History of Home Inspector Legislation:
Although California currently has no formal state licensing or registration of inspectors, there have been numerous pieces of legislation affecting inspectors over the past two decades. One of the key steps in regulating any business is a "Sunrise Study which describes the business in question and addresses any proposed need for regulation. Three sunrise studies on the home inspection business have been made. The first study, which was widely discredited, was created in 1986. Another study was created by the California Association of Realtors in 1994. The third study was created by the California Coalition of Home Inspectors as part of the legislative process for Senate Bill 1216 in 1999.
There are numerous other laws pertaining to real estate, contracting, small businesses, and building codes that all affect real estate inspection businesses. The California Coalition of Home Inspectors (CCHI) monitors legislation in all those areas, and reports to the CREIA membership through the Inspector magazine and through the local chapter representatives. The CCHI also maintains a highly effective lobbying presence in the State Capitol. CCHI and CREI-PAC (the political action committee for home inspectors) are funded by voluntary contributions.
Overview of Real Estate Inspection Law in California:
The primary law affecting California home inspectors is in the Business and Professions Code, sections 7195 et seq. This section of the law was originally created by Senate Bill 258 in the 1996 legislative session, was signed into law and has been in effect since January 1, 1997.
This part of California law defines home inspections and home inspectors, and imposes certain duties, constraints and prohibitions on inspection practitioners. A home inspection is defined as "a noninvasive, physical examination, performed for a fee in connection with a transfer, as defined in subdivision (e), of real property, of the mechanical, electrical, or plumbing systems or the structural and essential components of a residential dwelling of one to four units designed to identify material defects in those systems, structures and components."
A material defect is defined as "a condition that significantly affects the value, desirability, habitability, or safety of the dwelling. Style or aesthetics shall not be considered in determining whether a system, structure, or component is defective. These definitions were incorporated verbatim into CREIA’s Standards of Practice, effective April 15, 1999.
Other sections of this law contain provisions similar to those in the CREIA Code of Ethics, including prohibitions on repairing properties on which an inspection was performed in the last twelve months, accepting any kickbacks, or payment of referral fees to agents. The law also provides for a four year statute of limitations on the inspector's liability, beginning with the date of the inspection.
B&P Code Section 7195 was amended in 2001 to include language indicating that a home inspector may provide energy information as part of the inspection. The law that created those changes was Assembly Bill 1574. It also includes a provision mentioning home inspectors in the Public Resources Code. Section 25401.7 of that code and states that inspectors shall provide contact information on home energy for a nonprofit organization, a utility provider, or a government agency such as the State Energy Resources Conservation and Development commission.
Another important section of relevant law is found in the California Civil Code. Section 1102 of that code contains the information regarding required disclosure by sellers and agents, and the language for the Real Estate Transfer Disclosure Statement. Section 1102.4 contains a provision whereby an expert can relieve the seller and agent of liability by providing "substitute disclosure within the area of their expertise. The named types of experts include licensed engineers, land surveyors, geologists, structural pest control operators, contractors, or "other expert. The inspection community through the California Coalition of Home Inspectors (CCHI) has long been at odds with the California Association of Realtors (CAR) over the wording of this section. One major point of contention in the discussions surrounding SB 1332 in the 2002 legislative session was the proposed re-wording of this section to include "Certified Home Inspectors", and to make other clarifications regarding the need for the expert to specify their intent that their inspection report may be used as substitute disclosure.
In addition to these pieces of legislation, there is also another body of law referred to as case law, wherein the interpretations of a court are found to have the effect of law. Perhaps the most historically significant example of such law was the Easton decision in 1984, which resulted in the disclosure requirements we now have in California.