SB 458: "Home Inspector Licensing Act of Georgia"; enact

The House Committee on Regulated Industries offers the following substitute to SB 458:

A BILL TO BE ENTITLED

AN ACT

To amend Chapters 40 and 41 of Title 43 of the Official Code of Georgia Annotated, relating to real estate brokers and salespersons and residential and commercial general contractors, respectively, so as to require certain commissioners of the Georgia Real Estate Commission to be licensees in good standing; to prohibit certain real estate practices; to exempt certain operations; to provide for certain consent cease and desist orders; to provide for licensure of home inspectors; to provide for reciprocity of licensure; to provide for licensure of companies performing home inspections; to provide for minimum requirements to apply for licensure; to provide for requirements to maintain license; to require home inspectors to maintain or be covered by certain insurance; to provide for standards of practice and unfair trade practices; to provide for exceptions; to provide for definitions; to provide for a short title; to provide for a legislative purpose; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

This Act shall be known and may be cited as the "Home Inspector Licensing Act of Georgia."

SECTION 2.

The purpose of this Act is to regulate the practice of home inspection within this state by establishing minimum qualifications, education, experience, and unfair trade practices for home inspectors, thereby protecting consumers from unqualified or unethical practitioners.

SECTION 3.

Chapter 40 of Title 43 of the Official Code of Georgia Annotated, relating to real estate brokers and salespersons, is amended by adding a new paragraph to Code Section 43-40-1, relating to definitions, to read as follows:

"(12) 'Wholesaler' means any person not licensed under this chapter who enters, or offers to enter, an assignable contract for real property and markets the property for sale or reassignment without written authorization from the property owner."

SECTION 4.

Said chapter is further amended by revising subsection (a) of Code Section 43-40-2, relating to creation of commission, members, meetings, recusal for conflict of interest, removal, compensation, annual report, and budget unit, as follows:

"(a) There is created the Georgia Real Estate Commission, which shall be composed of six members, each of whom shall be appointed by the Governor and confirmed by the Senate for a term of five years. Any such appointments made when the Senate is not in session shall be effective until acted upon by the Senate. Five of the members shall be licensees in good standing who shall have been residents of this state and actively engaged licensed in the real estate business for five years. The sixth member of the commission shall have no connection with the real estate industry whatsoever but shall have a recognized interest in consumer affairs and in consumer protection concerns."

SECTION 5.

Said chapter is further amended by revising paragraphs (12), (35), and (36) of and adding a new paragraph to subsection (b) of Code Section 43-40-25, relating to violations by licensees, schools, and instructors, sanctions, and unfair trade practices, to read as follows: "(12) Offering real estate for sale or lease without the knowledge and consent of the owner or the owner's authorized agent or on terms other than those authorized by the owner or the owner's authorized agent, or offering real estate for sale or lease on behalf of a wholesaler;"

"(35) Inducing any person to alter, modify, or change another licensee's fee or commission for real estate brokerage services without that licensee's prior written consent; or

(36) Failing to obtain a person's written agreement to refer that person to another licensed broker for brokerage or relocation services and to inform such person being referred whether or not the licensee will receive a valuable consideration for such referral; or

(37) Indicating to a client or to another broker in direct communication, in a multiple listing service, any promotional material, or in any marketing of real property that an offer to buy or sell real estate will not be presented to the purchaser and to the seller based on a compensation request in that offer, or will be marketed in a manner that places the interest of the broker over that of the client."

SECTION 6.

Said chapter is further amended by revising paragraphs (1), (13), and (14) of and adding a new paragraph to Code Section 43-40-29, relating to exceptions to operation of chapter, to read as follows:

"(1) Any person who, as owner, as the spouse of an owner, as the family member of an owner, as that term is defined in rules promulgated by the Commission, as general partner of a limited partnership as an officer of a limited liability company, or as lessor, or as prospective purchaser or their regular employees, performs any act with reference to property owned, leased, or to be acquired by such owner, limited partnership, lessor, or prospective purchaser where such acts are performed in the regular course of, or as incident to, the management of such property and the investment therein or any person who manages residential apartment complexes under a contract approved by any federal agency for an organization which is exempt from federal taxes pursuant to Section 501(c)(3) of the Internal Revenue Code, as defined in Code Section 48-1-2, provided that such person was engaged in managing such property under such type contract prior to January 1, 1989;"

"(13) Any person who performs only physical maintenance on a property; or

(14) A licensed certified public accountant acting solely as an incident to the practice of public accounting; or

(15) Any prospective purchaser or their regular employee who performs any act with reference to property to be acquired by such prospective purchaser and who:

(A) Is not a wholesaler; or

(B) Does not receive a separate fee for the performance of such act."

SECTION 7.

Said chapter is further amended by revising subsection (c) of Code Section 43-40-30, relating to acting without a license, cease and desist order, judicial review, and effect of Code section on other remedies, as follows:

"(c) Notwithstanding any other provisions of law to the contrary, the:

(1) The commissioner may issue a consent cease and desist order to any person for whom the commission has opened an investigation for engaging in the practice of a real estate broker without a license. Such consent cease and desist order shall be final upon consummation of the order; and

(2) The commission may issue a cease and desist order prohibiting any person from violating the provisions of this chapter by engaging in the practice of a real estate broker without a license. Such cease and desist order shall be final ten days after it is issued unless the person to whom such order is issued requests a hearing before the commission."

SECTION 8.

Chapter 41 of Title 43 of the Official Code of Georgia Annotated, relating to residential and commercial general contractors, is amended by designating Code Sections 43-41-1 through 43-41-18 as Article 1.

