HOUSE BILL 551

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

Alonzo Baldonado and Daniel A. Ivey-Soto

AN ACT

RELATING TO LICENSURE; ENACTING THE HOME INSPECTOR LICENSING ACT; PROVIDING PENALTIES; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Home Inspector Licensing Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Home Inspector Licensing Act:

          A. "client" means a person or an agent of the person who, through a written pre-inspection agreement, engages the services of a home inspector for the purpose of obtaining a report on the condition of residential real property;

          B. "commission" means the New Mexico real estate commission;

          C. "compensation" means the payment for home inspection services pursuant to the written pre-inspection agreement;

          D. "foreign home inspector" means a home inspector who does not hold a home inspector license issued by the commission, but who holds a current and valid home inspector license issued by another state in the United States or any other sovereign nation;

          E. "home inspection" means an evaluation of residential real property components or systems that will be relied upon by a party to a transfer of the residential real property or by a lender that will hold the residential real property as collateral for a loan;

          F. "home inspector" means a person who performs home inspections for compensation and is licensed in accordance with the Home Inspector Licensing Act;

          G. "license" means a home inspector license issued by the commission in accordance with the Home Inspector Licensing Act;

          H. "licensee" means the holder of a license;

          I. "pre-inspection agreement" means the written agreement signed by the client and a home inspector by which a client engages the services of the home inspector and that sets forth at a minimum the following:

                (1) the amount of compensation due and payable to the home inspector upon completion of the home inspection and delivery of a report;

                (2) a list of all components and systems that will be inspected;

                (3) the date by which the client will receive the report; and

                (4) in all capital letters, the following statement: "THE HOME INSPECTOR WILL NOT DETERMINE AND THE REPORT PROVIDED UPON COMPLETION OF THE HOME INSPECTION WILL NOT CONTAIN A DETERMINATION OF WHETHER THE COMPONENTS AND/OR SYSTEMS OF THE HOME THAT HAVE BEEN INSPECTED CONFORM TO LOCAL OR STATE BUILDING CODE REQUIREMENTS.";

          J. "report" means a written opinion prepared by a home inspector pursuant to the terms of a pre-inspection agreement regarding the functional and physical condition of the residential real property as determined by a home inspection conducted by a home inspector; and

          K. "residential real property" means any real property or manufactured or modular home that is used for or intended to be used for residential purposes and that is a single-family dwelling, duplex, triplex, quadplex or unit as unit is defined by the Condominium Act.

     SECTION 3. [NEW MATERIAL] COMMISSION POWERS AND DUTIES.--Pursuant to the provisions of the Home Inspector Licensing Act, the commission shall:

          A. adopt rules and procedures necessary to administer and enforce the provisions of the Home Inspector Licensing Act;

          B. adopt and publish a code of ethics and standards of practice for persons licensed under the Home Inspector Licensing Act;

          C. issue, renew, suspend, modify or revoke licenses to home inspectors pursuant to the provisions of the Home Inspector Licensing Act;

          D. adopt rules defining the list of specific residential real property components and systems;

          E. establish standards for the training, experience and continuing education requirements of the Home Inspector Licensing Act;

          F. establish the amount and administer the fees charged for examinations, licenses, renewals and other services pursuant to the provisions of the Home Inspector Licensing Act;

          G. adopt and approve a licensing examination, which may be administered by a nationally accepted testing service as determined by the commission;

          H. establish a home inspector advisory panel as provided for in Section 4 of the Home Inspector Licensing Act;

          I. conduct state and criminal background checks on all applicants for a license;

          J. maintain a list of the names and addresses of all licensees and of all persons whose license has been suspended or revoked within that year, together with such other information relative to the enforcement of the provisions of the Home Inspector Licensing Act;

          K. maintain a statement of all funds received and a statement of all disbursements;

          L. mail copies of statements to any person in this state upon request; and

          M. perform other functions and duties as may be necessary to administer or carry out the provisions of the Home Inspector Licensing Act.

