Legislature(2003 - 2004)

05/05/2003 09:02 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                                             
                                                                                                                                

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