2005 SESSION

05-0743

08/09

SENATE BILL 198-FN

COMMITTEE: Public and Municipal Affairs

ANALYSIS

This bill establishes a board for the registration and regulation of home contractors. The attorney general has enforcement authority.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

05-0743

08/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Five

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Subparagraph; Consumer Protection and Antitrust Bureau; Duties. Amend RSA 21-M:9, II by inserting after subparagraph (u) the following new subparagraph:

(v) Enforcing the provisions of RSA 329-B, relative to home contractors.

2 New Chapter; Regulating Home Contractors. Amend RSA by inserting after chapter 329-A the following new chapter:

CHAPTER 329-B

HOME CONTRACTORS

329-B:1 Purpose. The purpose of this chapter is to provide consumer protection for the people of New Hampshire by registering and regulating home contractors.

329-B:2 Definitions. In this chapter:

I. “Actual loss” means the amounts payable for the cost of repair, replacement, completion, or performance under the terms of a residential contracting agreement with respect to which a claim is made.

II. “Apprentice” means any person who is engaged in learning and assisting in home construction or home improvement under an apprenticeship program acceptable to the board.

III. “Board” means the state board of registration for home contractors, established by RSA 329-B:3.

IV. “Claimant” means an owner and resident of a residential building, containing at least one but not more than 4 dwelling units, who has entered into a construction contract with a contractor to carry out construction work on such building, and who is making a claim against the contractor for failure of performance under the contract.

V. “Contract” means an agreement, written or oral, for the performance of certain residential contracting work, including all labor, goods, and services set forth under such agreement.

VI. “Employee” means any person employed by and under the direction and control of a contractor or subcontractor and who performs services for wages or salary.

VII. “Home contractor” means any person who owns or operates a contracting business who, personally or through others, undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid for residential contracting work.

VIII. “Owner” means any homeowner of a pre-existing building containing at least one but not more than 4 dwelling units, or a tenant thereof, who orders, contracts for, or purchases the services of a home contractor or subcontractor, and such owner’s primary business is not rental of tenant housing.

IX. “Person” means any individual, partnership, corporation, association, or other organization.

X. “Registrant” means any contractor or subcontractor duly registered under the provisions of this chapter.

XI. “Residential contracting” means the construction, reconstruction, alteration, renovation, repair, modernization, conversion, improvement, removal, demolition, or construction of an addition to any building containing at least one but not more than 4 dwelling units, which building or portion thereof is used or designed to be used as a residence or dwelling unit, or to structures which are adjacent to such residence or building.

XII. “Salesperson” means any person other than a supplier of material or a laborer, who solicits, offers, negotiates, executes, or otherwise endeavors to procure by any means whatsoever, directly or indirectly, a contract for residential contracting services from an owner on behalf of a contractor or subcontractor.

XIII. “Subcontractor” means any person other than a supplier of material or labor, who enters into a contract, written or verbal, with a contractor for the performance of any part of the contractor’s contract, or who enters into a contract with any other subcontractor for the performance of any part of the subcontractor’s contract, and who does not perform work other than as a subcontractor.

XIV. “Tenant” means a person who has entered into a lease or other contractual arrangement with the owner.

329-B:3 Board Established.

I. There shall be a state board of registration for home contractors consisting of 5 members: 2 contractors, one subcontractor, and 2 public members. Each member shall be appointed by the governor, with the approval of the council, to a term of 5 years. No member of the board shall be appointed to more than 2 consecutive terms.

II. Any public member of the board shall be a person who is not, and never was, a contractor, subcontractor, or the spouse of any such person, and who does not have, and never has had, a material financial interest in either the provision of residential contracting services or an activity directly related to residential contracting, including the representation of the board or trade for a fee at any time during the 5 years preceding appointment.

329-B:4 Compensation and Expenses. Members of the board shall serve without compensation, but shall be reimbursed for all actual traveling, incidentals, and clerical expenses necessarily incurred in carrying out the provisions of this chapter.