     SECTION 4. [NEW MATERIAL] HOME INSPECTOR ADVISORY PANEL.--The commission shall establish an advisory panel of five members who are residents of New Mexico and are appointed by the commission. The advisory panel shall consist of three home inspectors, one licensed real estate broker and one member of the public. The initial home inspectors appointed by the commission to be members of the advisory panel shall demonstrate that they have been actively and lawfully engaged in home inspections for at least twenty-four months prior to the effective date of the Home Inspector Licensing Act and have met all the licensing requirements of Section 7 that act with the exception of Paragraphs (4) and (5) of Subsection A of that section. Once the commission has prescribed a licensing examination, the initial home inspectors selected by the commission shall comply with Paragraph (5) of Subsection A of Section 7 of the Home Inspector Licensing Act within six months of the effective date of the licensing examination regulation. After the advisory panel is established, any replacement of a home inspector member of the advisory panel shall be a licensee. The advisory panel shall provide guidance and input to the commission on the rules and procedures necessary to administer and enforce the provisions of the Home Inspector Licensing Act and on matters involving violations of that act and disciplinary sanctions that result from those violations.

      SECTION 5. [NEW MATERIAL] PRE-INSPECTION AGREEMENT--REPORT--DISCLAIMER--NO WAIVER OF DUTY.--

          A. A home inspector shall enter into a pre- inspection agreement with a client prior to commencement of a home inspection.

          B. A home inspector shall provide a client with a report of the home inspection by the date set forth in the pre-inspection agreement. If the pre-inspection agreement does not set forth a date by which the report shall be provided to the client, the home inspector shall provide the report to the client no later than five days after the home inspection was performed.

          C. The report shall contain the following statement: "THE HOME INSPECTOR DID NOT DETERMINE AND THIS REPORT DOES NOT CONTAIN A DETERMINATION OF WHETHER THE HOME OR COMPONENTS AND/OR SYSTEMS OF THE HOME THAT HAVE BEEN INSPECTED CONFORM TO LOCAL OR STATE BUILDING CODE REQUIREMENTS.".

          D. Contractual provisions that purport to waive any duty owed pursuant to the Home Inspector Licensing Act, or accompanying regulations as prescribed by the commission or that limit the liability of the home inspector to the cost of the home inspection report, are invalid.

     SECTION 6. [NEW MATERIAL] LICENSE REQUIRED--EXEMPTIONS.--

          A. A person who is not a licensee shall not:

                (1) conduct home inspections, develop a report or otherwise engage in the business of home inspection;

                (2) in the course of conducting business, use the title "home inspector", "certified home inspector", "registered home inspector", "licensed home inspector", "professional home inspector" or any other title, abbreviation, letters, figures or signs that indicate the person is a licensed home inspector; or

                (3) use the terms "state licensed" or "licensed" to refer to an inspection conducted or a report prepared by a person who is not a licensee.

          B. A business entity shall not provide home inspection services unless all of the home inspectors employed by the business are licensees.

          C. A business entity shall not use, in connection with the name or signature of the business, the title "home inspectors" to describe the business entity's services unless each person employed by the business as a home inspector is a licensee.

          D. The Home Inspector Licensing Act does not apply to a person:

                (1) licensed by the state as an engineer, an architect, a real estate qualifying or associate broker, a real estate appraiser, a certified general appraiser, a residential real estate appraiser or a pest control operator, when acting within the scope of the person's license;

                (2) licensed by the state or a political subdivision of the state as an electrician, a contractor, a plumber or a heating and air conditioning technician, when acting within the scope of the person's license;

                (3) regulated by the state as an insurance adjuster, when acting within the scope of the person's license;

                (4) employed by the state or a political subdivision of the state as a code enforcement official, when acting within the scope of the person's employment;

                (5) who performs an energy audit of a residential property;

                (6) who performs a warranty evaluation of components, systems or appliances within a resale residential property for the purpose of issuing a home warranty; provided that all warranty evaluation reports include a statement that the warranty evaluation performed is not a home inspection and does not meet the standards of a home inspection pursuant to the provisions of the Home Inspector Licensing Act. A home warranty company shall not refer to a warranty evaluation as a home inspection;

                (7) who in the scope of the person's employment performs safety inspections of utility equipment in or attached to residential real property pursuant to the provisions of Chapter 62 NMSA 1978 or rules adopted by the public regulation commission; and

                (8) hired by the owner or lessor of residential real property to perform an inspection of the components of the residential real property for the purpose of preparing a bid or estimate for performing construction, remodeling or repair work in the residential real property.

