SB243 (2007) Detail

Relative to regulating home contractors.


SB 243-FN – AS AMENDED BY THE SENATE

03/22/07 0541s

2007 SESSION

07-0253

10/09

SENATE BILL 243-FN

AN ACT relative to regulating home contractors.

SPONSORS: Sen. D'Allesandro, Dist 20; Sen. Foster, Dist 13; Sen. Fuller Clark, Dist 24; Rep. Dumaine, Rock 3

COMMITTEE: Executive Departments and Administration

AMENDED ANALYSIS

This bill establishes a board for the registration of home contractors within the joint board of licensure and certification. The attorney general has additional enforcement authority under the consumer protection act.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

03/22/07 0541s

07-0253

10/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seven

AN ACT relative to regulating home contractors.

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

1 New Subdivision; Regulating Home Contractors. Amend RSA 310-A by inserting after section 160 the following new subdivision:

Home Contractors

310-A:161 Purpose. The purpose of this subdivision is to provide consumer protection for the people of New Hampshire by registering home contractors.

310-A:162 Definitions. In this subdivision:

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.

III. “Board” means the state board of registration for home contractors, established by RSA 310-A:163.

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 home contractor required to be registered under RSA 310-A:169 and who performs services.

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 duly registered under the provisions of this subdivision.

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. “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 directly for an owner or tenant.

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

310-A:163 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.

310-A:164 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 subdivision.

310-A:165 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.

310-A:166 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 subdivision.

II. The application procedure to register under this subdivision.

III. The qualifications of registration applicants under this subdivision.

IV. Registration approval, denial, renewal, suspension, or revocation as established in this subdivision.

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

VI. Fees authorized under this subdivision.

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

VIII. Procedures for continuing education requirements and the approval of administrators.

IX. Matters for the proper administration of this subdivision.

310-A:167 Fees. The board shall establish fees for registration of applicants and for renewal of registration to provide services under this subdivision, 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.

310-A:168 Receipts and Disbursements. The secretary of the board shall receive and account at least monthly for all moneys derived under the provisions of this subdivision, 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 subdivision. 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.

310-A:169 Registration of Contractors Required; Registration by Corporation or Partnership.

I. The board shall register home contractors. When issued, a registration shall be valid throughout the state, and the registrant shall be entitled to perform the work of a home contractor 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 relevant information as the board may require, accompanied by the required fee.

II. No contractor 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 applied for and have been approved for registration pursuant to this subdivision.

310-A:170 Application for Registration; Required Information. In order to be registered as a contractor, 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 and physical 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 and directors, 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 or licensed in this state under this subdivision, or in another jurisdiction as a contractor, under what other business and trade names he or she was previously registered, and whether any of the registrations have ever been suspended or revoked.

310-A:171 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 whose registration has been revoked, suspended, or surrendered.

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

310-A:172 Changes of Name or Address; Procedure Upon Expiration of Certificate; Replacement Certificates.

I. Every registered contractor 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.

310-A:173 Expiration and Renewal of Registration. Regardless of any outstanding registration to the contrary, all registrations issued by the board shall expire biennially 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 subdivision 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 310-A:169 and RSA 310-A:170.

310-A:174 Mandatory Continuing Education Requirements.

I. Effective January 1, 2010, annual applications for renewal submitted to the board pursuant to RSA 310-A:173 shall include a certification from the registrant that mandatory continuing education coursework has been completed. To be eligible for renewal, the registrant shall have completed a minimum of 8 hours of continuing education coursework during the prior registration period.

II. Continuing education coursework shall be administrated by persons approved as administrators by the board, but shall include the Home Builders and Remodelers Association of New Hampshire, an affiliate of the National Association of Home Builders, through its Certified New Hampshire Builder Program. Approved administrators may charge registrants course and administrative fees as may be approved by the board.

III. Upon request of the board, approved administrators shall conduct an audit of a registrant’s coursework for the purpose of determining minimum compliance with the educational requirements of this section. A registrant shall be considered in good standing, provided a minimum of 8 hours of continuing education coursework have been completed during the preceding registration period.

