Expiration of law deregulates home inspectors in Kansas

01/19/2014 7:52 AM

01/19/2014 7:53 AM

Last July, Kerry Parham and Jeff Barnes said they saw about a decade’s worth of work just disappear.

The two, Wichita-area home inspectors helped craft a bill to regulate their industry, the Kansas Home Inspectors Professional Competence and Financial Responsibility Act.

The major provisions of the bill, which was signed into law by then-Gov. Kathleen Sebelius and took effect in July 2009, required home inspectors in the state to abide by certain practices and standards, including having formal training (a minimum of 80 hours) as a home inspector. They also were required to carry certain types and amounts of liability insurance and annually complete a minimum of 16 hours of continuing education. A five-member board appointed by the governor would oversee registrations and compliance with the law.

Up until then, there was no regulation of home inspectors in Kansas, they said, and anyone with a ladder and flashlight could claim themselves a home inspector and go to work.

“There’s always somebody who is trying to make a quick buck and lacks a moral compass,” said Parham, president of the Kansas Association of Real Estate Inspectors and a home inspector for 36 years. “We kept the bad guys out of the business and had a set of standards for guys to follow.”

The home inspectors law, Parham and Barnes thought, would prevent that from happening.

And, they said, it worked.

But the law that they supported – along with the Kansas Association of Realtors — had a limited shelf life: a provision in the bill allowed it to expire five years after taking effect.

That fifth year was 2013. And despite efforts last spring to remove that sunset provision and keep the standards in place, the law expired.

“We’re back into the wild, wild West of home inspection,” said Barnes, a Mulvane-based home inspector for 25 years.

Parham said his interest in working on a law to regulate his industry stemmed from what he said was the practice of one person years ago; he called himself a home inspector but did not have the training or credentials that Parham and Barnes have.

“This guy was in and out of business every other year,” said Parham, who is a certified inspector through the American Society of Home Inspectors. And he quickly developed a reputation as being someone who could help get home sales deals closed “as fast as possible.”

“You can’t legislate work ethic,” Parham said. “But you can make them have to be qualified. That was our objective. And this guy immediately dropped out of business.”

‘Level of competence’

There was also a concern by Parham and some of his colleagues that attempts to regulate home inspectors by people outside the industry would be successful. That’s why the state real estate inspectors group was first created and why it later helped push for the state law.

Ed Robinson, an attorney at Joseph, Hollander & Craft who practices in real estate litigation, served on the Kansas Home Inspection Registration Board between 2009 and 2011. He thinks the organization served a dual purpose: It boosted home inspectors’ credibility, and it gave some assurance to home buyers and sellers that the person inspecting their home had “some level of competence.”

“The board was a volunteer board,” he said. “We were getting reimbursed for mileage. The board had contracted with an accounting firm in Topeka to help with the paperwork, process registrations and renewals. We didn’t have any full-time staff. All of the operating expenses of the board and the accounting firm came exclusively from the registration fees. There was no money appropriated. It was a self-sustaining entity.”

“I think there was only two complaints (against home inspectors) I was involved in,” Robinson added. “I think the process … kind of weeded out the professionals from the guy who just had a ladder and a flashlight. … Unfortunately, with the regulation and statutes going away, I think it reduces the legitimacy of home inspectors in general because anyone can call themselves a home inspector.”

Last spring, the inspectors group drafted a bill that would have struck the sunset provision from the law. That bill, Senate Bill 37, passed the Senate 36-3, and the House, 102-17. Gov. Sam Brownback vetoed the bill in April.

“Upon review of the materials provided by the proponents of this legislation, both in 2008 and 2013, I see little evidence of large numbers of Kansas citizens being economically harmed by home inspectors,” Brownback said in a news release announcing his veto. “In fact, even the proponents believe the vast majority of Kansans who provide this service are honest people. Therefore it appears the legislation passed in 2008 may simply add unnecessary fees and regulations to law abiding citizens.”

Brownback also noted in the release that he thought the home inspectors board lacked the resources and expertise to regulate home inspectors, and that the Kansas Attorney General’s office was “better equipped” to investigate complaints and help homeowners seek reimbursement from unscrupulous home inspectors.

Kansas Sen. Ty Masterson, R.-Andover, was one of three senators to vote against Senate Bill 37.

“Just on that area of licensure and regulation in general, I think I was on the same path with the governor,” Masterson said.

He added that he thought any financial remedy sought by a Kansas homeowner against and inspector could be “remedied in court.”

Masterson said the fact that home inspectors were lobbying for the bill — and had lobbied for the original law — didn’t make him think twice about supporting the bill. “Anybody from within an industry loves licensure because you are limiting competition,” he said.

Due diligence

Robinson, the lawyer, said he thinks the biggest takeaway from the short-lived regulation of Kansas home inspectors is that potential buyers and sellers need to be aware that there is no longer oversight of them.

“I think that for people looking to buy a home, who decide to get a home inspection, they need to be aware there are no minimum requirements,” Robinson said. “It becomes even more important for potential homebuyers to make sure they get references ... find out if the home inspector has some level of competence.”

Dwyn Thudium, broker and owner of Crown III Realty and the president of the Wichita Area Association of Realtors, said her agents don’t refer sellers and buyers to a home inspector whose history or qualifications they don’t know.

“It would be really hard” for her agency to recommend an inspector who they didn’t personally know, Thudium said. “What my Realtors, and I think a lot of Realtors do, we go through our list and we talk about them: I had a good experience with this person. … We value each other’s opinions.”

Thudium also said that among the issues her business faces, deregulation of home inspectors is not at the top of the list.

But, she added, “I am concerned. That seller is my client. I don’t want them to get just anybody (for a home inspection).”

Barnes and Parham said one thing homebuyers and sellers can find out about the qualifications of their inspector is to find out if they are certified by national organizations, including the American Society of Home Inspectors or the International Association of Certified Home Inspectors.

Parham said the Kansas inspectors group also maintains a database of its members – who he said meet the standards and qualifications originally set by the state board – at www.karei.org.

For now, Parham and Barnes said they’re not sure if they will renew a push to regulate their industry in Kansas. Both men said they are nearing retirement age, and they spent “hundreds of hours and thousands of dollars” trying to get the first law passed.

Barnes said the veto of Senate Bill 37 “took the wind out of my sails.”

“The whole thing was just nuts,” he said.

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