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        PRIOR PRINTER'S NOS. 1269, 1473, 1802         PRINTER'S NO. 2140

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 1032 Session of 1999


        INTRODUCED BY GREENLEAF, LOEPER, MELLOW, HART, SALVATORE,
           O'PAKE, FUMO, BELL, BOSCOLA, BRIGHTBILL, CONTI, CORMAN,
           KUKOVICH, SCHWARTZ, THOMPSON, WENGER, WOZNIAK, LEMMOND AND
           MOWERY, JUNE 18, 1999

        SENATOR TILGHMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED,
           SEPTEMBER 26, 2000

                                     AN ACT

     1  Amending Title 68 (Real and Personal Property) of the
     2     Pennsylvania Consolidated Statutes, relating to residential
     3     real estate transfers; providing for disclosures by sellers
     4     of residential real estate and for home inspections; and
     5     making a repeal.

     6     The General Assembly of the Commonwealth of Pennsylvania
     7  hereby enacts as follows:
     8     Section 1.  Title 68 of the Pennsylvania Consolidated
     9  Statutes is amended by adding a part to read:
    10                              PART III
    11                     RESIDENTIAL REAL PROPERTY
    12  Chapter
    13  71.  General Provisions
    14  73.  Seller Disclosures
    15  75.  Home Inspections
    16                             CHAPTER 71
    17                         GENERAL PROVISIONS
    18  Sec.