     SECTION 7. [NEW MATERIAL] LICENSURE.--

          A. Unless otherwise provided in the Home Inspector Licensing Act, an applicant for a license shall:

                (1) complete an application on forms provided by the commission;

                (2) provide documentation to establish that the applicant is at least eighteen years of age and a legal resident of the United States;

                (3) provide the commission with the applicant's fingerprints and all information necessary for a state and national criminal background check;

                (4) have completed at least forty hours of field training, or its equivalent, as determined by the commission;

                (5) have completed at least sixty hours of classroom training, the content of which shall be established by rule of the commission;

                (6) pass a licensing examination prescribed by the commission; and

                (7) provide proof of and maintain insurance coverage as provided in Section 13 of the Home Inspector Licensing Act.

          B. After the commission's review of all information obtained by the commission and submitted by the applicant as required by this section, if all the requirements for licensure are met, the commission shall issue a license to the applicant.

     SECTION 8. [NEW MATERIAL] FINGERPRINTS--CRIMINAL BACKGROUND CHECKS.--

          A. All applicants for licensure shall:

                (1) provide fingerprints to the federal bureau of investigation to permit a national instant criminal background check and to the department of public safety to conduct a state background check; and

                (2) have the right to inspect records if the applicant's licensure is denied.

          B. Records obtained by the commission pursuant to the provisions of this section shall not be disclosed except as provided by law. The commission is authorized to use criminal history records obtained from the federal bureau of investigation and the department of public safety to conduct background checks on applicants for certification as provided for in the Home Inspector Licensing Act.

          C. Records obtained by the commission pursuant to the provisions of this section shall not be used for any purpose other than conducting background checks. Records obtained pursuant to the provisions of this section and the information contained in those records shall not be released or disclosed to any other person or agency, except pursuant to a court order or with the written consent of the person who is the subject of the records.

          D. A person who releases or discloses records or information contained in those records in violation of the provisions of this section is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978.

     SECTION 9. [NEW MATERIAL] LICENSE VALIDITY PERIOD--RENEWAL.--A license shall be valid for a period not to exceed five years. No later than the last day of the month immediately following the licensee's birth month in the fifth calendar year after the license becomes effective, a licensee may renew the license by submitting a renewal application, renewal fee, proof of completion of the required continuing education as established by rule of the commission and other information necessary for a state and national criminal background check. A home inspection performed based on an expired license shall be deemed a violation of the Home Inspector Licensing Act.

     SECTION 10. [NEW MATERIAL] LICENSEE--CONTINUING EDUCATION REQUIREMENT.--The commission shall adopt rules providing for continuing education programs that offer courses in home inspection practices and techniques. The rules shall require that a home inspector, as a condition of license renewal, shall successfully complete a minimum of thirty classroom hours of commission-approved instruction every three years.

      SECTION 11. [NEW MATERIAL] LICENSE RECOGNITION--RECIPROCITY.--

          A. The commission may issue a license to a foreign home inspector; provided that the applicant's resident state license requirements are the same as or similar to the requirements set forth in the Home Inspector Licensing Act as determined by the commission. In the event that the state requirements for licensing a home inspector are not substantially similar to the provisions of the Home Inspector Licensing Act, or if the requirements cannot be verified, a foreign home inspector may be issued a license in accordance with Section 7 of that act.

           B. The commission may negotiate agreements with other states or licensing jurisdictions to allow for reciprocity regarding licensure. A license granted pursuant to a reciprocity agreement shall be issued upon payment by the applicant of the application fee and verification that the applicant has complied with the licensing jurisdiction's requirements, including continuing education requirements. The applicant shall provide to the commission documentation necessary to demonstrate that the applicant currently holds a license in good standing in the licensing jurisdiction.

     SECTION 12. [NEW MATERIAL] DENIAL, SUSPENSION OR REVOCATION OF A LICENSE.--

          A. The commission may deny issuance of a license or may suspend, revoke, limit or condition a license if the applicant or licensee is convicted of a felony or misdemeanor in accordance with the Criminal Offender Employment Act, has by false or fraudulent representations obtained a license or, in performing or attempting to perform any of the activities covered by the provisions of the Home Inspector Licensing Act, the applicant or licensee has:

                (1) made a substantial misrepresentation;

                (2) violated any of the provisions of the Home Inspector Licensing Act or any rule of the commission;

                (3) offered or delivered compensation, inducement or reward to the owner of the inspected property, or to the broker or the agent for the referral of any business to the home inspector or the home inspector's company;

                (4) had a license to perform home inspections revoked, suspended, denied, stipulated or otherwise limited in any state, jurisdiction, territory or possession of the United States or another country for actions of the licensee similar to acts proscribed in this subsection;

                (5) failed to furnish the commission, its investigators or its representatives with information requested by the commission in the course of an official investigation; or

                (6) performed or offered to perform for an additional fee any repair to a structure on which the home inspector or the home inspector's company has prepared a report at any time during the twelve months immediately prior to the repair or offer to repair, except that a home inspection company that is affiliated with or that retains a home inspector does not violate this paragraph if the home inspection company performs repairs pursuant to a claim made pursuant to the terms of a home inspection contract.

