California law mandates that any person who conducts roof inspections for a fee can no longer effectuate the actual repairs to the same property. Effective January 1, 2018, Business & Professions Code Section 7197 (Unfair Business Practices) deems it to be an unfair business practice for a home inspector who charges a homeowner a monetary fee for inspecting the property, to perform or offer to perform additional repairs due to the inherent financial interest and conflict raised by identifying alleged defects necessitating repairs. The new law is a result of California AB 1357, which was signed into law on October 5, 2017. The goal of the new law is to disincentivize a roof inspector from creating a report for the sole purpose of obtaining a bid to perform those documented repairs. The roof contractor can perform repairs identified in their report only after a twelve month “cooling period” which provides the homeowner an opportunity to obtain multiple bids/estimates for repairs based upon the inspector’s report. The new law also discourages home inspectors from providing a list of contractors who provide monetary referral fees back to the home inspector upon receiving repair work from the homeowner based exclusively on the home inspection report.
The California Business & Professions Code Section 7195(a)(1) defines a “home inspection” as a “non-invasive, physical examination, performed for a fee in connection with the transfer…of the real property…or essential components of the residential dwelling.” Home inspection includes “any consultation regarding the property that is represented to be a home inspection or any confusingly similar term.” Business & Professions Code section 7195(a)(2) further defines a “home inspection” as including energy efficiency and solar. A “home inspection report” is a written report prepared for a fee issued after an inspection. Business & Professions Code section 7195(c). It is noted that a home inspector does not have to be a licensed architect, professional engineer, or general contractor with a Class “B” license issued by the California Contractors State License Board, but “it is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise. Business & Professions Code section 7196.
The new law is codified as Business & Professions Code section 7197(a), which states:
“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 any of the following: (1) to perform or offer to perform, for an additional fee, any repairs to a structure on which the inspector, or inspector’s company, has prepared a home inspection report in the past 12 months; (2) inspect for a fee any property in which the inspector, or the inspector’s company, has any financial interest or any interest in the transfer of the property; (3) to offer or deliver any compensation, inducement, or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company; (4) accept an engagement to make an inspection or to prepare a report in which the employment itself or the fee payable for the inspection is contingent upon the conclusions in the report, preestablished findings, or the close of escrow; and (5) a home protection company that is affiliated with or that retains the home inspector does not violate this section if it performs repairs pursuant to claims made under the home protection contract.”
As a homeowner, it is imperative that any home inspection conducted during the purchase, improvement or renovation of your property be conducted by an independent and certified home inspection company that is separate and apart financially from the retained contractor who will actually perform the necessary repairs. It is also a good custom and practice to obtain a home inspection report with the goal of soliciting multiple bids/estimates for repair from licensed, bonded and insured contractors. This is especially pragmatic with regards to roof inspections and solar installation at your home.