Calif. Law.

1. 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, the
Business 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 is
controlled by a company that also has a financial interest in a company
employing a home inspector, to do various acts, including performing
or offering to perform, for an additional fee, any repairs to a structure
on which the inspector, or the inspector’s company, has prepared a
home inspection report in the past 12 months.
This bill would exempt from this prohibition those repairs identified
in a report prepared by a licensed contractor or a licensed structural pest
control operator if a specified notice is provided to the consumer in
plain English and Spanish disclosing that the licensed contractor or the
licensed structural pest control operator is a home inspector, a company
that employs a home inspector, or a company that is controlled by a
company that also has a financial interest in a company employing the
home inspector and disclosing that the consumer is entitled to seek a
second opinion or have another contractor make the repairs identified
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2. AB 2142 —2—
in the home inspection report. The bill would authorize the Contractors’
State License Board and the Structural Pest Control Board to impose
disciplinary actions and administrative fines on a licensed contractor or
structural pest control operator, respectively, that performs or offers to
perform 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:
1 SECTION 1. Section 7197 of the Business and Professions
2 Code is amended to read:
3 7197. It is an unfair business practice for a home inspector, a
4 company that employs the inspector, or a company that is
5 controlled by a company that also has a financial interest in a
6 company employing a home inspector, to do any of the following:
7 (a) To perform or offer to perform, for an additional fee, any
8 repairs to a structure on which the inspector, or the inspector’s
9 company, has prepared a home inspection report in the past 12
10 months, unless the home inspector, a company that employs the
11 home inspector, or a company that is controlled by a company that
12 also has a financial interest in a company employing the home
13 inspector, is a licensed contractor as defined in Section 7057 or
14 7058, or a licensed structural pest control operator as defined in
15 Section 8506 or 8506.1, if the requirements of Section 7197.5 are
16 met.
17 (b) Inspect for a fee any property in which the inspector, or the
18 inspector’s company, has any financial interest or any interest in
19 the transfer of the property.
20 (c) To offer or deliver any compensation, inducement, or
21 reward to the owner of the inspected property, the broker, or agent,
22 for the referral of any business to the inspector or the inspection
23 company.
24 (d) Accept an engagement to make an inspection or to prepare
25 a report in which the employment itself or the fee payable for the
26 inspection is contingent upon the conclusions in the report,
27 preestablished findings, or the close of escrow.
28 (e) A home protection company that is affiliated with or that
29 retains the home inspector does not violate this section if it
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3. —3— AB 2142
1 performs repairs pursuant to claims made under the home
2 protection contract.
3 SEC. 2. Section 7197.5 is added to the Business and
4 Professions Code, to read:
5 7197.5. (a) A licensed contractor or a licensed structural pest
6 control operator that performs a home inspection pursuant to
7 subdivision (a) of Section 7197 shall comply with both of the
8 following:
9 (1) Only perform repairs identified in a report prepared by the
10 licensed contractor or the licensed structural pest control operator.
11 (2) Prior to signing a contract for performing any repairs,
12 provide notice to the consumer in 14-point type on a separate page
13 stating in plain English and Spanish that the following
14 information:
15 (A) That the licensed contractor or the licensed structural pest
16 control operator is a home inspector, a company that employs a
17 home inspector, or a company that is controlled by a company that
18 also has a financial interest in a company employing the home
19 inspector.
20 (B) That the consumer is entitled to seek a second opinion or
21 have another contractor make the repairs identified in the home
22 inspection report.
23 (b) A licensed contractor or a licensed structural pest control
24 operator that performs or attempts to perform a repair in violation
25 of paragraphs (1) or (2) of subdivision (a) or that is found to have
26 committed fraud, as defined by Section 7116 or Section 8644, as
27 applicable, is subject to disciplinary action as prescribed in Article
28 7 (commencing with Section 7090) of Chapter 9 or Article 7
29 (commencing with Section 8620) of Chapter 14, as applicable. In
30 addition to disciplinary action taken by the Contractors’ State
31 License Board or the Structural Pest Control Board, a licensed
32 contractor or a licensed structural pest control operator that
33 performs or attempts to perform a repair in violation of paragraphs
34 (1) or (2) of subdivision (a) or that is found to have committed
35 fraud, as defined by Section 7116 or Section 8644, shall be subject
36 to an administrative fine of not more than five thousand dollars
37 ($5,000) to be imposed by the respective board.
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