BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY
OF THE STATE OF MONTANA
In the matter of the adoption of New Rules I through XII pertaining to registration of home inspectors
NOTICE OF ADOPTION
TO: All Concerned Persons
1. On October 4, 2019, the Department of Labor and Industry (department) published MAR Notice No. 24-35-349 regarding the public hearing on the proposed adoption of the above-stated rules, at page 1721 of the 2019 Montana Administrative Register, Issue Number 19.
2. On October 25, 2019, the department conducted a public hearing in Helena. Written comments were received during the public comment period.
3. The department has thoroughly considered the comments made. A summary of the comments and the department's responses are as follows:
Comment 1: A commenter stated that they believe the proposed distinction between a home inspection worker and a home inspection business was confusing and unnecessary, and that only individuals performing home inspection work should be registered under the law.
Response 1: The department concludes that while some home inspection workers in Montana will operate as a sole proprietorship with no employees, many home inspection workers will form a business entity structure, such as an LLC, a partnership, or corporation, by which to conduct business. Because of the distinction between the legal identity of a sole proprietorship and legal identity of those recognized business entities, the department has determined that it is necessary to recognize that distinction within its rules. As an example, if the registration applicant is an LLC, the LLC is not going to demonstrate that it (as an entity) has the education or has passed an examination to qualify to perform home inspection work. Likewise, a partnership is only required to provide one set of insurance coverages applicable to the partnership, rather than each member of the partnership having to obtain coverages in her or his individual capacity. Additionally, the department recognizes the possibility that a home inspection business (regardless of entity form) might hire qualified home inspection workers as employees. The business would obtain the required insurance coverages for its operations; a qualified home inspector working as an employee would not need to pay for individual liability insurance, errors and omission insurance, and would be covered by the workers' compensation insurance coverage of the employer. The department notes that to the extent that an individual qualified as a home inspector wishes to provide services as an "independent contractor" to another home inspection business, the independent contractor will need to be personally registered as a home inspection business and carry his or her own insurance and own national association membership.
In order to accommodate the range of likely forms of business entities and types of operations, the department concludes that it is necessary to maintain the distinction between a home inspection business and a home inspection worker in the rules.
Comment 2: A commenter stated that home inspectors rely on building codes to identify shortcomings in homes and that New Rule VI(1) through (3) should be amended to include familiarity with applicable building codes to the minimum qualifications, organizational examinations, and educational programs.
Response 2: As part of its rule-drafting process the department met with a variety of stakeholders regarding home inspection registration. Several individuals who currently provide home inspection services advised the department that home inspectors do not perform the functions of a building code inspector, and that the nationally accepted professional standards for home inspection do not include determining compliance with building code standards. The department further notes that national building inspector examinations do not test for knowledge of building code standards. Accordingly, the department concludes that requiring formal training in building code standards as a prerequisite for qualification as a home inspection worker or for continuing education purposes is neither necessary or appropriate. Nothing in the rules will prevent a home inspection worker from obtaining either initial training or continuing education regarding building code requirements, however.
4. The department has adopted New Rules I (24.33.401), II (24.33.406), III (24.33.411), IV (24.33.416), V (24.33.421), VI (24.33.431), VII (24.33.441), VIII (24.33.445), IX (24.33.461), X (24.33.471), XI (24.33.475), and XII (24.33.486) as proposed.
5. The new rules are effective November 23, 2019.
/s/ MARK CADWALLADER
Alternate Rule Reviewer
/s/ GALEN HOLLENBAUGH
Galen Hollenbaugh, Commissioner
DEPARTMENT OF LABOR AND INDUSTRY
Certified to the Secretary of State November 12, 2019.