329-B:5 Organization and Meetings. The board shall hold at least 4 regular meetings each year, and special meetings may be held at such times as the business of the board may require. Notice of all meetings shall be given in such manner as the rules of the board may provide. The board shall annually elect a chairperson and a vice-chairperson from among its members. A quorum of the board shall consist of not less than 3 members, at least one of whom shall be a public member.

329-B:6 Rulemaking Authority. The board shall adopt rules, pursuant to RSA 541-A, relative to:

I. The design and content of all forms and applications required under this chapter.

II. The application procedure to register under this chapter.

III. The qualifications of registration applicants in addition to those requirements established under this chapter.

IV. Registration approval, denial, renewal, suspension, or revocation.

V. Ethical and professional standards required to be met by each registrant under this chapter, and how disciplinary actions by the board shall be implemented for violations of these standards.

VI. Fees authorized under this chapter.

VII. Procedures for the conduct of hearings consistent with the requirements of due process.

VIII. Matters related to the proper administration of this chapter.

329-B:7 Fees. The board shall establish fees for registration of applicants and for renewal of registration to provide services under this chapter, and for transcribing and transferring records and other services. The fees established by the board shall be sufficient to produce estimated revenues equal to 125 percent of the direct operating expenses of the board for the previous fiscal year.

329-B:8 Receipts and Disbursements. The secretary of the board shall receive and account at least monthly for all moneys derived under the provisions of this chapter, and shall pay the same to the state treasurer. The board may employ such clerical or other assistants as are necessary for the proper performance of its work, and may make expenditures from this fund for any purpose which, in the opinion of the board, is reasonably necessary for the proper performance of its duties under this chapter. Under no circumstances shall the total amount of payments made exceed the amount of fees collected. Any balance in this account shall lapse at the end of each fiscal year.

329-B:9 Registration of Contractors Required; Registration by Corporation or Partnership.

I. The board shall register and regulate home contractors and subcontractors. When issued, a registration shall be valid throughout the state, and the registrant shall be entitled to perform the work of a home contractor or subcontractor, as the case may be, anywhere within the state without any payment or additional fee. Each applicant for registration shall present to the secretary of the board on a form furnished by the board a written application for registration, containing such information as the board may require, accompanied by the required fee.

II. No contractor or subcontractor shall undertake, offer to undertake, or agree to perform residential contracting services unless registered therefor with the approval of the board.

III. It shall be the duty of the board to issue and deliver a certificate of registration to all applicants who have been approved for registration.

IV. In the case of registration by a corporation or partnership, an individual shall be designated to be responsible for the corporation’s or partnership’s work. The corporation or partnership and its designee shall be jointly and severally liable for the payment of the registration fee and for violations of any provisions of this chapter, including actions by the registrant’s employees, subcontractors, or salespersons.

329-B:10 Application for Registration; Required Information. In order to be registered as a contractor or subcontractor, an applicant shall make a written application under oath to the board on a form provided by the board. Said application shall set forth information that includes, but shall not be limited to:

I. The applicant’s name, home address, and business address exclusive of post office box addresses.

II. The names and addresses of all owners, partners or trustees of an applicant including, in case of corporate entities, the names and addresses of all officers, directors and principal shareholders, and evidence of registration with the secretary of state under RSA 293-A, 305-A, or 349, as appropriate. If such corporate information is accurately reflected in the articles of organization or amendments thereto, or a current annual report of condition or other documents on file with the secretary of state or the Securities and Exchange Commission, a copy of the relevant sections of such filing shall satisfy the application requirements specified in this paragraph.

III. Whether the applicant has ever been previously registered in the state as a contractor or subcontractor pursuant to this chapter, under what other names he or she was previously registered, whether there have been previous judgments or arbitration awards against him or her, and whether the registration has ever been suspended or revoked.

329-B:11 Registration Applications to be Public Records; Display of Registration Number by Contractors.

I. The board shall keep on file, in convenient form and open to public inspection, all applications for registration and copies of registrations issued and the names of all contractors or subcontractors whose registration has been revoked, suspended, or surrendered.

