PRINTER'S NO. 636
No. 608 Session of 1999
INTRODUCED BY WOGAN, McCALL, KENNEY, BARRAR, STABACK, READSHAW,
FICHTER, LAUGHLIN, WOJNAROSKI, RUBLEY, J. TAYLOR, HARHAI,
ROONEY, ORIE, MAITLAND, SNYDER, COY, MARSICO, MELIO, PESCI,
TRAVAGLIO, L. I. COHEN, WALKO, TRELLO, SURRA, COLAFELLA,
CIVERA, VAN HORNE, STEELMAN, DeLUCA, BARD, E. Z. TAYLOR, WILT
AND GANNON, FEBRUARY 17, 1999
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, FEBRUARY 17, 1999
AN ACT
1 Providing for the regulation of home improvement contracts and
2 for registration of certain home improvement contractors;
3 prohibiting certain acts; prescribing requirements for home
4 improvement contracts; establishing the Home Improvement
5 Guaranty Fund; and providing for claims against the fund and
6 for the offense of home improvement fraud.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 TABLE OF CONTENTS
10 Section 1. Short title.
11 Section 2. Definitions.
12 Section 3. Registration of contractors and salespersons.
13 Section 4. Procedures for registration.
14 Section 5. Application fees.
15 Section 6. Certificate of registration and renewal.
16 Section 7. Certificate holder to exhibit and advertise
17 certificate.
18 Section 8. Prohibited acts.
1 Section 9. Home improvement fraud.
2 Section 10. Unfair Trade Practices and Consumer Protection Law.
3 Section 11. Regulations.
4 Section 12. Exemptions.
5 Section 13. Home improvement contracts.
6 Section 14. Home Improvement Guaranty Fund.
7 Section 15. Claims against fund.
8 Section 16. Procedure for submitting claims.
9 Section 17. Reimbursement of fund.
10 Section 18. Notice of suspension or revocation.
11 Section 19. Effective date.
12 Section 1. Short title.
13 This act shall be known and may be cited as the Home
14 Improvement Consumer Protection Act.
15 Section 2. Definitions.
16 The following words and phrases when used in this act shall
17 have the meanings given to them in this section unless the
18 context clearly indicates otherwise:
19 "Bureau." The Bureau of Consumer Protection within the
20 Office of Attorney General of the Commonwealth.
21 "Certificate." A certificate of registration issued pursuant
22 to this act.
23 "Contractor." Any person, including a subcontractor or
24 employee of another contractor, who owns and operates a home
25 improvement business or who undertakes, offers to undertake or
26 agrees to perform any home improvement. The term does not
27 include a person for whom the total cash value of all of that
28 person's home improvements is less than $3,000 during any period
29 of 12 consecutive months.
30 "Department." The Department of Labor and Industry of the
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1 Commonwealth.
2 "Fund." The Home Improvement Guaranty Fund established in
3 section 14.
4 "Home improvement." The term includes, but is not limited
5 to, the repair, replacement, remodeling, alteration, conversion,
6 modernization, improvement, rehabilitation or sandblasting of or
7 addition to any land or building, or that portion thereof, which
8 is used or designed to be used as a private residence or the
9 construction, replacement, installation or improvement of
10 driveways, swimming pools, porches, garages, roofs, siding,
11 insulation, solar energy systems, security systems, flooring,
12 patios, fences, doors and windows and waterproofing in
13 connection with such land or building or that portion thereof
14 which is used or designed to be used as a private residence in
15 which the total cash price for all work agreed upon between the
16 contractor and owner exceeds $200. The term does not include:
17 (1) The construction of a new home.
18 (2) The sale of goods or materials by a seller who
19 neither arranges to perform nor performs, directly or
20 indirectly, any work or labor in connection with the
21 installation or application of the goods or materials.
22 (3) The sale of services furnished for commercial or
23 business use or for resale, provided commercial or business
24 service takes place somewhere other than at a private
25 residence.
26 (4) The sale of appliances, such as stoves,
27 refrigerators, freezers, room air conditioners and others
28 which are designed for and are easily removable from the
29 premises without material alteration thereof.
30 (5) Any work performed without compensation by the owner
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1 on the owner's private residence or residential rental
2 property.