          B. Disciplinary proceedings may be instituted by sworn complaint by any person, including a commission member, and shall conform to the provisions of the Uniform Licensing Act.

     SECTION 13. [NEW MATERIAL] INSURANCE REQUIREMENTS.--

          A. All licensees and their employers shall carry at all times errors and omissions insurance or professional liability insurance to cover all activities contemplated pursuant to the provisions of the Home Inspector Licensing Act.

          B. In addition to the powers and duties granted to the commission pursuant to the provisions of Section 4 of the Home Inspector Licensing Act, the commission may adopt rules that establish the minimum terms and conditions of coverage, including limits of coverage and permitted exceptions. If adopted by the commission, the rules shall require every applicant for a license and licensee who applies for renewal of a license to provide the commission with satisfactory evidence that the applicant or licensee has professional liability insurance coverage that meets the minimum terms and conditions required by commission rule.

          C. The commission is authorized to solicit sealed, competitive proposals from insurance carriers to provide a group errors and omissions insurance policy that complies with the terms and conditions established by commission rule. The commission may approve one or more policies that comply with the commission rules; provided that the minimum coverage shall not be less than one hundred thousand dollars ($100,000) for an individual claim and not less than a five hundred thousand dollars ($500,000) aggregate limit per policy.

          D. If the commission obtains a group policy as provided in Subsection C of this section, licensees shall not be required to contract with the group policy provider. Licensees may satisfy any requirement for professional liability insurance coverage by purchasing an individual policy.

     SECTION 14. [NEW MATERIAL] FEES--DEPOSIT OF FEES.--

          A. In addition to any fees to cover reasonable and necessary administrative expenses, the commission shall establish, charge and collect:

                (1) a license application or renewal fee, not to exceed one hundred fifty dollars ($150);

                (2) a state and national criminal background check fee, not to exceed one hundred dollars ($100);

                (3) a five-year license fee, not to exceed five hundred dollars ($500);

                (4) a reactivation fee, not to exceed two hundred dollars ($200); and

                (5) for each duplicate license issued because a license is lost or destroyed and an affidavit as to its loss or destruction is made and filed, not to exceed fifty dollars ($50.00).

          B. All fees received by the commission pursuant to the Home Inspector Licensing Act shall be deposited with the state treasurer to the credit of the real estate recovery fund in accordance with the Real Estate Recovery Fund Act.

     SECTION 15. [NEW MATERIAL] ADVERTISING.--The term "licensed home inspector" along with the license number of the home inspector shall appear on all advertising, correspondence and documents incidental to the business of home inspection, including the pre-inspection agreement and the report.

     SECTION 16. [NEW MATERIAL] CIVIL AND CRIMINAL PENALTIES--INJUNCTIVE RELIEF.--

          A. A person who engages in the business or acts in the capacity of a home inspector within New Mexico without a license issued by the commission or pursuant to the Home Inspector Licensing Act is guilty of a misdemeanor and shall be punished in accordance with Section 31-19-1 NMSA 1978. A person who violates any other provision of the Home Inspector Licensing Act is guilty of a petty misdemeanor and shall be punished in accordance with Section 31-19-1 NMSA 1978.

          B. If a person has engaged or is engaged in any act or practice violative of a provision of the Home Inspector Licensing Act, the attorney general or the district attorney of the judicial district in which the person resides or in which the violation has occurred or is occurring may, upon application of the commission, maintain an action in the name of the state to prosecute the violation or to enjoin the act or practice.

          C. In an action brought under Subsection B of this section, if the court finds that a person is or has willfully engaged in any act or practice violative of a provision of the Home Inspector Licensing Act, the attorney general or the district attorney of the judicial district in which the person resides or in which the violation has occurred or is occurring may, upon petition to the court, recover on behalf of the state a civil penalty not exceeding five thousand dollars ($5,000) per violation and attorney fees and costs.

     SECTION 17. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2015.

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