II. Every written contract, building permit, and advertisement shall display the contractor’s or subcontractor’s certificate of registration number.

329-B:12 Changes of Name or Address; Procedure Upon Expiration of Certificate; Replacement Certificates.

I. Every registered contractor or subcontractor shall notify the board within 30 days of any change of trade name or address.

II. Upon the expiration, termination, or voluntary surrender of a registration, the registrant shall deliver the registration to the board which shall cancel the registration and endorse the date of expiration, termination, or surrender.

III. If a certificate of registration is lost, misplaced, or destroyed, the registrant shall file an affidavit to that effect and the board, for a nominal fee, shall issue a replacement registration, clearly identified as such, both on the certificate of registration and in the records of the board.

329-B:13 Expiration and Renewal of Registration. Regardless of any outstanding registration to the contrary, all registrations issued by the board shall expire on the last day of the month of the registrant’s birth, but may be renewed during the following month, retroactive to the first day of the month. The fee for renewal of all registrations issued under this chapter shall be established by the board. Upon failure to pay the renewal fee within the required period, a registrant may renew the registration by submitting the required fee plus $10 before the last day of the second month following the month of the registrant’s birth. Any application received thereafter shall be rejected, unless accompanied by a new written application pursuant to RSA 329-B:9 and RSA 329-B:10.

329-B:14 Grounds for Denying Registration or Renewal; Reconsideration. No application for registration or renewal conforming to the requirements of this chapter may be denied except for a finding by the board that the applicant has done one or more of the following acts which are grounds for denial:

I. Made material omissions or misrepresentations of fact on application for registration or renewal under this chapter.

II. Failed to pay the registration fee required by this chapter.

III. Failed consistently to perform contracts or has performed the contracts in an unprofessional manner, or has failed to complete the contracts with no good cause, or has engaged in fraud or bad faith with respect to the contracts.

IV. Failed to meet or has violated any of the requirements for a registered contractor or subcontractor set forth in this chapter or has performed or is attempting to perform any act prohibited by this chapter.

V. Has engaged in an unfair or deceptive act or practice in violation of RSA 358-A. If a registration is refused, the applicant may, within 10 days from the date notice of refusal is mailed, make a request for reconsideration. The board shall render its decision within a reasonable period of time, but not more than 60 days following the request.

329-B:15 Suspension or Revocation of Registration; Grounds. Prior to its expiration date, a certificate of registration may be suspended or revoked by the board in accordance with the procedures and on the grounds set forth in section RSA 329-B:14, or may be terminated by voluntary surrender by the registrant. Further grounds for suspension or revocation include any violation by a registrant or any agent or employee of the registrant of any of the provisions of this chapter.

329-B:16 Prohibited Acts by Contractors and Subcontractors.

I. The following acts are prohibited by contractors or subcontractors:

(a) Operating without a certificate of registration issued by the board.

(b) Abandoning or failing to perform, without justification, any contract or project engaged in or undertaken by a registered contractor or subcontractor, or deviating from or disregarding plans or specifications in any material respect without the consent of the owner.

(c) Failing to credit to the owner any payment the owner has made to the contractor or the contractor’s salesperson in connection with a residential contracting transaction.

(d) Making any material misrepresentation in the procurement of a contract or making any false promise of a character likely to influence, persuade, or induce the procurement of a contract.

(e) Contracting beyond the scope of the registration as a contractor or subcontractor.

(f) Acting directly, regardless of the receipt or the expectation of receipt of compensation or gain from the mortgage lender, in connection with a residential contracting transaction by preparing, offering or negotiating or attempting to or agreeing to prepare, arrange, offer, or negotiate a mortgage loan on behalf of a mortgage lender.

(g) Acting as a mortgage broker or agent for any mortgage lender.

(h) Publishing, directly or indirectly, any advertisement relating to home contracting which does not contain the contractor’s or subcontractor’s certificate of registration number or which does contain an assertion, representation, or statement of fact which is false, deceptive, or misleading.

