Third Party Review Model Legislation

Third Party Inspections

Allowing Private Providers for Building Inspections and Plan Reviews
Allowing property owners and contractors to hire private providers for building inspections and plan reviews can streamline approval processes, making them faster and more efficient. This policy offers an alternative to local building officials that helps address delays caused by overburdened municipal resources and keeps project timelines on track.

Overburdened municipal departments delay projects:
Many local building departments are understaffed, leading to backlogs in inspections and permits. These delays slow down construction, increase costs, and limit the availability of new housing and infrastructure. Private providers help clear these bottlenecks by stepping in to perform inspections and reviews, allowing projects to move forward faster.

Maintaining inspection quality and compliance standards:
Private providers, including licensed architects, engineers, and building code administrators, must follow the same codes and safety standards as public officials. This ensures that quality and compliance are maintained while offering a faster alternative to municipal reviews.

Flexible inspection options reduce project costs and timelines:
A 2005 study highlighted that efficient permitting processes can reduce construction expenses, which may lower housing costs for tenants and buyers. Hiring private providers streamlines inspections by avoiding delays caused by overburdened municipal departments, helping projects move forward faster and reducing costs for developers and property owners. This flexibility is particularly beneficial in high-demand cities with limited resources, where timely project completion is crucial.

Private sector involvement promotes construction industry growth:
Bringing private providers into the inspection process taps into industry expertise and creates jobs, boosting construction investment. This helps meet the demand for new housing and infrastructure while supporting industry growth.

An alternative, not a replacement for public inspections:
This policy allows property owners to hire private providers, but municipal building departments still play an important role. Local officials retain oversight and auditing powers to ensure compliance, focusing on high- priority cases while private providers handle routine inspections. This balance makes the process more efficient without compromising safety. By allowing private providers to complement public inspections, cities and states can speed up construction, lower costs, and ensure quality. This balanced approach supports housing expansion and sustainable community growth.

Examples of successful reform:
Several states have implemented legislative reforms to streamline building regulations and enhance housing development. Florida’s HB 267 simplifies permitting processes by reducing timelines for local building officials to issue permits or notices, particularly when private providers are involved, expediting construction. Similarly, Texas’s HB 14 focuses on addressing regulatory barriers to facilitate housing development, aligning with the state’s broader efforts to meet growing housing demands. Tennessee’s SB 2100 introduces measures to enhance enforcement coordination, reflecting the state’s regulatory modernization efforts. These reforms highlight state-level initiatives to promote efficiency, reduce delays, and support housing and infrastructure growth.

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Third Party Inspections Model Legislation

Section 1

Purpose and Intent.

1. The purpose of this Act is to allow property owners or contractors to engage Third Party Professionals for building plans review and inspection services as an alternative to using local building officials, streamlining the building inspection and permit approval process. By authorizing the use of Third Party Professionals, this Act aims to reduce delays caused by overburdened local officials, expedite construction projects, and facilitate the development of affordable housing.