3 (6) Any work performed by a landscaper certified by the
4 Department of Agriculture under the act of December 16, 1992
5 (P.L.1228, No.162), known as the Plant Pest Act, except to
6 the extent that such work involves the construction,
7 replacement, installation or improvement of buildings,
8 driveways, swimming pools, porches, garages, roofs, siding,
9 insulation, solar energy systems, security systems, flooring,
10 patios, nondecorative fences, doors, lighting systems,
11 concrete walkways and windows.
12 "Home improvement contract." An agreement between a
13 contractor or salesperson and an owner for the performance of a
14 home improvement.
15 "Owner." A person who owns or resides in a private residence
16 and includes any agent of that person. An owner of a private
17 residence shall not be required to reside in such residence to
18 be deemed an owner under this act. A person who owns three or
19 more private residences shall not be deemed an owner except with
20 respect to the person's primary residence or the part of the
21 building which houses the primary residence of the owner.
22 "Person." An individual, partnership, limited partnership,
23 limited liability company, joint venture or corporation.
24 "Private residence." A single family dwelling, a multifamily
25 dwelling consisting of not more than three units or a single
26 unit located within any multifamily dwelling, including, but not
27 limited to, condominiums and co-op units.
28 "Salesperson." Any individual who negotiates or offers to
29 negotiate a home improvement contract with an owner or solicits
30 or otherwise endeavors to procure by any means whatsoever,
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1 directly or indirectly, a home improvement contract from an
2 owner.
3 Section 3. Registration of contractors and salespersons.
4 (a) General rule.--No person shall hold himself out as a
5 contractor or salesperson, nor shall that person perform any
6 home improvement, without first obtaining a certificate from the
7 department as provided in this act, except that a person
8 registered as a contractor shall not be required to obtain a
9 salesperson's certificate. An individual who has provided
10 personal information to the department when registering on
11 behalf of a business is not required to register as an
12 individual so long as the person performs home improvements
13 solely on behalf of the registered business.
14 (b) Salespersons.--
15 (1) No contractor shall employ or use the services of
16 any salesperson to procure business from an owner unless the
17 salesperson is registered under this act.
18 (2) No individual shall act as a home improvement
19 salesperson on behalf of an unregistered contractor.
20 (c) Liability.--No business entity registered pursuant to
21 this act shall be relieved of responsibility under this act for
22 the conduct and acts of its agents, employees, officers or
23 directors, nor shall any individual be relieved of
24 responsibility under this act by reason of his employment or
25 relationship with such business entity.
26 (d) Effects of unregistered status.--No unregistered
27 contractor or salesperson shall have standing to sue, countersue
28 or raise a defense of nonpayment in any dispute arising from a
29 home improvement. No unregistered contractor or salesperson may
30 file a mechanic's lien with respect to a home improvement.
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1 (e) Public access to registration information.--The
2 department shall maintain a toll-free telephone number from
3 which a caller can obtain information as to whether a contractor
4 or salesperson is registered with the department pursuant to
5 this act.
6 Section 4. Procedures for registration.
7 (a) Application.--A person desiring a certificate as a
8 contractor or salesperson shall apply to the department in
9 writing on a form provided by the department. The application
10 shall include the following information:
11 (1) For an individual applicant, the name, home address,
12 home telephone number and driver's license identification
13 number of the applicant, as well as the individual's business
14 name, address and telephone number if different.
15 (2) For a partnership applicant, the name, home address,
16 home telephone number and driver's license identification
17 number of each partner as well as the partnership name,
18 address and telephone number.
19 (3) For a corporation, limited liability company or
20 limited partnership applicant, the name, home address, home
21 telephone number and driver's license identification number
22 of each officer, each director or each individual holding
23 greater then a 10% stake in the business, as well as the
24 entity's business name, address and telephone number.
25 (4) For an out-of-State corporation, limited liability
26 or limited partnership, the name and address of the entity's
27 resident agent or registered office provider within this
28 Commonwealth.
29 (5) For a joint venture applicant, the name, address and
30 telephone number of the joint venture, as well as the name,
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1 address and telephone number of each party to the joint
2 venture. When the parties to a joint venture include business
3 entities, the information required from such entities
4 pursuant to paragraphs (2) and (3) shall also be provided.
5 (6) If the applicant is applying for a contractor
6 registration, a complete description of the nature of the
7 contracting business of the applicant.
8 (7) A statement whether:
9 (i) The individual making application, even if doing
10 so as part of a business entity application, has ever
11 been convicted of a criminal offense related to a home
12 improvement transaction, fraud, theft, a crime of
13 deception or a crime involving fraudulent business
14 practices, as well as a statement whether the applicant
15 has ever had a civil judgment entered against the
16 applicant or a business in which the applicant held an
17 interest that was related to a home improvement
18 transaction.