(i) Advertising in any manner that a registrant is registered under this chapter unless the advertisement includes an accurate reference to the contractor’s or subcontractor’s certificate of registration.

(j) Violating the building laws of the state or of any its political subdivisions.

(k) Misrepresenting a material fact by an applicant in obtaining a certificate of registration.

(l) Failing to notify the board of any change of trade name or address as required by RSA 329-B:12, I.

(m) Conducting a residential contracting business in any name other than the one in which the contractor or subcontractor is registered.

(n) Failing to pay for materials or services rendered in connection with operating as a contractor or subcontractor where sufficient funds are received as payment for the particular construction work, project, or operation for which the services or materials were rendered or purchased.

(o) Failing to comply with any order, demand, or requirement lawfully made by the board or attorney general under and within the authority of this chapter.

(p) Demanding or receiving payment in violation of RSA 329-B:19, I(f).

(q) Violating any other provision of this chapter.

II. Violations of this section may subject the violator to the administrative sanctions of RSA 329-B:20 and to the penalties described in RSA 329-B:22.

III. Violations of any of the provisions of this chapter shall constitute an unfair or deceptive act or practice within the meaning of RSA 358-A:2.

329-B:17 Persons Exempt From Registration Requirement. The following persons are not required to be registered under this chapter:

I. The state or any of its political subdivisions.

II. Any school, public or private, offering as part of a vocational education program courses and training in any aspects of home contracting.

III. Electricians, plumbers, architects or any other persons who are required by New Hampshire law to attain standards of competency or experience as a prerequisite to licensure for and engaging in such profession and who are acting exclusively within the scope of the profession for which they are currently licensed pursuant to such other law, construction supervisors excepted.

IV. Persons dealing in the sale of goods or materials who neither arrange to perform nor perform directly or indirectly any work or labor in connection with the installation of or application of the goods or materials.

V. Persons building their own homes or personally doing the renovations, and any individual who performs labor or services for a contractor or subcontractor, for wages or salary, and who does not act in the capacity of a contractor.

VI. Any contractor or subcontractor who works on one undertaking or project by one or more contracts where the aggregate contract price is less than $500, provided, however, that the contract is not in an amount of less than $500 for the purpose of evading this chapter.

VII. Any person who engages in the business of a contractor or subcontractor on other than a full-time basis, and who has earned in gross revenues, as a contractor or subcontractor, less than $5,000 in the previous 12-month period.

VIII. Any person acting as a contractor or subcontractor who was enrolled as a full-time student in a secondary school or college with degree granting authority from the government of the state in which the school is located for the immediately preceding academic semester, and is also enrolled as a full-time student for the next academic semester in the same or a similar degree granting secondary school or college, provided that at least 2/3 of the number of the employees of the contractor or subcontractor are similarly enrolled in secondary schools or colleges and that the contractor or subcontractor does not reasonably expect to earn or does not in fact earn, in gross revenues, more than $5,000.

IX. Persons who install central heating, air-conditioning systems, energy-conservation devices, or provide conservation services conducted by or on behalf of a public utility.

329-B:18 Inspectors.

I. The board shall have the authority to appoint such inspectors as are necessary to ensure compliance with home construction and home improvement practices consistent with the public safety and welfare.

II. Upon written request of the board, a building inspector appointed by a local municipality pursuant to RSA 673:1, III, shall have the authority to perform inspections as an agent of the board to ensure compliance with home construction and home improvement practices consistent with this chapter.

III. An inspector appointed under this section shall have the authority to enter any premises, with the owner’s consent, in which a home construction project subject to regulation under this chapter is being conducted for the purpose of making such inspection as is necessary to carry out the inspector’s duties under this section. If the residence to be inspected is occupied by a tenant, the owner shall give notice to the tenant as required under the terms of the owner’s lease before granting consent for an inspection under this section.

329-B:19 Residential Contracting Agreements; Owner to be Given Copy of Agreement; Alternative Dispute Resolution Clauses Permitted.