Section 2

Definitions

1. For purposes of this section:
2. “Third-Party Professionals” means Licensed individuals or entities, including architects, engineers, building code administrators, or certified inspectors, authorized to perform building inspections and review development plans in compliance with state or local law.
3. “Regulatory Authority” means the government body, agency, or local building department responsible for enforcing building codes, issuing permits, conducting inspections, and overseeing compliance with applicable construction standards within the jurisdiction. Regulatory Authority includes state or local building code commissions and local building officials who have statutory authority to issue stop-work orders, conduct audits, and manage building safety regulations.
4. “Local Building Officials” means Employees or agents of the Regulatory Authority who are officially designated to perform building inspections, approve development documents, and enforce local building regulations.
5. “Fee Owner” means the individual or entity holding full ownership rights to a parcel of land or a building, authorized to make decisions regarding development, construction, and property improvements, including contracting with Third-Party Professionals for building inspection and plan review services.
6. “Development Documents” means plans, drawings, specifications, and other documents submitted by the Fee Owner or contractor to the Regulatory Authority for approval, detailing the design, structure, and code compliance measures for the construction or renovation project.
7. “Building Inspections” mean the examination and verification of construction work at various stages of development, conducted to ensure compliance with applicable building codes, zoning requirements, and safety standards. Building Inspections may include, but are not limited to, foundation, framing, electrical, plumbing, and final inspections performed by either Local Building Officials or Third-Party Professionals.
8. “Permit Application” means a formal request submitted by a Fee Owner or contractor to the Regulatory Authority to begin construction, which must include relevant Development Documents and, if applicable, the designation of a Third-Party Professional for inspection and plan review services.
9. “Certificate of Occupancy” means an official document issued by the Regulatory Authority upon satisfactory completion of all required Building Inspections and compliance with building codes, authorizing the building for occupancy and use.
10. “Professional Liability Insurance” means an insurance coverage maintained by Third- Party Professionals to cover claims arising from errors, omissions, or negligence in the performance of building inspections and plan reviews. This insurance ensures that Third- Party Professionals are financially liable for any deficiencies in the services they provide, unless waived by the Regulatory Authority.

Section 3

Allowance for Use of Independent Providers

1. This Act applies to all building and construction projects requiring residential permits, or commercial permits for residential uses, issued by the Regulatory Authority or local enforcement agencies in the state.
2. Notwithstanding any other law, a fee owner of the property, or the fee owner’s contractor with written authorization, may contract a Third-Party Professional to perform reviews of development plans or conduct building inspections in lieu of Local Building Officials. The fee owner or contractor is permitted to compensate the Third-Party Professional directly for these services.
3. A Third-Party Professional may conduct reviews or inspections only if they maintain professional liability insurance for all services provided, unless the Regulatory Authority waives this insurance requirement.
4. When a Third-Party Professional is engaged by a fee owner or contractor, the Regulatory Authority shall provide the Third-Party Professional, fee owner, or contractor equal access to all permitting and inspection documents and reports that would be made available to Regulatory Authority personnel.
5. A fee owner or the fee owner’s contractor shall not hold any ownership interest in the Third-Party Professional hired to conduct reviews or inspections.
6. The Third-Party Professional shall not provide legal counsel to the fee owner or the fee owner’s contractor.
7. The Third-Party Professional is prohibited from inspecting any buildings or structures they have designed, constructed, or directly participated in creating.
8. The Third-Party Professional shall not review or inspect any projects in which they have a financial interest or personal relationship, including familial or business ties.

Section 4

Licensure Requirements for Third- Party Professionals

1. A Third-Party Professional must hold a valid license under state law and may only conduct inspections and reviews for construction disciplines that fall within the scope of their professional licensure.
2. A Licensed Engineer must be registered under state or local law and qualified to perform inspections relevant to their specific engineering discipline, including structural, civil, mechanical, or electrical inspections.
3. A Licensed Architect must be registered under state or local law and qualified to conduct inspections related to the building’s design, structure, and compliance with applicable codes.
4. A Certified Inspector must hold certification from a nationally recognized organization, such as the International Code Council (ICC) or the National Fire Protection Association (NFPA).

Section 5

Responsibilities and Powers of the Regulatory Authority

1. The Regulatory Authority or local building officials shall be responsible for auditing the work performed by Third-Party Professionals to verify that proper inspections have been conducted. The Regulatory Authority may review reports, affidavits, and perform random audits of the inspections.
2. The Regulatory Authority retains the power to issue stop-work orders if a violation is identified that poses a significant threat to safety or compliance.
3. The Regulatory Authority may audit up to 25 percent of the inspections conducted by Third-Party Professionals. Any audit must be completed within two business days of receiving the inspection report from the Third-Party Professional.
4. Construction work shall not be delayed pending the completion of an audit by the
5. Regulatory Authority.
6. The Regulatory Authority may not adopt or enforce any laws, rules, procedures, policies, qualifications, or standards related to Independent Providers that are more restrictive than the provisions established under this Act.

