March 12, 2019

Third Party Inspections Are "Everywhere"

Patrick G. Granson and Paul E. Davis, Esq.

Introduction

The use of third-party (or private) building inspectors (“TPIs”) is spreading.  It has even come to North Carolina, which has not always been in the forefront of change.  North Carolina has joined a growing number of jurisdictions that allow certain inspections to be performed by TPIs.  North Carolina now permits licensed professionals (architects and engineers) or those under their supervision to perform inspections in lieu of municipal code enforcement departments.  Our survey of similar laws in other states shows that while there is similarity of justification for TPIs, there is little similarity in the scope of the practice from state to state.   Nonetheless, Code Enforcement Officials in North Carolina should look to other states for implementation guidance.

Some states, including Colorado, Georgia and South Carolina, allow each municipality to decide whether to accept third-party inspections; and, if allowed, to determine which building components may be so inspected and under what circumstances.  The FAQs on the City of Alpharetta, Georgia’s construction and inspection web page has the following Q and A: “Can I hire my own third-party inspector?  No, the City of Alpharetta does not permit third-party inspections.  As it is the City’s policy to perform same-day inspections, there is no scheduling or economic advantage to using outside parties for inspections.” Contrast that with Gwinnett County, Georgia’s code regulations, which allow numerous third-party inspections.

Several municipalities in Virginia accept third-party inspections only under limited circumstances and then only if the Code Enforcement Officials are unable to perform such inspections within a certain time period.  In Florida, TPIs may be used for inspections as well as for plan review. The actual process varies from municipality to municipality.

The North Carolina Story

The story in North Carolina began when two counties out of 220 AHJs (Authority Having Jurisdiction) in North Carolina were taking three  to five  days to perform routine inspections for new single-family home construction.  Inspection delays were further exacerbated when the work failed the inspection and the builder had to call for a re-inspection.  It could then take weeks to get the inspections completed. This created a tremendous backlog of inspections and tension between builders, developers, and AHJs seeking to keep pace in this building boom.  Discussions began between the North Carolina Department of Insurance, which is responsible for certifying Code Enforcement Officials, and the AHJs to better understand and address these issues.   

What came out of these discussions?

Three  pieces of legislation -- House Bill 255 (2015), House Bill 252 (2017), and House Bill 948 (2018) – resulting in North Carolina General Statutes §160A-413.5 (“Alternate inspection method for component or element”) (applicable to cities) and §153A-352(b2) (applicable to counties).

As the title implies, the statute permits inspections of building “components and elements” to be performed by a professional other than the AHJ.  Numerous questions arose from that simple statement.

What are “components and elements”?

The statutory definitions provided by the North Carolina Legislature are a bit circular, to say the least.  “Element” is defined as “a combination of products designed to be combined with other elements to form all or part of a building component.”  “Component” is defined as “any assembly, sub-assembly, or combination of elements designed to be combined with other components to form part of a building or structure.”  And, for good measure, the Legislature added the clarification that “components and elements are not systems.”

Who can perform the inspections?

When House Bill 255 was ratified in 2015, the North Carolina legislation referred to “the” architect or engineer as persons permitted to make such inspections in lieu of county or city inspectors.  It was not clear in 2015 whether that was an intentional designation of the project architect/engineer as “the” person authorized to perform an alternate inspection.  Nonetheless, the 2017 amendment to the statute (House Bill 252) broadened the scope to include “a licensed architect or licensed engineer or a person under the direct supervisory control of the licensed architect or licensed engineer.”  Qualified TPIs in other jurisdictions, including Virginia and Gwinnett County, Georgia, are similarly limited to architects and engineers (and those under their responsible charge).  Other states, including Florida and Maine, expand the field of authorized TPIs to include non-professionals who have the training and certifications equal to that of the public Code Enforcement Officials.

What documentation is required?

To satisfy the statute in North Carolina, the non-AHJ inspector shall provide the respective AHJ with “a signed written document stating the component or element of the building so inspected … is in compliance with” the applicable building code.  Upon receipt of the written document from the architect or engineer, the AHJ is relieved of any liabilities, duties, and responsibilities otherwise imposed by law for inspections.  The AHJ also has no statutory obligation to review or approve the inspector’s documentation.   

What is the role of the AHJ?

The current role for AHJs in North Carolina is somewhat confusing.  The North Carolina Legislature did not provide a clear path on how to proceed with the new statutes.  The larger AHJs in North Carolina are creating processes to establish detailed roles and responsibilities to guide third-party inspections. 

First, is to understand the request process for inspections.  Second, is to perform the inspection and provide the necessary detailed wording within the document to determine where the project’s responsibility for a third-party inspection starts and stops.  Third, determine the proper verification documentation for the sealed licensed professional. 

Currently, AHJs are working with the new statutes as written and are dealing with them on a case-by-case basis until a natural work flow process is in place.

Impact On Industry And Risk Exposure

We in North Carolina are in the infancy of the use of TPIs.  Will we see a new industry in the market to take advantage of this legislation?  Still too soon to tell.  And if so, how widespread will it be?   For those performing alternate inspections either as part of the project design professional’s scope of services or as a stand-alone service, here are a few risk management items to consider.

  • Is the firm or person knowledgeable enough to understand the code requirements and logistics of construction practices for what is being inspected and approved?
  • Does the firm or person fit in the overall portfolio for performing this type of service?
  • What paper trail is necessary for these inspections?
  • How will the inspections be documented by the AHJs?
  • Do these services require a different code of ethics; and does that depend on whether inspections are performed within the scope of work of the project designer or as a stand-alone service?
  • What is the appropriate standard of care?

Regulating Inspectors

A question heard often in discussions about the North Carolina legislation was “who will regulate the inspectors?” 

The North Carolina Code Officials Qualifications Board (“COQB”) is charged with certifying and disciplining Code Enforcement Officials employed by AHJs.  The COQB is located within the Engineering and Codes Division, of the Office of the State Fire Marshal, Department of Insurance. Currently, the COQB does not certify or discipline TPIs.    

Complaints brought against a Code Enforcement Official are filed with the COQB.  The COQB can impose penalties upon the inspector, including the following:  requiring the inspector to take additional training / educational courses, putting the inspector on probation, issuing a letter of reprimand, or suspending / revoking the inspector’s certification.

It is a query in North Carolina who will regulate the inspection services performed by the architect or engineer (or person working under the direct supervisory control of the architect or engineer).  It is doubtful the COQB will play a role in regulating these TPIs.  The North Carolina licensing boards for engineers and for architects are currently reviewing the legislation and the impact on their licensees and are considering the creation of a regulatory process for compliance.  North Carolina may follow the lead of Florida and leave regulation of TPIs largely to the appropriate occupational licensing board (architecture or engineering).  Note, however, that TPIs in Florida are also subject to the statutory disciplinary guidelines applicable to Building Code Administrators and Inspectors.

Conclusion

Moving forward, we think the process in North Carolina will stabilize as learning curves and standard operation procedures are established by AHJs.  We see the need for additional assistance from the North Carolina Legislature and occupational licensing boards as well as the American Institute of Architects- North Carolina to establish rules and guidelines within the framework of the new statutes for those providing these services.

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Patrick G. Granson

Mecklenburg County Code Enforcement Land Use & Environmental Services Agency, Charlotte, NC

Paul E. Davis, Esq.

Conner Gwyn Schenck PLLC, Raleigh, NC