I. Every agreement to perform residential contracting services in an amount in excess of $1,000 shall be in writing and shall include the following documents and information:

(a) The complete agreement between the owner and the contractor and a clear description of any other documents which are or shall be incorporated into the agreement.

(b) The full names, dates of birth, physical addresses, and registration numbers of the contractor and any subcontractor or subcontractors, the name of the salesperson, if any, who solicited or negotiated the contract, and the date when the contract was executed by the parties.

(c) The anticipated date on which the work under the contract is scheduled to begin and the anticipated date on which the work is scheduled to be substantially completed.

(d) A detailed description of the work to be done and the materials to be used in the performance of the contract.

(e) The total amount agreed to be paid for the work to be performed under the contract.

(f) A time schedule of payments to be made under the contract and the amount of each payment stated in dollars, including all finance charges. Any deposit required under the contract to be paid in advance of the commencement of work under the contract shall not exceed the greater of 1/3 of the total contract price or the total of the actual cost of any materials or equipment of a special order or custom-made nature, which must be ordered in advance of the commencement of work, in order to assure that the project will proceed on schedule. No final payment shall be demanded until the contract is completed to the satisfaction of the parties.

(g) The signatures of all parties shall be affixed to the contract.

(h) There shall be a clear and conspicuous notice appearing in the contract:

(1) That all contractors and subcontractors must be registered by the board and that any inquiries about a contractor or subcontractor relating to a registration should be directed to the board.

(2) Of the registration number of the contractor or subcontractor.

(3) Of an owner’s 3 day cancellation rights.

(4) Of all warranties and the owner’s rights under the provisions of this chapter.

(5) In 10 point bold type or larger, directly above the space provided for the signature, “Do not sign this contract if there are any blank spaces.”

(6) Of any lien on or security interest on the residence as a consequence of the contract.

(i) An enumeration of such other matters upon which the owner and the contractor may lawfully agree, provided, however, that no such agreement may waive any rights conveyed to the owner under the provisions of this chapter.

(j) Any other provision otherwise required by the applicable laws of the state.

II. No contract shall contain an acceleration clause under which any part or all of the balance not yet due may be declared due and payable because the holder deems himself or herself to be insecure. However, where the contractor deems himself or herself to be insecure he or she may require as a prerequisite to continuing the work that the balance of funds due under the contract, which are in the possession of the owner, shall be placed in a joint escrow account requiring the signature of the contractor and the owner for withdrawal.

III. At the time of signing, the owner shall be furnished with a copy of the contract signed by both the contractor and the owner. No work shall begin prior to the signing of the contract and transmittal to the owner of a copy of such contract.

IV. Any contract entered into between a contractor and owner shall require the contractor to inform the owner of all necessary permits.

V. Any contract entered into between a contractor and owner may provide that the contractor may initiate alternative dispute resolution through any private arbitration services approved by the board, under paragraphs I-V, inclusive, provided that the alternative dispute resolution provision is clearly and conspicuously disclosed in the contract, in language designated by the board, and that each party separately signs and dates the provision, thereby assenting to the procedure. Any contract that includes an arbitration provision shall also authorize the owner to opt out of the arbitration provision and to seek a remedy in a court of competent jurisdiction.

VI. Contracts which fail to comply with the requirements of this section shall not be invalid solely because of noncompliance.

329-B:20 Enforcement of Chapter; Court Action; Arbitration.

I. Any party may bring an action to enforce any provision of this chapter, or to seek damages subject to the provisions of this chapter, in the superior court, the district court, or the small claims court, subject to each court’s jurisdictional requirements.

II. In the alternative, any party may request that a dispute resulting from and relating to residential contracting be decided under the terms of a private arbitration program approved by the board.

329-B:21 Private Arbitration Services Program; Two-Year Limitations Period; Appeals.

I. There shall be a private arbitration services program approved by the board, to consider disputes between owners and registered contractors and subcontractors, concerning or arising from contracts for residential contracting services. No claim may be filed for arbitration after 2 years from the date of the contract. Such arbitration shall be performed by private arbitration services approved by the board, and shall operate in accordance with the rules adopted by the board. Either party may elect to pursue an action in small claims court if the amount of the dispute is within small claims court jurisdiction.

