DONALD E. LOVERING
Insurance costly
Less than two years after Massachusetts’ home inspection licensing law went into effect, a leading industry group has given the state legislation a qualified thumbs up.
Massachusetts ranked 12th out of 25 states that currently have laws regulating the home inspection industry in a recent evaluation completed by the American Society of Home Inspectors. Massachusetts scored 79, with the highest score of 96 going to three states – Connecticut, Mississippi and New Jersey.
According to local home inspectors, the licensing law – which established the Board of Registration of Home Inspectors to issue licenses to inspectors and formulate industry standards – has worked out relatively well since it went into effect in May 2001.
“It’s [the law] so new I don’t know if there’s any real glitches yet,” said Carl Pucci, chief financial officer of Braintree-based Tiger Home Inspections, one of the largest independently owned home inspection companies in New England.
But some acknowledged there are some kinks that may need to be ironed out. The law is making it increasingly difficult for newcomers to enter the industry, according to local inspectors.
One of the reasons is that under law, a prospective inspector must complete an apprenticeship. Many smaller companies and independent home inspectors – who make up the majority of licensed inspectors – don’t want to assume the risks associated with training an inexperienced inspector, said Pucci.
Another requirement under the law that makes it difficult for newcomers is the errors and omissions insurance that home inspectors are required to carry. The insurance requirement is aimed at protecting customers in cases where mistakes are made during the home inspection. But the insurance, with annual premiums ranging from $4,000 to as much as $7,000, is too expensive for most of the independent and newer inspectors, according to Donald E. Lovering, president of the New England chapter of ASHI.
“[The law] has created a barrier to entry for new home inspectors,” said Lovering, who works with Advantage Home Inspection in Newton. “They’ve raised the bar high enough to where it’s significantly difficult for someone to enter the business.”
Consumers are going to “pay significantly” for the lack of newcomers on the field, according to Lovering, because once the pool of inspectors shrinks it will be more difficult and expensive to hire an inspector within the five-day period that most real estate agents negotiate in purchase-and-sale agreements.
Reciprocity
In the ASHI evaluation, state regulations were evaluated based on 12 criteria: definition of home inspector and home inspection, governing board, licensing criteria, continuing education requirements, exclusions, standards of practice, reporting requirements, reciprocity, fees, prohibited acts, liability and penalties.
Massachusetts scored a zero – the worst rating – for reciprocity, which basically means that the law does not allow those licensed in other states to practice here.
The rating is a little unfair, according to Pucci, because the only other New England state with licensed inspectors is Connecticut. Pucci said the Massachusetts board has had discussions with Connecticut inspectors to try to come up with a reciprocity solution.
Rhode Island has a licensing law effective as of July 2001 and rules and regulations in place. However, there are currently no licensed inspectors in that state because Rhode Island never provided funding to create a separate home inspectors’ licensing board. Instead, two Rhode Island home inspectors are serving on an existing contractors registration board, which wrote the regulations currently in place. Interestingly, Rhode Island’s regulation, while not currently being enforced, received a higher ranking than Massachusetts in the ASHI evaluation, tying with Louisiana for fifth place with a score of 90.
The Massachusetts state regulation also received an “acceptable” rating with regard to liability. For the liability criteria, ASHI evaluated whether the law included reasonable protections for the consumer and the home inspector. Pucci said that the regulation includes a three-year limit on when consumers can file a claim after a home inspection. Prior to the implementation of the law, no time limit had been established. According to Pucci, inspectors would have preferred a one-year limit.
Issues have also popped up regarding the continuing education and training requirements of home inspectors and the overall administration of the board. The Board of Registration of Home Inspectors has yet to work out the details about which schools, programs and courses will be approved for credit. Some inspectors feel that the board should have more frequent meetings to deal with such issues swiftly. Currently, the board meets on a quarterly basis with meetings running up to six hours to cover lengthy agendas.
“Certain things could be implemented and changes could have been implemented more quickly if they [the board] met more often,” said Pucci.
But Pucci emphasized that the board is “conscientious” and did a “great job” with the regulations.
“I think we have some of the best regulations out there,” said Pucci.
The Massachusetts licensing law is modeled after New Jersey’s. New Jersey got a top ranking in the ASHI evaluation. Meanwhile, states like Alabama, Virginia and California received total scores of less than 65. At the bottom of the ASHI evaluation were South Carolina, Tennessee and Georgia, with scores of 12, 6 and 5, respectively.