     1  7101.  Short title of part.
     2  7102.  Definitions.
     3  7103.  Application of part.
     4   7101.  Short title of part.
     5     This part shall be known and may be cited as the Residential
     6  Real Estate Transfers Law.
     7   7102.  Definitions.
     8     Subject to additional definitions contained in subsequent
     9  provisions of this part which are applicable to specific
    10  provisions of this part, the following words and phrases when
    11  used in this part shall have the meanings given to them in this
    12  section unless the context clearly indicates otherwise:
    13     "Agent."  Any broker, associate broker or salesperson, as
    14  defined in the act of February 19, 1980 (P.L.15, No.9), known as
    15  the Real Estate Licensing and Registration Act.
    16     "Agreement of transfer."  A contract between a buyer and
    17  seller setting forth the terms of a residential real estate
    18  transfer.
    19     "Buyer."  Any person receiving any estate or interest in real
    20  property in a transfer subject to this part.
    21     "Commission."  The State Real Estate Commission.
    22     "Final settlement."  The time at which the buyer and seller
    23  have signed and delivered all papers and consideration necessary
    24  to convey title to the estate or interest in real property being
    25  conveyed.
    26     "Material defect."  A problem with a residential real
    27  property or any portion of it that would have a significant
    28  adverse impact on the value of the property or that involves an
    29  unreasonable risk to people on the property. The fact that a
    30  structural element, system or subsystem is near, at or beyond
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     1  the end of the normal useful life of such a structural element,
     2  system or subsystem is not by itself a material defect.
     3     "Seller."  Any person transferring any estate or interest in
     4  residential real property in a transfer subject to this part.
     5   7103.  Application of part.
     6     (a)  General rule.--This part shall apply to and the term
     7  "residential real estate transfer" when used in this part shall
     8  mean a transfer of any interest in real property located within
     9  this Commonwealth, other than a transfer described in subsection
    10  (b), that consists of not less than one nor more than four
    11  residential dwelling units, whether by sale, exchange,
    12  installment sales contract, lease with an option to purchase,
    13  grant or transfer of unit in a residential condominium or
    14  cooperative.
    15     (b)  Exceptions.--This part shall not apply to a transfer:
    16         (1)  Pursuant to court order, including, but not limited
    17     to, transfers ordered by a probate court in the
    18     administration of an estate, transfers pursuant to a writ of
    19     execution, transfers by a trustee in bankruptcy, transfers by
    20     eminent domain and condemnation and transfers resulting from
    21     a decree for specific performance.
    22         (2)  To a mortgagee by a mortgagor or successor in
    23     interest who is in default; to a beneficiary of a deed of
    24     trust by a trustee or successor in interest who is in
    25     default; by any foreclosure sale after default in an
    26     obligation secured by a mortgage; by a sale under a power of
    27     sale or any foreclosure sale under a decree of foreclosure
    28     after default in an obligation secured by a deed of trust or
    29     secured by any other instrument containing a power of sale;
    30     or by a mortgagee or a beneficiary under a deed of trust who
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     1     has acquired the real property at a sale conducted pursuant
     2     to a power of sale under a mortgage or deed of trust or a
     3     sale pursuant to a decree of foreclosure or who has acquired
     4     the real property by a deed in lieu of foreclosure.
     5         (3)  From one co-owner to one or more other co-owners.
     6         (4)  Made to a spouse or to a person or persons in the
     7     lineal line of consanguinity of one or more of the
     8     transferors.
     9         (5)  Between spouses resulting from a decree of
    10     dissolution of marriage or a decree of legal separation or
    11     from a property settlement agreement incidental to the
    12     decree.
    13         (6)  By a corporation, partnership or other association
    14     to its shareholders, partners or other equity owners in
    15     connection with the liquidation of the corporation,
    16     partnership or other association.
    17         (7)  Of a property to be converted by the buyer into a
    18     use other than residential use or to be demolished.
    19         (8)  Of unimproved real property.
    20                             CHAPTER 73
    21                         SELLER DISCLOSURES
    22  Sec.
    23  7301.  Short title of chapter.
    24  7302.  Application of chapter.
    25  7303.  Disclosure of material defects.
    26  7304.  Disclosure form.
    27  7305.  Delivery of disclosure form.
    28  7306.  Information unavailable to seller.
    29  7307.  Information subsequently rendered inaccurate.
    30  7308.  Affirmative duty of seller.
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     1  7309.  Nonliability of seller.
     2  7310.  Nonliability of agent.
     3  7311.  Failure to comply.
     4  7312.  Amendment of disclosure.
     5  7313.  Specification of items for disclosure no limitation on
     6             other disclosure obligations.
     7  7314.  Cause of action.
     8  7315.  Preemption of local requirements.
     9   7301.  Short title of chapter.
    10     This chapter shall be known and may be cited as the Real
    11  Estate Seller Disclosure Law.
    12   7302.  Application of chapter.
    13     (a)  General rule.--This chapter shall apply to all
    14  residential real estate transfers, except the following:
    15         (1)  Transfers by a fiduciary in the course of the
    16     administration of a decedent's estate, guardianship,
    17     conservatorship or trust.
    18         (2)  Transfers of new residential construction that has
    19     not been previously occupied when:
    20             (i)  the buyer has received a one-year or longer
    21         written warranty covering such construction;
    22             (ii)  the dwelling has been inspected for compliance
    23         with the applicable building code or, if there is no
    24         applicable code, for compliance with a nationally
    25         recognized model building code; and
    26             (iii)  a certificate of occupancy or a certificate of
    27         code compliance has been issued for the dwelling.
    28     (b)  Limitations in the case of condominiums or
    29  cooperatives.--Any seller of a unit in a condominium created
    30  under Subpart B of Part II (relating to condominiums) or a
    19990S1032B2140                  - 5 -