19 (ii) Whether the applicant's certificate or the
20 certificate of a business with which the individual
21 making application held an interest, has ever been
22 revoked or suspended pursuant to an order issued by a
23 court of competent jurisdiction.
24 (8) Whether within the last ten years the applicant has
25 ever been suspended or debarred from participating in any
26 Federal, State or local program through which funding or
27 other assistance is provided to consumers for home
28 improvements.
29 (9) If the department or the bureau determines that
30 additional information is necessary to effectuate the purpose
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1 of this act, the department or the bureau shall promulgate
2 regulations to require the submission of the additional
3 information.
4 (b) Grounds for refusal of certificate.--The department may
5 not provide a certificate of registration to any applicant:
6 (1) who has had a certificate of registration revoked
7 within five years preceding the application;
8 (2) whose officer or principal has had his registration
9 revoked within five years preceding the application; or
10 (3) who has been suspended or debarred within the last
11 ten years from participating in any Federal, State or local
12 program which provides funding to consumers for home
13 improvements.
14 (c) Contractual relationships.--In addition to the
15 information required in subsection (a), a contractor shall be
16 required to notify the department of any employment or other
17 contractual relationship between the contractor and any
18 salesperson. A contractor shall be required to submit such
19 information within 20 days of entering into an employment or
20 other contractual relationship with a salesperson. Information
21 under this subsection shall be updated by the contractor, on a
22 form provided by the department, on an as-needed basis
23 throughout the period of registration.
24 (d) Reporting of multiple registration or licensure.--Any
25 registered contractor or salesperson in this Commonwealth who is
26 registered or licensed as a home improvement contractor or
27 salesperson in any other state, or political subdivision
28 thereof, shall report this information to the department on the
29 initial registration and biennial registration application. Any
30 disciplinary action taken in such other jurisdiction shall be
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1 reported to the department on the initial registration
2 application or, if such action occurred subsequent to submission
3 of an initial application, on the biennial registration
4 application or within 90 days of final disposition, whichever is
5 sooner. Multiple registration or licensure shall be noted by the
6 department on the contractor's or salesperson's record, and such
7 state, or political subdivision thereof, shall be notified by
8 the department of any disciplinary actions taken against such
9 contractor or salesperson in this Commonwealth.
10 Section 5. Application fees.
11 (a) General rule.--Each application for a certificate for:
12 (1) A home improvement contractor or renewal of that
13 certificate shall be accompanied by a fee of $50.
14 (2) A salesperson or renewal of that certificate shall
15 be accompanied by a fee of $25.
16 (b) Dedicated use of fees.--Fifty percent of the application
17 fees collected shall be used by the department for the purposes
18 of fulfilling its obligations under this act relating to
19 registration. The balance of the application fees collected
20 shall be used by the bureau for the purposes of carrying out and
21 enforcing the provisions of this act. The department and the
22 bureau shall establish rules or regulations regarding payment,
23 collection and distribution of money payable to and received by
24 the department pursuant to this section.
25 (c) Multiple registrations.--Business entity applicants
26 shall be required to pay the application fee in this section and
27 the fund fee set forth in section 14 only as a business entity,
28 regardless of the number of individuals who provide registration
29 information pursuant to this act.
30 Section 6. Certificate of registration and renewal.
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1 (a) Duty of department.--Upon receipt of a completed
2 application and fee, the department shall issue and deliver to
3 the applicant a certificate to engage in the business for which
4 the application was made or refuse to issue the certificate
5 pursuant to this act or an order of a court of competent
6 jurisdiction within seven days.
7 (b) Nontransferability.--Certificates issued to home
8 improvement contractors or salespersons shall not be
9 transferable or assignable.
10 (c) Duration of certificate.--All certificates issued under
11 this act shall expire biennially. The expiration date shall be
12 placed upon the certificate. The fee for renewal of a
13 certificate shall be the same as the fee charged for an original
14 application under section 5. The information required pursuant
15 to section 4 shall also be required for renewal of
16 certification. The department shall provide a form for renewal
17 of registration.