IV. Registrants holding and maintaining a current designation from the National Association of Home Builders as Certified Graduate Builder, Certified Graduate Remodeler, Certified Graduate Associate, or Certified Graduate Master Builder, or its equivalent, shall be exempt from the educational requirements of this section.

310-A:175 Grounds for Denying Registration or Renewal; Reconsideration.

I. No application for registration or renewal conforming to the requirements of this subdivision 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:

(a) Made material omissions or misrepresentations of fact on application for registration or renewal under this subdivision.

(b) Failed to pay the registration fee required by this subdivision.

(c) Has engaged in fraud, bad faith, or unfair or deceptive acts or practices in violation of RSA 358-A in the performance of residential construction services.

(d) Failed to meet or has violated any of the requirements for a registered contractor set forth in this subdivision or has performed or is attempting to perform any act prohibited by this subdivision.

II. 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.

310-A:176 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 RSA 310-A:175, 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 subdivision.

310-A:177 Prohibited Acts by Contractors.

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 deviating from or disregarding plans or specifications in any substantial respect without justification or the consent of the owner.

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

(d) Making any material misrepresentation or omission 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.

(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 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 subdivision unless the advertisement includes an accurate reference to the contractor’s certificate of registration.

(j) Violating the building laws of the state or of any of its political subdivisions after receiving notice of a violation and having a reasonable opportunity to cure the violation.

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

(l) Failing to reasonably notify the board of any change of trade name or address as required by RSA 310-A:172, 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 within a reasonable time for materials or services properly delivered or rendered in connection with operating as a contractor 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 subdivision.

(p) Demanding or receiving payment in violation of RSA 310-A:179, I(f).

(q) Violating any other provision of this subdivision.

II. Violations of this section may subject the violator to administrative sanctions and penalties described in RSA 310-A:182.

III. Violations of any of the provisions of this section shall constitute an unfair or deceptive act or practice within the meaning of RSA 358-A:2 and subject the violator to the penalties of RSA 358-A.

310-A:178 Persons Exempt From Registration Requirement. The following persons are not required to be registered under this subdivision:

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.

VI. Subcontractors and employees who perform labor or services for a contractor registered under this subdivision and who does not act in the capacity of a contractor.

VII. Any contractor who works on one undertaking or project by one or more contracts where the aggregate contract price is less than $1,500, provided, however, that the contract is not in an amount of less than $1,500 for the purpose of evading this subdivision.

VIII. Any person who engages in the business of a contractor on other than a full-time basis, and who has earned in gross revenues, as a contractor, less than $10,000 in the previous 12-month period.

IX. Any person acting as a contractor 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 are similarly enrolled in secondary schools or colleges and that the contractor does not reasonably expect to earn or does not in fact earn, in gross revenues, more than $5,000.

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

310-A:179 Residential Contracting Agreements; Owner to be Given Copy of Agreement; Alternative Dispute Resolution Clauses Permitted.

I. Every agreement to perform residential contracting services, between a contractor and an owner, that requires an initial down payment or deposit or involves a total contract price in excess of $5,000 shall require a written agreement and shall include the following minimum information:

(a) The full name, physical business address, and registration number of the contractor who solicited or negotiated the contract, and the date when the contract was executed by the parties.

(b) 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.

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

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

(e) Where applicable, 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 substantially completed.

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

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

(1) That all contractors must comply with this subdivision and that any inquiries about a contractor relating to a registration should be directed to the board.

(2) Of the registration number of the contractor.

(3) Of an owner’s 3 day right of rescission under RSA 361-B:2, when applicable.

(4) Of any warranties offered and the owner’s rights under the provisions of this subdivision.

(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 placed on or security interest pledged on the residence as a consequence of the contract.

(7) A statement describing any liability insurance maintained by the contractor.

(8) A statement to homeowners pursuant to RSA 359-G:7, when applicable.

(h) 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 subdivision.

(i) 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 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 mediation or arbitration services approved by the board, provided that the alternative dispute resolution provision is clearly and conspicuously disclosed in the contract. Any contract that includes a mediation arbitration provision shall also authorize the parties to opt out of the mediation or 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.

310-A:180 Enforcement of Subdivision; Court Action; Mediation or Arbitration.