     1  similar provision of prior law or a cooperative as defined in
     2  section 4103 (relating to definitions) shall be obligated to
     3  make disclosures under this chapter only with respect to the
     4  seller's own unit and shall not be obligated by this chapter to
     5  make any disclosure with respect to any common elements or
     6  common facilities of the condominium or cooperative. The
     7  provisions of section 3407 (relating to resales of units) shall
     8  control disclosures a seller is required to make concerning
     9  common elements in a condominium, and section 4409 (relating to
    10  resales of cooperative interests) shall control disclosures a
    11  seller is required to make concerning common elements in a
    12  cooperative.
    13   7303.  Disclosure of material defects.
    14     Any seller who intends to transfer any interest in real
    15  property shall disclose to the buyer any material defects with
    16  the property known to the seller by completing all applicable
    17  items in a property disclosure statement which satisfies the
    18  requirements of section 7304 (relating to disclosure form). A
    19  signed and dated copy of the property disclosure statement shall
    20  be delivered to the buyer in accordance with section 7305
    21  (relating to delivery of disclosure form) prior to the signing
    22  of an agreement of transfer by the seller and buyer with respect
    23  to the property.
    24   7304.  Disclosure form.
    25     (a)  General rule.--A form of property disclosure statement
    26  that satisfies the requirements of this chapter shall be
    27  promulgated by the State Real Estate Commission. Nothing in this
    28  chapter shall preclude a seller from using a form of property
    29  disclosure statement that contains additional provisions that
    30  require greater specificity or that call for the disclosure of
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     1  the condition or existence of other features of the property.
     2     (b)  Contents of property disclosure statement.--The form of
     3  property disclosure statement promulgated by the State Real
     4  Estate Commission shall call for disclosures with respect to all
     5  of the following subjects:
     6         (1)  Seller's expertise in contracting, engineering,
     7     architecture or other areas related to the construction and
     8     conditions of the property and its improvements.
     9         (2)  When the property was last occupied by the seller.
    10         (3)  Roof.
    11         (4)  Basements and crawl spaces.
    12         (5)  Termites/wood destroying insects, dry rot and pests.
    13         (6)  Structural problems.
    14         (7)  Additions, remodeling and structural changes to the
    15     property.
    16         (8)  Water and sewage systems or service.
    17         (9)  Plumbing system.
    18         (10)  Heating and air conditioning.
    19         (11)  Electrical system.
    20         (12)  Other equipment and appliances included in the
    21     sale.
    22         (13)  Soils, drainage and boundaries.
    23         (14)  Presence of hazardous substances.
    24         (15)  Condominiums and other homeowners associations.
    25         (16)  Legal issues affecting title or that would
    26     interfere with use and enjoyment of the property.
    27     (c)  Transitional rule.--Until a form of property disclosure
    28  statement has been promulgated by the commission, the form
    29  prescribed under the act of July 2, 1996 (P.L.500, No.84), known
    30  as the Real Estate Seller Disclosure Act, shall be deemed to be
    19990S1032B2140                  - 7 -

     1  the form contemplated under subsection (b).
     2   7305.  Delivery of disclosure form.
     3     (a)  Method of delivery.--The seller shall deliver the
     4  property disclosure statement to the buyer by personal delivery;
     5  first class mail; certified mail, return receipt requested; or
     6  facsimile transmission to the buyer or the buyer's agent.
     7     (b)  Parties to whom delivered.--For purposes of this
     8  chapter, delivery to one prospective buyer or buyer's agent is
     9  deemed delivery to all persons intending to take title as co-
    10  tenants, joint tenants or as a tenant by the entireties with the
    11  buyer. Receipt may be acknowledged on the statement, in an
    12  agreement of transfer for the residential real property or shown
    13  in any other verifiable manner.
    14   7306.  Information unavailable to seller.
    15     If at the time the disclosures are required to be made, an
    16  item of information required to be disclosed is unknown or not
    17  available to the seller, the seller may make a disclosure based
    18  on the best information available to the seller.
    19   7307.  Information subsequently rendered inaccurate.
    20     If information disclosed in accordance with this chapter is
    21  subsequently rendered inaccurate prior to final settlement as a
    22  result of any act, occurrence or agreement subsequent to the
    23  delivery of the required disclosures, the seller shall notify
    24  the buyer of the inaccuracy.
    25   7308.  Affirmative duty of seller.
    26     The seller is not obligated by this chapter to make any
    27  specific investigation or inquiry in an effort to complete the
    28  property disclosure statement. In completing the property
    29  disclosure statement, the seller shall not make any
    30  representations that the seller or the agent for the seller
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     1  knows or has reason to know are false, deceptive or misleading
     2  and shall not fail to disclose a known material defect.
     3   7309.  Nonliability of seller.
     4     (a)  General rule.--A seller shall not be liable for any
     5  error, inaccuracy or omission of any information delivered
     6  pursuant to this chapter if:
     7         (1)  the seller had no knowledge of the error, inaccuracy
     8     or omission;
     9         (2)  the error, inaccuracy or omission was based on a
    10     reasonable belief that a material defect or other matter not
    11     disclosed had been corrected; or
    12         (3)  the error, inaccuracy or omission was based on
    13     information provided by a public agency, home inspector,
    14     contractor or person registered or licensed under an act
    15     referred to in section 7503(a) (relating to relationship to
    16     other laws) about matters within the scope of the agency's
    17     jurisdiction or such other person's occupation and the seller
    18     had no knowledge of the error, inaccuracy or omission.
    19     (b)  Delivery of information by public agency.--The delivery
    20  of any information required to be disclosed by this chapter to a
    21  prospective buyer by a public agency or other person providing
    22  information required to be disclosed under this chapter shall be
    23  deemed to comply with the requirements of this chapter and shall
    24  relieve the seller or the agent of the seller from any further
    25  duty under this chapter with respect to that item of
    26  information.
    27     (c)  Report by expert.--The delivery of a report or opinion
    28  prepared by a home inspector, contractor or person registered or
    29  licensed under an act referred to in section 7503(a) dealing
    30  with matters within the scope of the person's registration,
    19990S1032B2140                  - 9 -