18 (d) Grounds for denial and revocation of registration.--The
19 department shall deny registration to any contractor or
20 salesperson against whom a civil judgment has been entered in
21 favor of an owner that was related to a home improvement
22 transaction if the transaction occurred after the effective date
23 of this act and the judgment remains unsatisfied. The
24 department, with bureau approval, may permit a contractor or
25 salesperson to receive a new or renewed certificate after the
26 contractor has entered into a written agreement whereby the
27 contractor agrees to pay the judgment in full in the form of
28 periodic payments over a specific period of time. If the
29 contractor or salesperson does not pay in accordance with the
30 terms of the agreement, the department shall immediately revoke
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1 the contractor's or salesperson's certificate of registration.
2 Section 7. Certificate holder to exhibit and advertise
3 certificate.
4 Contractors and salespersons shall exhibit their certificates
5 upon request by any interested party, state in any advertisement
6 the fact that they are registered, and include their
7 registration numbers.
8 Section 8. Prohibited acts.
9 No person shall:
10 (1) Present or attempt to present, as his own, the
11 certificate of another person.
12 (2) Knowingly give false information when applying for a
13 certificate or a renewal of a certificate.
14 (3) Present himself falsely as or impersonate a
15 registered home improvement contractor or salesperson.
16 (4) Use or attempt to use a certificate which has
17 expired or which has been revoked.
18 (5) Offer to make or make any home improvement without
19 having a current certificate under this act.
20 (6) Represent in any manner that his registration
21 constitutes an endorsement of the quality of his workmanship
22 or of his competency by the department or the bureau.
23 (7) Fail to refund the amount paid for a home
24 improvement within ten days of a written request mailed or
25 delivered to the contractor's last known address, if:
26 (i) No substantial portion of the contracted work
27 has been performed at the time of the request.
28 (ii) More than 30 days has elapsed since the
29 starting date specified in the written contract or the
30 date of the contract if such contract does not specify a
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1 starting date.
2 (8) Accept a municipal certificate of occupancy or other
3 proof that performance of a home improvement contract is
4 complete or satisfactorily concluded with knowledge that the
5 document or proof is false and the performance is incomplete.
6 (9) Utter, offer or use a completion certificate or
7 other proof that a home improvement contract is complete or
8 satisfactorily concluded:
9 (i) to make or accept an assignment or negotiation
10 of the right to receive payment under a home improvement
11 contract; or
12 (ii) to get or grant credit or a loan on security of
13 the right to receive payment under a home improvement
14 contract;
15 when the person knows or has reason to know that such
16 document or proof is false.
17 (10) Abandon or fail to perform, without justification,
18 a home improvement contract. The term "without justification"
19 shall include, but not be limited to, nonpayment by the owner
20 as required under the contract or any other violation of the
21 contract by the owner.
22 (11) Deviate materially from the plans or specifications
23 without the express, verifiable consent of the owner.
24 (12) Prepare, arrange, accept or participate in
25 arranging a mortgage, promissory note or other evidence of
26 debt for performing or selling a home improvement with
27 knowledge that the evidence of debt states a greater monetary
28 obligation than the consideration, including a time sale
29 price, for a home improvement.
30 (13) Advertise or offer, by any means, to perform a home
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1 improvement if the person does not intend:
2 (i) to accept a home improvement contract;
3 (ii) to perform the home improvement; or
4 (iii) to charge for the home improvement at the
5 price advertised or offered.
6 (14) Violate a building law or ordinance of this
7 Commonwealth or political subdivision, a safety or labor law
8 of this Commonwealth or political subdivision, or the act of
9 June 2, 1915 (P.L.736, No.338), known as the Workers'
10 Compensation Act.
11 (15) Fail to pay all taxes associated with home
12 improvement sales or contracting.
13 (16) Perform or sell a home improvement with or through
14 another person who is required to hold a certificate pursuant
15 to this act but who does not hold the certificate.
16 (17) Act as a contractor or sell a home improvement
17 under a name other than that which is stated on the person's
18 certificate.
19 (18) Demand or receive any payment for a home
20 improvement before the home improvement contract is signed.
21 (19) Receive a deposit of more than one-third of the
22 home improvement contract price unless the total price of the
23 contract is less than $500.
24 (20) While acting as a salesperson, fail to account for
25 or remit to the contractor whom the salesperson represents a
26 payment received in connection with a home improvement.
27 (21) Fail to pay fees or assessments required by this
28 act.
29 (22) Be suspended or debarred from a Federal, State or
30 local program as described in section 4(a)(8).
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1 Section 9. Home improvement fraud.
