The California Business and Professions Code and the CREIA Contract - SOP

The California Business and Professions Code and the CREIA Contract/SOP

The California Business & Professions Code sections 7195 through 7199 are the law that governs Home Inspectors in this state. It is a mere two pages long and it is the responsibility of each of us to know and understand this document. Our contract and our SOP are designed to work in harmony with the B&P code but you cannot understand your responsibilities under the law without knowing the critical elements of this law. A copy is provided for you after this article.

You need to be familiar with all of the provision, but for the purpose of this article, I will zero in and quote key passages that are critical to understanding the law and its relation to our SOP and contract. I have stripped the B&P down to its essence for the purpose of clarity but made every effort not to distort its intent. Section 7195(a) starts: ‘“Home Inspection” is …designed to identify material defects… (b) A “material defect” is a condition that significantly effects the value, desirability, habitability, or safety of the dwelling.’ These words are the crux of our responsibility from which we cannot hide but alas ‘value, desirability and habitability’ are very subjective. One of the goals that guided us in the development of the Contract/SOP was to define and provide parameters for these terms that were both fair and defensible and I feel we have been successful in that task.

The terms ‘value, desirability, and habitability’ will give us liability but the level of liability pales in relation to the risks associated with our responsibility to identify ‘safety’ issues. Consequently, I would like to emphasize and focus on the importance to each of us to be vigilant for reporting safety issues because this is where our greatest liability is. The contract and SOP can only limit our scope and exposure to a reasonable degree but nothing in these documents can insulate us from our responsibility under the law to report safety issues. The bottom line is that if you see a potential safety concern – report it. If you are not sure if something may be unsafe – for your own safety – report it and refer it out for further evaluation.

Ground Fault Circuit Interrupters GFCI’s are credited with saving hundreds of lives every year and could save hundreds more if all older homes were upgraded to meet more recent standards. Do we need to report on GFCI’s in the home? – YES – they are clearly a safety concern and need to be reported – period. There has been discussion among some inspectors that the standards of practice where lowered because the current standard no longer specifically specify GFCI’s as items to be inspected like the old standards did. However, outlets are a required component of the current SOP and the GFCI function of outlets is a critical SAFETY component that needs to be addressed. The current standards state: “The inspector is not required to operate circuit breakers or circuit interrupters”. This language was added to allow the Home Inspector to use sound judgment to determine when it was appropriate to test the GFCI’s. (The restrictions on operating GFCI’s are a topic for an electrical seminar, not here.) The important point is that GFCI’s must still be discussed in the inspection report specifically because they are a SAFETY issue, and SAFETY doesn’t have anything to do with the year the house was built. In revising the SOP we believed that Home Inspectors needed and deserved to have more latitude to determine how to report an issue like GFCI’s and should be respected to have the judgment to determine when actual testing was appropriate. Just because you are ‘not required’ to operate the GFCI doesn’t mean that you can’t. I do whenever possible. The bottom line is that even if you don’t test them, you still have liability if you do not report on the lack of GFCI’s specifically because of the mandate in the B&P code to identify safety defects. I don’t want to beat you over the head, but this same discussion could play out with any safety issue. You need to appreciate that the Building and Professions Code goes hand in hand with and supersedes both our contract and SOP and the B&P Code makes us responsible for safety concerns – period.

Of course there are other provisions in the B&P Code that impact our inspections and cover issues besides safety. Section 7195 (c) states: ‘A “home inspection report” is a written report’ (my underlining). Clearly if the inspected property is four units or less, the report is required to be written – no verbal consultation. Furthermore, pictures can be very helpful but they need to be accompanied by written information explaining the pictures.

The section continues: ‘The report clearly describes and identifies the inspected systems, structures, or components of the dwelling, any material defects identified, and any recommendations regarding the conditions observed or recommendations for evaluation by appropriate persons.’ There are three major components to this sentence and we have an obligation to comply with each. First, we must: clearly describe and identify the inspected systems, structures, and components of the dwelling. The SOP doesn’t dictate how this is to be done and allows the inspector discretion to use their judgment. You should include any information you feel will be helpful to your clients. Some inspectors may choose to include brand and model numbers which can be helpful but that level of detail is not dictated by our SOP. However, each of us needs to make a conscientious effort to comply with this provision of the B&P. What information should be provided will vary depending on so many factors that you must exercise your judgment in each case. When the SOP was developed, we could not find any reasonable way to dictate what would be necessary to meet the “clearly describes and identifies” wording in the B&P. However, it is safe to say that providing more information is better than less.

The middle component regarding material defects has already been discussed and will be addressed again later in this article.