     1  license or expertise shall be sufficient compliance for
     2  application of the exemption provided under subsection (a)(3) if
     3  the information is provided to the prospective buyer in writing.
     4   7310.  Nonliability of agent.
     5     An agent of a seller or a buyer shall not be liable for any
     6  violation of this chapter unless the agent had actual knowledge
     7  of a material defect that was not disclosed to the buyer or of a
     8  misrepresentation relating to a material defect.
     9   7311.  Failure to comply.
    10     (a)  General rule.--A residential real estate transfer
    11  subject to this chapter shall not be invalidated solely because
    12  of the failure of any person to comply with any provision of
    13  this chapter. However, any person who willfully or negligently
    14  violates or fails to perform any duty prescribed by any
    15  provision of this chapter shall be liable in the amount of
    16  actual damages suffered by the buyer as a result of a violation
    17  of this chapter. This subsection shall not be construed so as to
    18  restrict or expand the authority of a court to impose punitive
    19  damages or apply other remedies applicable under any other
    20  provision of law.
    21     (b)  Statute of limitations.--An action for damages as a
    22  result of a violation of this chapter must be commenced within
    23  two years after the date of final settlement.
    24   7312.  Amendment of disclosure.
    25     Any disclosure made pursuant to this chapter may be amended
    26  in writing by the seller prior to the signing of an agreement of
    27  transfer by the seller and buyer.
    28   7313.  Specification of items for disclosure no limitation on
    29             other disclosure obligations.
    30     (a)  General rule.--The specification of items for disclosure
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     1  in this chapter or in any form of property disclosure statement
     2  promulgated by the State Real Estate Commission does not limit
     3  or abridge any obligation for disclosure created by any other
     4  provision of law or that may exist in order to avoid fraud,
     5  misrepresentation or deceit in the transaction.
     6     (b)  Responsibility of licensee.--Nothing in this chapter
     7  shall abrogate or diminish the responsibility of a licensee
     8  under the act of February 19, 1980 (P.L.15, No.9), known as the
     9  Real Estate Licensing and Registration Act.
    10     (c)  Duty to provide form.--An agent representing a seller
    11  must advise a seller of the seller's responsibilities under this
    12  chapter and must provide the seller with a copy of the form of
    13  property disclosure statement.
    14   7314.  Cause of action.
    15     A buyer shall not have a cause of action under this chapter
    16  against the seller or the agent for either or both of the seller
    17  or the buyer for:
    18         (1)  material defects to the property disclosed to the
    19     buyer prior to the signing of an agreement of transfer by the
    20     seller and buyer;
    21         (2)  material defects that develop after the signing of
    22     the agreement of transfer by the seller and buyer; or
    23         (3)  material defects that occur after final settlement.
    24   7315.  Preemption of local requirements.
    25     (a)  General rule.--Except as provided in subsection (b), a
    26  municipality or local authority shall not have the power to
    27  mandate that:
    28         (1)  a seller or an agent of either or both the seller
    29     and the buyer make any particular disclosures to the buyer in
    30     connection with a residential real estate transfer; or
    19990S1032B2140                 - 11 -

