For home inspectors in Arizona, there are legislative changes to consider this summer to stay in legal compliance.
Senate Bill 1422, which will take effect as of August 1st, provides for new rules regarding the Arizona home inspection bond requirement. Home inspectors need to post such a surety bond in order to get their certification.
With the new bill, the bond needs to be retroactive from the date when the inspector has obtained their certification. The actual bonding can take place no later than 60 days after the certificate has been issued.
Let’s take a look at what the new Arizona legislation means for home inspectors in the state.
The bill defines ‘home inspection’ as a professional visual analysis of the heating, cooling, plumbing, electrical system, structure, foundation, and roofing of a building, including swimming pools and spa. Its purpose is to identify any defects and issue a report and recommendations.
The language of the certification process remains largely the same, with the exclusion of the new bonding rules. Home inspectors still need to complete a full application, provide proof of passed written exam in the last two years, a course of study and a home inspector-in-training program, submit fingerprints, pay relevant fees ($100 application fee and $42 fingerprinting fee), and provide the home inspector bond in question. Home inspectors shouldn’t have had their certification application refused in the last one year previous to their current application.
The most significant change in terms of the home inspector bond is that it should be retroactive as of the date of the certification issuance. It needs to be obtained within 60 days after the certification has taken place, and before paid home inspection has been performed. The bonding amount remains $25,000.
Additionally, the bill cancels the option to provide financial insurance instead of a bond. Inspectors can still provide errors and omissions insurance. A suggested bond language can be accessed on the Arizona State Board of Technical Registration’s website.
The home inspector bond, just as other surety bonds, works as a three-party contract. The home inspector, who is required to get bonded, is the principal. The Board is the obligee that demands the bond. The third entity is the surety, which is the bond underwriter that backs the principal.
The purpose of this surety bond is to guarantee that the home inspector will act lawfully and follow all applicable Arizona laws. In this way, the interests of the state and the general public are better protected.
In case an inspector is seen as transgressing the rules, an affected party can make a claim on their bond. Bond claims are handled by the surety at first, but the bonded inspector is liable for all payments in the end. It’s advisable for all home inspectors to learn more about surety bonds, so they can be aware of their rights and obligations, and avoid claims as best as they can.
The new home inspector bond rules in Arizona are likely to bring clarity for home inspectors in the state when it comes to the security they need to provide when getting their certification. What are your thoughts on the new bill? Please share them in the comments below.
About the author: Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.