The third part of this sentence is another area the B&P dictates what is required of us. Not only does it tell us that we are responsible to report “material defects” but we need to go further and follow through. We are given the option to make recommendations regarding the conditions observed or recommend further evaluation. So many speakers, at so many conferences over the years, have repeated in one way or another the requirement to not only identify the problem but make a recommendation for further action or defer it out for further evaluation. This is where that requirement comes from – not our contract – not our SOP – it comes from California law. The last words in the sentence “evaluation by appropriate persons” should encourage us to give our clients more direction than I see in some reports. Just because a problem is with the toilet doesn’t mean your client will realize it should be repaired by a plumbing contractor, so tell them.

I would encourage all inspectors to be well versed in every provision in the B&P code, but most of the other provisions relate more to ethics than the Standards of Practice which is the scope of my article.

Before ending this article, I want to explain our reasoning for changing the SOP language regarding safety glass.

Those of us that revised the Standards of Practice clearly understood that the requirement for reporting safety issues came directly from the B&P code. Even if a topic is not specifically listed as required to be reported, you have a requirement to report on safety issues that supersedes the SOP and should permeate your every thought as you do your inspections.

There is no better way to address this issue than to talk about safety glass. Bob Fennema has done a wonderful presentation that made us all aware of the risks and pitfalls of properly identifying safety glass. One of the things I remember him saying was that the largest court award against a home inspector was for the failure to report a lack of safety glass in a location where it would be required today.

So why isn’t safety glass listed as an item to be inspected in the Standards of Practice if we still need to report on it? All of us that worked to develop our Standards of Practice knew that safety glass needs to be reported specifically because it is a safety issue and we are responsible for all safety issues because of the language in the B&P code. We removed it from the SOP because it is such a huge liability and it does not make sense to paint large red targets on our backs for every plaintiff’s attorney by stating an affirmative duty to do so. We removed it from the SOP because it can be all too easy to miss a particular location. It can be very difficult to identify when the glass is dirty and it is possible for the trim on the door to partly or completely cover the etching. We removed it to allow the home inspector more latitude in how best to report the issue. You may want to include report language whenever a home was built before safety glass was required in a sliding glass door (or any other location) that further evaluation is needed to determine if the glass has been upgraded and recommend that it be replaced for safety. I use standard statements whenever I can’t absolutely confirm that every piece that should be replaced has been upgraded. Our current standards give you more freedom in how to report the issue and reduce our level of liability if we inadvertently miss a particular location, but they in no way eliminate our responsibility to report this critical safety issue.

In addition I would like to drive home how Bob’s example shows us once again how safety issues supersede the age of the house. It would be sheer folly to think that you would not need to report this issue because safety glass was not required when this house was built. Safety doesn’t care when the house was built and supersedes our Standards of Practice. Your greatest liability comes from failure to report a safety issue and this is where you need to place your greatest vigilance.

Before our SOP was revised we were aware from feedback from the legal community and inspectors doing expert witness work that a CREIA inspector was more difficult to defend than an ASHI inspector using their SOP. This has been completely corrected. As part of the revision process, we compared every line of our SOP with the ASHI SOP and the current SOP’s are now much more in harmony. The ASHI SOP has never mentioned safety glass and now we no longer mention safety glass in our SOP.

Although I have expounded on just a couple of safety issues in this article, you need to use this same thought process whenever you see a fountain or other concrete statuary that isn’t secure and could fall over on a child, or a shallow pond or water feature that a toddler could stumble into. Or the wide spacing on a guard rail that may have been allowed in the past or a completely unprotected walk-off or any of thousands of safety items that we encounter in and around homes every day. Find a place in your report to recommend a carbon monoxide detector. Make a recommendation that older smoke alarms be replaced. (The CPSC states that alarms over 10 years old have a 20% rate of failure even if the siren operates with the test button.) And it seems inexcusable not to recommend a smoke alarm in any bedroom that doesn’t have one. Every inspection you do provides you with another potential opportunity to save a life. Even if altruism isn’t your thing, safety issues need to be your top priority because they are certainly your top liability.

I feel that this issue of safety has not been addressed clearly or directly enough in the past and hope this article corrects that. I look forward to the day that a conference speaker can ask the audience if a safety issue needs to be included in their report and the audience realizes that it is meant to be a rhetorical question. Of course it needs to be reported – it is a safety issue. The B&P code requires it and we cannot escape our responsibility to report it. Protect yourself, protect your clients, and report all safety issues.

Our Contract/SOP was not written in a vacuum. You must know and follow the law in California laid out in the B&P Code which is just as important as our Contract/SOP. The two go hand in hand and are equally critical to understanding our responsibilities as home inspectors. For any of you that don’t have a copy of the B&P Code sections that cover home inspectors they are reprinted here for your convenience.

I look forward to any questions or feedback you may have. Please email me directly.

Steve John, MCI, CNCS

All Pro Home Inspections

[email protected]