     1         (2)  provisions on any particular subject be included in
     2     an agreement of transfer.
     3     (b)  Exception.--Subsection (a) shall not apply to an
     4  ordinance or regulation adopted by a municipality or local
     5  authority before the effective date of this section and such an
     6  ordinance or regulation shall continue in full force and effect,
     7  except that the municipality or local authority shall not have
     8  the power after that date to amend the ordinance or regulation
     9  in a manner that:
    10         (1)  imposes new or expanded disclosure requirements;
    11         (2)  increases the scope of any provision that must be
    12     included in an agreement of transfer; or
    13         (3)  imposes new requirements on any agent, buyer or
    14     seller involved in a residential real estate transfer.
    15                             CHAPTER 75
    16                          HOME INSPECTIONS
    17  Sec.
    18  7501.  Short title of chapter.
    19  7502.  Definitions and index of definitions.
    20  7503.  Relationship to other laws.
    21  7504.  Duty of care of home inspectors.
    22  7505.  Consumer remedies.
    23  7506.  Contractual provisions REQUIRED CONTRACTUAL                <--
    24         PROVISION regarding home inspections.
    25  7507.  Contracts with home inspectors.
    26  7508.  Home inspection reports.
    27  7509.  Liability insurance.
    28  7510.  RELIANCE BY BUYER.                                         <--
    29  7510. 7511.  Penalties.                                           <--
    30  7511. 7512.  Statute of limitations.                              <--
    19990S1032B2140                 - 12 -

     1   7501.  Short title of chapter.
     2     This chapter shall be known and may be cited as the Home
     3  Inspection Law.
     4   7502.  Definitions and index of definitions.
     5     (a)  Definitions.--The following words and phrases when used
     6  in this chapter shall have the meanings given to them in this
     7  section unless the context clearly indicates otherwise:
     8     "Home inspection."  A noninvasive, visual examination of some
     9  combination of the mechanical, electrical or plumbing systems or
    10  the structural and essential components of a residential
    11  dwelling designed to identify material defects in those systems
    12  and components, and performed for a fee in connection with or
    13  preparation for a proposed or possible residential real estate
    14  transfer. The term also includes any consultation regarding the
    15  property that is represented to be a home inspection or that is
    16  described by any confusingly similar term. The term does not
    17  include an examination of a single system or component of a
    18  residential dwelling such as, for example, its electrical or
    19  plumbing system or its roof. The term also does not include an
    20  examination that is limited to inspection for, or of, one or
    21  more of the following: wood destroying insects, underground
    22  tanks and wells, septic systems, swimming pools and spas, alarm
    23  systems, air and water quality, tennis courts and playground
    24  equipment, pollutants, toxic chemicals and environmental
    25  hazards.
    26     "Home inspection report."  A written report on the results of
    27  a home inspection.
    28     "Home inspector."  An individual who performs a home
    29  inspection.
    30     "National home inspectors association."  Any national
    19990S1032B2140                 - 13 -

     1  association of home inspectors that:
     2         (1)  Is OPERATED ON A NOT-FOR-PROFIT BASIS AND IS not      <--
     3     operated as a franchise.
     4         (2)  Has members in more than ten states.
     5         (3)  Requires that a person may not become a full member
     6     unless the person HAS PERFORMED OR PARTICIPATED IN MORE THAN   <--
     7     100 HOME INSPECTIONS AND has passed a recognized or
     8     accredited examination testing knowledge of the proper
     9     procedures for conducting a home inspection.
    10         (4)  Requires that its members comply with a code of
    11     conduct and attend continuing professional education classes

