Section 7(d) on page six, line 16. He opined that permitting a home inspection report to be valid for 180 days is too long. A roll call was taken on the motion. IN FAVOR: Senator Olson, Senator Bunde, Co-chair Green, and Co- chair Wilken OPPOSED: Senator Taylor and Senator Hoffman ABSENT: Senator B. Stevens The motion PASSED (4-2-1) SCS HB 9 (FIN) was REPORTED from Committee with zero fiscal note #1 from the Department of Revenue; zero fiscal note #2 from the Department of Law; zero fiscal note #3 from the Department of Labor and Workforce Development; and fiscal note #4 in the amount of $66,100 from the Division of Occupational Licensing, Department of Community and Economic Development.