I. Any party may bring an action to enforce any provision of this subdivision, or to seek damages subject to the provisions of this subdivision, 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 mediation or arbitration program approved by the board.

310-A:181 Mediation and Arbitration Services Program; Three-Year Limitations Period; Appeals.

I. There shall be a mediation and arbitration services program approved by the board, to consider disputes between owners and registered contractors, concerning or arising from contracts for residential contracting services. No claim may be filed for mediation or arbitration after 3 years from the date of the contract.

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

III. A contractor 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.

310-A:182 Penalties.

I. If the board determines that any registrant is liable for a violation of any of the provisions of this subdivision, the board may suspend the registrant’s certificate of registration for such period of time as shall be determined by the board not to exceed 5 years, 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 subdivision committed by contractors who are registered or who are required to be registered under this subdivision.

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, and the contractor’s history of previous violations.

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

V. Such penalties may be sought in an action brought by the attorney general, county attorney, or police department, pursuant to RSA 358-A, and shall be in addition to any administrative penalty otherwise applicable.

310-A:183 Subdivision Not to Lessen Individual Responsibility. This subdivision shall not be construed to relieve or lessen the responsibility of any person registered under this subdivision, nor shall the state be deemed to have assumed any such liability by reason of the issuance of registration.

2 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 310-A:161 through RSA 310-A:183, relative to home contractors.

3 Reference to Joint Board. Amend RSA 5:13 to read as follows:

5:13 Commissions and Boards Functioning Within Department. The ballot law commission, the boxing and wrestling commission, the board of accountancy and the joint board of [engineers, architects, land surveyors, and natural scientists] licensure, certification, and registration shall each function within the department of state as a separate organizational entity and with all the powers and duties as heretofore provided, except as otherwise provided by law.

4 Chapter Heading; Joint Board. The chapter heading preceding RSA 310-A is repealed and reenacted to read as follows:

JOINT BOARD OF LICENSURE, CERTIFICATION, AND REGISTRATION

5 Joint Board Established. Amend RSA 310-A:1 to read as follows:

310-A:1 Joint Board Established. There shall be a joint board of licensure, certification, and registration for professional engineers, architects, land surveyors, foresters, professional geologists, natural scientists, [and] landscape architects, and home contractors consisting of each of the members of the board of professional engineers, board of architects, state board of licensure for land surveyors, foresters’ board, board of professional geologists, the board of natural scientists, [and] the board of landscape architects, and the board of registration for home contractors. The joint board shall meet at least quarterly to carry out its duties established under this chapter.

6 Repeal. RSA 310-A:97, relative to the joint board chapter title reference, is repealed.

7 Effective Date. This act shall take effect July 1, 2007.

LBAO

07-0253

Amended 04/04/07

SB 243 FISCAL NOTE

AN ACT relative to regulating home contractors.

FISCAL IMPACT:

The Department of Justice and the Joint Board of Licensure and Certification have determined this bill, as amended by the Senate (Amendment #2007-0541s), may increase state general fund revenue by an indeterminable amount in fiscal year 2008 and each year thereafter. There will be no fiscal impact on county and local revenue or state, county and local expenditures.

METHODOLOGY:

The Department of Justice states this bill, as amended, requires home contractors to register with the state and establishes a board of registration for that purpose. Members of the board shall serve without compensation but shall be reimbursed for travel expenses, incidentals and clerical expenses. The registration fees of the board shall be 125% of the direct operating expenses of the board. Certain acts prohibited by this bill may be prosecuted by the Department, county attorney, or police department. As a result, the Department may experience an increase in the number of civil and criminal prosecutions. The Department assumes such prosecutions would be minimal and could be absorbed by the Department.

The Joint Board of Licensure and Certification states this bill establishes a board of home contractors. The Joint Board has no information regarding the number of potential applicants and is also unable to estimate the fee as it will be set by the board by administrative rule. The fee must be set at an amount to recover 125% of direct costs, which cannot be estimated. Due to the lack of information, the fiscal impact on revenue cannot be estimated. The Joint Board states there will be no cost to establish registration of home contractors as it currently has adequate staff and equipment to administer the new board. The Joint Board assumes any costs can be absorbed within the existing budget.