    12     as an ongoing condition of membership.
    13     (b)  Index of other definitions.--The following is a
    14  nonexclusive list of other definitions applying to this chapter
    15  and the sections in which they appear:
    16     "Agent."  Section 7102 (relating to definitions).
    17     "Agreement of transfer."  Section 7102 (relating to
    18  definitions).
    19     "Buyer."  Section 7102 (relating to definitions).
    20     "Material defect."  Section 7102 (relating to definitions).
    21     "Residential real estate transfer."  Section 7103 (relating
    22  to application of part).
    23     "Seller."  Section 7102 (relating to definitions).
    24   7503.  Relationship to other laws.
    25     (a)  General rule.--Nothing in this chapter shall be
    26  construed to allow a home inspector who is not registered or
    27  licensed under one or more of the following laws to perform any
    28  activity that would constitute the practice of the profession
    29  regulated by that law:
    30         (1)  The act of May 23, 1945 (P.L.913, No.367), known as
    19990S1032B2140                 - 14 -

     1     the Engineer, Land Surveyor and Geologist Registration Law.
     2         (2)  The act of January 24, 1966 (1965 P.L.1535, No.537),
     3     known as the Pennsylvania Sewage Facilities Act.

     4         (3)  The act of March 1, 1974 (P.L.90, No.24), known as
     5     the Pennsylvania Pesticide Control Act of 1973.
     6         (4)  The act of December 14, 1982 (P.L.1227, No.281),
     7     known as the Architects Licensure Law.
     8         (5)  The act of July 9, 1987 (P.L.238, No.43), known as
     9     the Radon Certification Act.
    10         (6)  The act of July 10, 1990 (P.L.404, No.98), known as
    11     the Real Estate Appraisers Certification Act.
    12     (b)  Exclusions.--This chapter shall not:
    13         (1)  Apply to a person registered or licensed under an
    14     act referred to in subsection (a) when acting pursuant to his
    15     registration or license.
    16         (2)  Apply to an officer or employee of a municipality or
    17     local authority when acting in his official capacity.
    18         (3)  Affect the obligations or immunities of a person
    19     licensed under the act of February 19, 1980 (P.L.15, No.9),
    20     known as the Real Estate Licensing and Registration Act, that
    21     are imposed or provided by that act or Chapter 73 (relating
    22     to seller disclosures) when the person is acting pursuant to
    23     his license.
    24         (4)  Affect the obligations or immunities of a person
    25     certified under the act of July 10, 1990 (P.L.404, No.98),
    26     known as the Real Estate Appraisers Certification Act, when
    27     the person is acting pursuant to the person's license.
    28   7504.  Duty of care of home inspectors.
    29     (a)  General rule.--It is the duty of a home inspector to
    30  conduct a home inspection with the degree of care that a
    19990S1032B2140                 - 15 -

     1  reasonably prudent home inspector would exercise.
     2     (b)  Standard.--In ascertaining the degree of care that would
     3  be exercised by a reasonably prudent home inspector, the court
     4  shall consider the standards of practice and codes of ethics of
     5  national home inspector associations.
     6   7505.  Consumer remedies.
     7     (a)  General rule.--The performance of a home inspection is a
     8  service that is subject to the act of December 17, 1968
     9  (P.L.1224, No.387), known as the Unfair Trade Practices and
    10  Consumer Protection Law.
    11     (b)  Prohibited acts.--Any of the following acts engaged in
    12  by a home inspector, an employer of a home inspector or another
    13  business or person that controls or has a financial interest in
    14  the employer of a home inspector shall be deemed to be an unfair
    15  or deceptive act or practice as defined by section 2(4)(i)
    16  through (xxi) of the Unfair Trade Practices and Consumer
    17  Protection Law:
    18         (1)  Performing or offering to perform for an additional
    19     fee any repairs to a structure with respect to which the home
    20     inspector, the employer of the home inspector or such other
    21     business or person has prepared a home inspection report
    22     within the preceding 12 months, except that this paragraph
    23     shall not apply to remediation for radon or wood destroying
    24     insects.
    25         (2)  Inspecting for a fee any property in which the home
    26     inspector, the employer of the home inspector or such other
    27     business or person has any financial interest or any interest
    28     in the transfer of the property, including without limitation
    29     receipt of a commission as an agent, unless the financial
    30     interest or interest in the transfer of the property is
    19990S1032B2140                 - 16 -

