June, 2005
Legislative News
Inspection News and Views from the American Society of Home Inspectors

Ethics Takes Center Stage at ARELLO Meeting


ASHI President Don Norman engaged in lively debate on the ethical implications of home inspectors doing home repairs or paying real estate agents to be on preferred vendor lists as an Ethics Roundtable participant at the Association of Real Estate License Law Officials (ARELLO) mid-year meeting in Monterey, California, April 1-2, 2005.

ARELLO is a global, nonprofit association made up of entities involved in regulating the practice of real estate. In several states, including Texas, home inspector advisory boards are governed under state real estate commissions; therefore, ARELLO pays close attention to trends in inspector regulation and highlights major issues. It regularly includes a home inspector track of workshops at its annual meetings, and invites government officials and inspector organizations to participate.

Mutual respect between organizations

ASHI considers ARELLO an important audience with which to network, and we hope ARELLO considers ASHI the premier source of private sector, expert information on issues of concern to consumers, inspectors and regulators. Over the years, a relationship of mutual respect and sharing has developed.

Don Norman, ASHI president; Marvin Goldstein, ASHI Legislative Committee member; and Bob Kociolek, ASHI director of chapter relations and state affairs, officially represented ASHI at the April meeting.  

Several other ASHI members were on hand and they played an active role. The Home Inspector Agenda included roundtables on Errors & Omissions/
Risk Management/Liability Insurance; Education, Enforcement, Licensure, Reporting Forms and More; Standards of Practice/Standards of Care; and Ethics.
Ethics Roundtable highlight of event

The highlight of the event was the Ethics Roundtable. President Norman served on a panel that included George Harper; California Real Estate Inspection Association (CREIA) president; Brian Murphy, Texas Association of Real Estate Inspectors (TAREI) president; and Ralph Wirth, National Association of Home Inspectors (NAHI) past president. Harper and Murphy are also ASHI Members.

Panelists were asked to address three issues:

  • whether or not an inspector can do construction or repairs on a home he/she inspects,

  • whether or not it's ethical for inspectors to pay real estate agents to be on preferred vendor listings, and

  • whether or not a licensed inspector should disclose receipt or payment of money to/from parties outside the transaction.

Norman makes ASHI position clear

The first two topics were debated in a lively fashion for two hours. Norman made ASHI's position clear: consumers must be assured that inspectors are independent and have no hidden alliances or conflicts of interest. Even a hint of conflict must be avoided. To that end, both ASHI's and CREIA's Codes of Ethics prohibit offering repair work within 12 months of the inspection, as well as participating in paid preferred vendor listings. TAREI also spoke against these activities.

NAHI argued that the free market and the First Amendment allow for repair work and the commitment of advertising and marketing fees to real estate companies, citing these as prudent business decisions, best left to the individual inspector and, in the case of repairs, to the inspector and the client. NAHI's Code of Ethics allows for repair work immediately following an inspection and does not prohibit participating in paid preferred vendor lists.

The regulators in the audience noted that four states currently prohibit preferred vendor arrangements in their laws: New Jersey, Wisconsin, Arizona and Massachusetts.

There was less discussion about the third issue because the panelists seemed to agree that inspectors should disclose any payments from parties outside the transaction.

ASHI looks forward to continuing its current relationship with ARELLO and to taking part in future discussions like those held at the April meeting.  

Two more states pass laws regulating home inspectors; total now 31

Tennessee's new licensure law is the 2005 Public Chapter 65 of the Tennessee Code. The effective date of the act is July 1, 2006.

North Dakota has a new registration act.

For information, including links to these laws, visit ASHI's Legislative Action Center at www.homeinspectorregulation.com. Here, you'll also find information on regulatory bills active in six other states, and bills of interest to inspectors in 33 states. The action center also provides contact information for your elected representatives and gives you the ability to mount grassroots lobbying efforts. If you would like to create an e-mail effort to reach your state's elected representatives with a targeted message, contact Bob Kociolek at 847-954-3177 or e-mail at bobk@ashi.org.