II. All registered contractors and subcontractors who enter into contracts for residential contracting impliedly consent to the provisions contained in this section.

III. A contractor or subcontractor who is required to submit to arbitration as a result of an owner’s application for arbitration may file a counterclaim, based on or arising from the same contract, in that arbitration.

IV. All findings of fact issuing from arbitration shall be taken as prima facie evidence in any subsequent appeal brought by either party arising from the matter considered in the arbitration.

V. A contractor, subcontractor, or owner may also appeal the decision of an arbitrator for a trial in a New Hampshire court of competent jurisdiction and venue. Such appeal shall be filed within 21 days from the issuance of such findings and shall stay any work or payment to the owner, contractor, or subcontractor.

329-B:22 Penalties for Violation of Chapter.

I. If the board determines that any registrant is liable for a violation of any of the provisions of this chapter, the board may suspend the registrant’s certificate of registration for such period of time as shall be determined by the board, revoke the registrant’s certificate of registration, or reprimand the registrant.

II. The board may assess an administrative penalty not to exceed $2,000, payable within 30 days of its order, for each violation of any provision of this chapter committed by contractors or subcontractors who are registered or who are required to be registered under this chapter.

III. In determining whether to impose an administrative penalty, the board shall consider the seriousness of the violation, the deleterious effect of the violation on the complainant, any good faith on the part of the contractor or subcontractor, and the contractor’s or subcontractor’s history of previous violations.

329-B:23 Penalty for Knowing Failure to Register or Other Willful Violation.

I. Any contractor or subcontractor who knowingly operates without obtaining a certificate of registration as required by this chapter and who is not otherwise exempt from the registration requirement or any contractor or subcontractor who continues to operate after revocation of or during suspension of, or who fails to renew his certificate of registration, shall be guilty of a misdemeanor.

II. Any person who knowingly violates any of the provisions of this chapter, with respect to which a greater penalty is not otherwise provided by the provisions of this chapter or by any other law shall be guilty of a misdemeanor.

III. Such penalties shall be in addition to any administrative penalty otherwise applicable thereto and may be sought in an action brought by the attorney general pursuant to RSA 21-M:9, II(u) and RSA 358-A.

329-B:24 Actions the Board May Take to Prevent Harm to Citizens.

I. If the board concludes that the continuing conduct of any person alleged to be in violation of this chapter may result in substantial or irreparable harm to any citizen of the state, it may seek:

(a) A permanent or temporary injunction with respect to the conduct from the superior court of any county in which the alleged violation is occurring, or in which the violator has its principal place of business; or

(b) Restitution or an order requiring satisfactory completion of the contractor’s contract.

II. The board shall not be required to file a bond or to show a lack of an adequate remedy at law when seeking an injunction under this section against any person, association, partnership, or corporation not registered under this chapter.

329-B:25 Chapter Not to Lessen Individual Responsibility. This chapter shall not be construed to relieve or lessen the responsibility of any person registered under this chapter, nor shall the state be deemed to have assumed any such liability by reason of the issuance of registration.

3 Initial Appointments.

I. The initial appointments to the board of registration for home contractors under RSA 329-B:3 as inserted by section 1 of this act shall be staggered as follows:

(a) One contractor, a one-year term.

(b) The subcontractor, a 2-year term.

(c) One public member, a 3-year term.

(d) One contractor, a 4-year term.

(e) One public member, a 5-year term.

II. Except for the appointments made under subparagraphs I(d) and (e), appointments under paragraph I shall not be construed as a term for the purposes of the 2-consecutive-term restriction under RSA 329-B:3, I.

4 Effective Date. This act shall take effect January 1, 2006.

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SB 198-FN - FISCAL NOTE

FISCAL IMPACT:

METHODOLOGY:

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• SB198 at GenCourtMobile

Bill Text Revisions

SB198 Revision: 9252 Date: Jan. 21, 2010, midnight

Docket

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