     1     disclosed in writing to the buyer before the home inspection
     2     is performed and the buyer signs an acknowledgment of receipt
     3     of the disclosure.
     4         (3)  Offering or delivering any commission, referral fee
     5     or kickback to the seller of the inspected property or to an
     6     agent for either or both of the seller and the buyer for the
     7     referral of any business to the home inspector, the employer
     8     of the home inspector or such other business or person.
     9         (4)  Accepting an engagement to perform a home inspection
    10     or to prepare a home inspection report in which the
    11     employment itself or the fee payable for the inspection is
    12     contingent upon the conclusions in the report, preestablished
    13     or prescribed findings or the closing of the transaction.
    14     (c)  Exception.--A home warranty company that is affiliated
    15  with or retains the home inspector does not violate subsection
    16  (b) if the home warranty company performs repairs pursuant to
    17  claims made under a home warranty contract.
    18     (d)  Remedies.--In addition to any other remedies available
    19  under the Unfair Trade Practices and Consumer Protection Law or
    20  other applicable provision of law, the owner of a property on
    21  which repairs are performed in violation of subsection (b)(1)
    22  shall be entitled to a full refund of any moneys paid for those
    23  repairs and any promissory note or other obligation to pay given
    24  to the person performing those repairs shall be void.
    25   7506.  Contractual provisions REQUIRED CONTRACTUAL PROVISION    <--
    26         regarding home inspections.
    27     (a)  General rule.--A provision of an agreement of transfer    <--
    28  regarding the right of the buyer to obtain a home inspection
    29  report and providing for the consequences, if any, to the         <--
    30  parties based on the results of the report shall not be
    19990S1032B2140                 - 17 -

     1  enforceable unless it requires SHALL PROVIDE that the home        <--
     2  inspection be performed by a full member in good standing of a
     3  national home inspection association in accordance with the
     4  ethical standards and code of conduct or practice of that
     5  association. A home inspection performed by a person who has not
     6  attained full membership in a national home inspection
     7  association satisfies the requirements of this subsection         <--
     8  SECTION if the person is supervised by a full member in good      <--
     9  standing of a national home inspection association who agrees to
    10  be responsible for the home inspection report by signing the
    11  report.
    12     (b)  Reliance.--A buyer shall be entitled to rely in good      <--
    13  faith, without independent investigation, on a written
    14  representation by a home inspector that the home inspector is a
    15  full member in good standing of a national home inspection
    16  association.
    17   7507.  Contracts with home inspectors.
    18     (a)  Prohibited provisions.--The following types of
    19  provisions in a contract with a home inspector for the
    20  performance of a home inspection are contrary to public policy
    21  and shall be void:
    22         (1)  a limitation on the liability of the home inspector
    23     for gross negligence or willful misconduct;
    24         (2)  a waiver or modification of any provision of this
    25     chapter.
    26     (b)  Scope of inspection.--The scope of a home inspection,
    27  the services to be performed and the systems and conditions to
    28  be inspected or excluded from inspection may be defined by a
    29  contract between the home inspector and the client.
    30   7508.  Home inspection reports.
    19990S1032B2140                 - 18 -

     1     (a)  Required contents.--A home inspection report must be in
     2  writing and shall include:
     3         (1)  A description of the scope of the inspection,
     4     including without limitation an identification of the
     5     structural elements, systems and subsystems covered by the
     6     report.
     7         (2)  A description of any material defects noted during
     8     the inspection, along with any recommendation that certain
     9     experts be retained to determine the extent of the defects
    10     and any corrective action that should be taken. A "material
    11     defect" as defined in section 7102 (relating to definitions)
    12     that poses an unreasonable risk to people on the property
    13     shall be conspicuously identified as such.
    14         (3)  The following statements, set forth conspicuously:
    15             "A home inspection is intended to assist in
    16         evaluation of the overall condition of the dwelling. The
    17         inspection is based on observation of the visible and
    18         apparent condition of the structure and its components on
    19         the date of inspection."
    20             "The results of this home inspection are not intended
    21         to make any representation regarding the presence or
    22         absence of latent or concealed defects that are not
    23         reasonably ascertainable in a competently performed home
    24         inspection. No warranty or guaranty is expressed or
    25         implied."
    26             "If the person conducting your home inspection is not
    27         a licensed structural engineer or other professional
    28         whose license authorizes the rendering of an opinion as
    29         to the structural integrity of a building or its other
    30         component parts, you may be advised to seek a
    19990S1032B2140                 - 19 -

