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AMENDED IN ASSEMBLY MARCH 31, 2004

CALIFORNIA LEGISLATURE—2003–04 REGULAR SESSION

ASSEMBLY BILL No. 2142

Introduced by Assembly Member Houston

February 18, 2004

An act to amend Section 7197 of, and to add Section 7197.5 to, theBusiness and Professions Code, relating to home inspectors.

LEGISLATIVE COUNSEL’S DIGEST

AB 2142, as amended, Houston. Home inspectors.Existing law regulates a person who performs certain home

inspections for a fee.Existing law provides that it is an unfair business practice for a home

inspector, a company that employs the inspector, or a company that iscontrolled by a company that also has a financial interest in a companyemploying a home inspector, to do various acts, including performingor offering to perform, for an additional fee, any repairs to a structureon which the inspector, or the inspector’s company, has prepared ahome inspection report in the past 12 months.

This bill would exempt from this prohibition those repairs identifiedin a report prepared by a licensed contractor or a licensed structural pestcontrol operator if a specified notice is provided to the consumer inplain English and Spanish disclosing that the licensed contractor or thelicensed structural pest control operator is a home inspector, a companythat employs a home inspector, or a company that is controlled by acompany that also has a financial interest in a company employing thehome inspector and disclosing that the consumer is entitled to seek asecond opinion or have another contractor make the repairs identified

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in the home inspection report. The bill would authorize the Contractors’State License Board and the Structural Pest Control Board to imposedisciplinary actions and administrative fines on a licensed contractor orstructural pest control operator, respectively, that performs or offers toperform repairs in violation of these provisions or who commits fraud.The bill would enact other related provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes.State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1. Section 7197 of the Business and ProfessionsCode is amended to read:

7197. It is an unfair business practice for a home inspector, acompany that employs the inspector, or a company that iscontrolled by a company that also has a financial interest in acompany employing a home inspector, to do any of the following:

(a) To perform or offer to perform, for an additional fee, anyrepairs to a structure on which the inspector, or the inspector’scompany, has prepared a home inspection report in the past 12months, unless the home inspector, a company that employs thehome inspector, or a company that is controlled by a company thatalso has a financial interest in a company employing the homeinspector, is a licensed contractor as defined in Section 7057 or7058, or a licensed structural pest control operator as defined inSection 8506 or 8506.1, if the requirements of Section 7197.5 aremet.

(b) Inspect for a fee any property in which the inspector, or theinspector’s company, has any financial interest or any interest inthe transfer of the property.

(c) To offer or deliver any compensation, inducement, orreward to the owner of the inspected property, the broker, or agent,for the referral of any business to the inspector or the inspectioncompany.

(d) Accept an engagement to make an inspection or to preparea report in which the employment itself or the fee payable for theinspection is contingent upon the conclusions in the report,preestablished findings, or the close of escrow.

(e) A home protection company that is affiliated with or thatretains the home inspector does not violate this section if it

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performs repairs pursuant to claims made under the homeprotection contract.

SEC. 2. Section 7197.5 is added to the Business andProfessions Code, to read:

7197.5. (a) A licensed contractor or a licensed structural pestcontrol operator that performs a home inspection pursuant tosubdivision (a) of Section 7197 shall comply with both of thefollowing:

(1) Only perform repairs identified in a report prepared by thelicensed contractor or the licensed structural pest control operator.

(2) Prior to signing a contract for performing any repairs,provide notice to the consumer in 14-point type on a separate pagestating in plain English and Spanish that the followinginformation:

(A) That the licensed contractor or the licensed structural pestcontrol operator is a home inspector, a company that employs ahome inspector, or a company that is controlled by a company thatalso has a financial interest in a company employing the homeinspector.

(B) That the consumer is entitled to seek a second opinion orhave another contractor make the repairs identified in the homeinspection report.

(b) A licensed contractor or a licensed structural pest controloperator that performs or attempts to perform a repair in violationof paragraphs (1) or (2) of subdivision (a) or that is found to havecommitted fraud, as defined by Section 7116 or Section 8644, asapplicable, is subject to disciplinary action as prescribed in Article7 (commencing with Section 7090) of Chapter 9 or Article 7(commencing with Section 8620) of Chapter 14, as applicable. Inaddition to disciplinary action taken by the Contractors’ StateLicense Board or the Structural Pest Control Board, a licensedcontractor or a licensed structural pest control operator thatperforms or attempts to perform a repair in violation of paragraphs(1) or (2) of subdivision (a) or that is found to have committedfraud, as defined by Section 7116 or Section 8644, shall be subjectto an administrative fine of not more than five thousand dollars($5,000) to be imposed by the respective board.

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