Section 6

Permitting Process

1. The fee owner or contractor may submit a permit application to the local building department, including construction plans for the project. The application must specify whether a Third-Party Professional will be used for building inspections or plan reviews.
2. The permit application must include the credentials and certifications of the selected Third-Party Professional, verifying their licensure under applicable state or local statutes.
3. If a Third-Party Professional is chosen, the fee owner or contractor shall notify the local building department in writing before the commencement of construction. The Third-Party Professional must be a licensed architect, engineer, or building code administrator, as appropriate for the type of construction, building inspections, plan or permit reviews.
4. The Third-Party Professional shall be responsible for performing all plan reviews and code inspections required to meet local and state building regulations.
5. When a Third-Party Professional is engaged for inspections or plan reviews, the local jurisdiction must reduce the permit fee to reflect the savings from not performing those services. The local jurisdiction may only charge a reasonable administrative fee.

Section 7

Plan Review and Reporting

1. The Third-Party Professional shall conduct plan reviews to verify that the submitted construction plans comply with all relevant building codes.
2. Upon completion of the plan review, the Third-Party Professional shall submit the certified plans to the local building department, accompanied by an affidavit certifying compliance with approved construction plans and applicable building codes.
3. Following each inspection, the Third-Party Professional shall provide a signed inspection report to the Regulatory Authority or local building department, documenting the inspection results and certifying that the work conforms to the applicable codes.
4. Upon completion of the construction project, the Third-Party Professional must submit a final affidavit certifying that all inspections have been completed and that the entire project complies with state and local building regulations.

Section 8

Inspection and Examination Criteria

1. During construction, the Third-Party Professional shall conduct inspections at each critical stage of the construction process, including but not limited to foundation, framing, electrical, and plumbing, to verify compliance with applicable building codes. The inspections shall be performed in the same manner as those conducted by code officials from a Regulatory Authority.
2. Inspections may be conducted either in-person or through virtual means, depending on the scope of work and the location of the project.
3. Upon completing an inspection or plan review, the Third-Party Professional shall submit the inspection results or review findings to the local building department or Regulatory Authority no later than 15 business days following the inspection.
4. The Regulatory Authority shall have 10 business days from the receipt of the inspection results or plan review findings to either approve the submission or notify the Third-Party Professional of any deficiencies identified in the report.

Section 9

Review Timelines

1. The Regulatory Authority shall issue the permit or provide written notice outlining any deficiencies within 10 business days of receiving a completed application and all required supporting documents.
2. If the Regulatory Authority does not issue a written notice of deficiencies within 10 business days, the permit shall be deemed automatically approved.
3. Upon completion of the final inspections and submission of the final certification by the Third-Party Professional, the Regulatory Authority shall issue a Certificate of Occupancy (CO) or Certificate of Completion within 15 business days.
4. If the Regulatory Authority or Building Department fails to conduct the required inspections within 30 business days of receiving notice of project completion, the applicant shall be entitled to a refund of the permit fees.

Section 10

Appeals Process

1. An applicant, including the Third-Party Professional, fee owner, or contractor, may file an appeal in a court of competent jurisdiction if the Regulatory Authority or Building Department:
2. Incorrectly interprets ordinances or regulations;
3. Rejects a compliance certificate without valid cause;
4. Fails to reduce fees when a Third-Party Professional is utilized;
5. Wrongfully denied a permit or suspends a Third-Party Professional’s services.
6. The court may review the matter, determine compliance, and issue an order directing the Regulatory Authority to accept the submitted documents, approve inspections, or issue the necessary permits or certificates.
7. Appeals may also be filed with the governing body of the political subdivision within 15 business days of the decision by the Regulatory Authority. If the governing body does not render a decision within 60 business days, the submitted document or inspection shall be deemed automatically approved or waived.

Section 11

Severability

1. If any provision of this Act or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end, the provisions of this Act are severable. It is the intent of the legislature that this Act would have been enacted even if such invalid provision or application had not been included.

Section 12

Effective Date

1. This act is ordered to take immediate effect.