     1         professional opinion as to any defects or concerns
     2         mentioned in the report."
     3             "This home inspection report is not to be construed
     4         as an appraisal and may not be used as such for any
     5         purpose."
     6     (b)  Confidentiality.--Except as otherwise required by law, a
     7  home inspector shall not deliver a home inspection report to any
     8  person other than the client of the home inspector without the
     9  client's consent. The seller shall have the right, upon request,
    10  to receive without charge a copy of a home inspection report
    11  from the person for whom it was prepared.
    12     (c)  Repair estimates prohibited.--A home inspector shall not
    13  express either orally or in writing an estimate of the cost to
    14  repair any defect found during a home inspection, except that
    15  such an estimate may be included in a home inspection report if:
    16         (1)  the report identifies the source of the estimate;
    17         (2)  the estimate is stated as a range of costs; and
    18         (3)  the report states that the parties should consider
    19     obtaining an estimate from a contractor who performs the type
    20     of repair involved.
    21   7509.  Liability insurance.
    22     (a)  Required insurance.--A home inspector shall maintain
    23  insurance against errors and omissions in the performance of a
    24  home inspection and general liability, with coverages of not
    25  less than $100,000 per occurrence and $500,000 in the aggregate
    26  and with deductibles of not more than $2,500.
    27     (b)  Term.--
    28         (1)  Except as set forth in paragraph (2), a home
    29     inspector shall maintain insurance under subsection (a) for
    30     at least one year after the latest home inspection report the
    19990S1032B2140                 - 20 -

     1     home inspector delivers.
     2         (2)  Paragraph (1) shall not apply to a home inspection
     3     report that was delivered prior to (the Legislative Reference  <--
     4     Bureau shall insert here the effective date of this act). THE  <--
     5     EFFECTIVE DATE OF THIS SECTION.
     6   7510.  RELIANCE BY BUYER.
     7     A BUYER SHALL BE ENTITLED TO RELY IN GOOD FAITH, WITHOUT
     8  INDEPENDENT INVESTIGATION, ON A WRITTEN REPRESENTATION BY A HOME
     9  INSPECTOR THAT THE HOME INSPECTOR IS A FULL MEMBER IN GOOD
    10  STANDING OF A NATIONAL HOME INSPECTION ASSOCIATION.
    11   7510.  7511.  Penalties.                                       <--
    12     (a)  Criminal penalty.--A person who violates section 7509
    13  (relating to liability insurance) or who provides a false
    14  representation under section 7506(b) (relating to contractual     <--
    15  provisions regarding home inspections) 7510 (RELATING TO          <--
    16  RELIANCE BY BUYER) commits a summary offense and upon conviction
    17  thereof for a first offense shall be sentenced to pay a fine not
    18  exceeding $500 or to imprisonment for not more than three
    19  months, or both, and for a second or subsequent offense commits
    20  a felony MISDEMEANOR of the third degree and upon conviction      <--
    21  thereof shall be sentenced to pay a fine of not less than $2,000
    22  but not more than $5,000 or to imprisonment for not less than
    23  one year but not more than two years, or both.
    24     (b)  Fine.--A person who violates any provision of section
    25  7508 (relating to home inspection reports) shall, upon
    26  conviction in a summary proceeding before a district justice, be
    27  sentenced to pay a fine not exceeding $500 and, in default of     <--
    28  payment of such fine and costs, be imprisoned in the county jail
    29  one day for each $50 of fine and costs unpaid.
    30   7511.  7512.  Statute of limitations.                          <--
    19990S1032B2140                 - 21 -

     1     An action to recover damages arising from a home inspection
     2  report must be commenced within one year after the date the
     3  report is delivered.
     4     Section 2.  The act of July 2, 1996 (P.L.500, No.84), known
     5  as the Real Estate Seller Disclosure Act, is repealed.
     6     Section 3.  This act shall take effect in one year.
















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