SECTION 9.

Said chapter is further amended by adding a new article to read as follows: "ARTICLE 2

43-41-20.

As used in this article, the term:

(1) 'Ancillary services' means specialized inspections that a home inspector may offer but are not considered part of a general home inspection unless specifically advertised or performed outside the scope of the standards of practice.

(2) 'Client' means the party for whom the home inspection is performed, including, but not limited to, a prospective purchaser or seller of a home.

(3) 'Home inspection' means a limited, noninvasive examination of the condition of a home by a home inspector.

(4) 'Home inspector' means any person, except an employee of a county, municipality, or political subdivision while engaged in the performance of the duties of his or her employment, who, for consideration, inspects and reports on the condition of any home or single-family dwelling or the grounds, roof, exterior surface, garage or carport, structure, attic, basement or crawl space, electrical system, heating system, air-conditioning system, plumbing, on-site sewerage disposal, pool or hot tub, fireplace, kitchen, appliances, or any combination thereof for a prospective purchaser or seller.

(5) 'Standards of practice' means the minimum standards for home inspections established by the board.

(6) 'Unfair trade practices' means practices that violate the code of conduct that governs home inspectors as established by the board.

43-41-21.

(a) Home inspectors shall be licensed by the board beginning January 1, 2028.

(b) The residential contractor division shall have jurisdiction and authority over home inspectors.

(c) The board shall provide by regulation for reciprocity with other states or territories of the United States in the licensing of home inspectors, provided that such other states have requirements substantially equal to the requirements in force in this state for registration, licensure, or certification, and that any such home inspector holding a current and valid license, certificate, or registration from another state or territory seeking licensure by way of reciprocity shall demonstrate that such applicant meets the qualifications, requirements, and criteria set forth in this article and that such applicant is otherwise in compliance with all requirements of this state for the transaction of such business; provided, further, that a similar privilege is offered to residents of this state by such other state or territory.

43-41-22.

(a) An applicant for a home inspector license shall:

(1) Be at least 18 years of age;

(2) Possess a high school diploma, or its equivalent, or ten years of experience in the home inspection or residential contractor industry;

(3) Pass a criminal background check; and

(4) Submit a complete application with all required documentation and fees.

(b) Applicants shall pass a psychometrically sound examination administered or approved by the board.

(c) Such licenses shall be renewable every four years by birth month of the licensee.

43-41-23.

Applicants and home inspectors shall maintain or be covered by:

(1) A minimum of $250,000.00 per occurrence and $500,000.00 aggregate general liability insurance for third-party claims for bodily injury or property damage; and

(2) A minimum of $250,000.00 per occurrence and $500,000.00 aggregate errors and omissions insurance for claims of professional mistakes, oversights, or negligence. Such errors and omissions insurance shall include coverage for liability arising from referrals.

43-41-24.

To maintain licensure, home inspectors shall maintain competency in the current standards of practice and residential building codes.

43-41-25.

(a) Companies that perform home inspections shall be licensed by the board beginning January 1, 2028.

(b) To be licensed by the board, companies that perform home inspections shall:

(1) Register with the board;

(2) Provide the board a list of all licensed home inspectors employed or contracted by the company;

(3) Ensure all home inspections are performed by individuals holding active licenses;

(4) Maintain records of all inspections performed, including, but not limited to, home inspection reports and client information; and

(5) Be subject to audit and disciplinary action by the board.

43-41-26.

(a) The board shall adopt and periodically update comprehensive standards of practice and unfair trade practices that all licensed home inspectors shall comply with. Such standards shall define the scope of a home inspection, include what is and is not required to be inspected, and establish a baseline for the protection of public interest.

(b) Licensed home inspectors shall provide clients with a written disclosure of the current standards of practice and unfair trade practices, a written disclosure of any ancillary services to be performed, and a sample home inspection report prior to commencing an inspection.

43-41-27.

(a) The board shall open an investigation when there is:

(1) A sworn written complaint from a client who hired a home inspector or company that performs home inspections;

(2) A referral from another licensing entity; or

(3) Probable cause established in the course of another investigation, or that is available in the public domain, that the home inspector or company that performs home inspections violated the standards of practice or engaged in unfair trade practices.

(b) If an investigation finds a violation of this article, the board may:

(1) Issue cease and desist orders to home inspectors or companies performing home inspections;

(2) Impose fines;

(3) Suspend or revoke licenses;

(4) Require additional education or training;

(5) File a criminal complaint with the Attorney General; or

(6) Any combination thereof.

(c) Before imposing penalties for violations of this article, such violations shall be heard and determined by the residential contractor division in accordance with the provisions of Chapter 13 of Title 50, the 'Georgia Administrative Procedure Act.'

43-41-28.

The board shall establish reasonable fees for applications, examinations, licenses, license renewals, and other administrative services. All such fees collected shall be used to fund the operations and enforcement activities of the board.

43-41-29.

This article shall not apply to:

(1) A real estate appraiser licensed pursuant to Chapter 39A of this title;

(2) A real estate broker or salesperson licensed pursuant to Chapter 40 of this title;

(3) A residential contractor licensed pursuant to Article 1 of this chapter; or

(4) Any officer or employee of a government agency conducting official duties.

43-41-30.

Beginning July 1, 2027, any person working as a home inspector on or before such date may apply to the board for licensure without meeting the initial education requirements if they pass the National Home Inspector Examination or meet an equivalent psychometrically sound competency measure as approved by the board."

SECTION 10.

All laws and parts of laws in conflict with this Act are repealed.