2 (a) Offense defined.--A person commits the offense of home
3 improvement fraud if, with intent to defraud or injure anyone or
4 with knowledge that he is facilitating a fraud or injury to be
5 perpetrated by anyone, the actor:
6 (1) makes a false or misleading statement to induce,
7 encourage or solicit a person to enter into any written or
8 oral agreement for home improvement services or provision of
9 home improvement materials or to justify an increase in the
10 previously agreed upon price;
11 (2) receives any advance payment for performing home
12 improvement services or providing home improvement materials,
13 fails to perform or provide such services or materials within
14 the date specified in the agreement unless extended by
15 agreement with the consumer and fails to return the payment
16 received for such services or materials which were not
17 provided by that date;
18 (3) while soliciting a person to enter into an agreement
19 for home improvement services or materials, misrepresents or
20 conceals the contractor's or salesperson's real name, the
21 name of the contractor's business, the contractor's business
22 address or any other identifying information;
23 (4) damages a person's property with the intent to
24 induce, encourage or solicit that person to enter into a
25 written or oral agreement for performing home improvement
26 services or providing home improvement materials;
27 (5) misrepresents himself or another as an employee or
28 agent of the Federal, Commonwealth or municipal government,
29 any other governmental unit or any public utility, with the
30 intent to cause a person to enter into any agreement for
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1 performing home improvement services or providing home
2 improvement materials;
3 (6) alters a home improvement agreement, mortgage,
4 promissory note or other document incident to performing or
5 selling a home improvement without the consent of the
6 consumer; or
7 (7) directly or indirectly publishes a false or
8 deceptive advertisement about home improvement.
9 (b) Grading.--
10 (1) A violation of subsection (a)(1), (3), (4), (5), (6)
11 or (7) constitutes:
12 (i) a felony of the third degree if the amount
13 involved exceeds $2,000; or
14 (ii) a misdemeanor of the first degree if the amount
15 involved is $2,000 or less or if the amount involved
16 cannot be satisfactorily ascertained.
17 (2) A violation of subsection (a)(2) constitutes:
18 (i) a felony of the third degree if the amount of
19 the payment retained exceeds $2,000; or
20 (ii) a misdemeanor of the first degree if the amount
21 of the payment retained is $2,000 or less or if the
22 amount of the overcharge cannot be satisfactorily
23 ascertained.
24 (3) Amounts involved pursuant to one scheme or course of
25 conduct, whether involving one or more victims, may be
26 aggregated in determining the grade of the offense pursuant
27 to subsection (a).
28 (4) Where a person commits an offense under subsection
29 (a) and the victim is 60 years of age or older, the grading
30 of the offense shall be one grade higher than specified in
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1 paragraphs (1), (2) and (3). This paragraph shall not be
2 applicable to individuals whose sentence would be enhanced
3 pursuant to paragraph (5).
4 (5) Notwithstanding any other provisions of this
5 section, where a person commits a second or subsequent
6 offense described in subsection (a), the offense will
7 constitute a felony of the second degree regardless of the
8 amount of money involved. For this paragraph to be
9 applicable, the second or subsequent offense must have
10 occurred after the first conviction. Paragraph (4) shall not
11 be applicable to individuals whose sentences would be
12 enhanced pursuant to this paragraph.
13 (6) In addition to any other penalty imposed by this
14 act, the court may revoke or suspend the certificate of
15 registration issued under section 6. At the time of
16 sentencing, the court shall state the reasons for such
17 revocation or suspension.
18 (c) Jurisdiction.--
19 (1) The district attorneys of the several counties shall
20 have the authority to investigate and to institute criminal
21 proceedings for any violation of this section.
22 (2) In addition to the authority conferred upon the
23 Attorney General by the act of October 15, 1980 (P.L.950,
24 No.164), known as the Commonwealth Attorneys Act, the
25 Attorney General shall have the authority to investigate and
26 institute criminal proceedings for any violation of this
27 section or any series of such violations involving more than
28 one county of this Commonwealth or involving any county of
29 this Commonwealth and another state. No person charged with a
30 violation of this section by the Attorney General shall have
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1 standing to challenge the authority of the Attorney General
2 to investigate or prosecute the case, and, if any such
3 challenge is made, the challenge shall be dismissed and no
4 relief shall be available in the courts of this Commonwealth
5 to the person making the challenge.
6 Section 10. Unfair Trade Practices and Consumer Protection Law.
7 (a) General rule.--A violation of any of the provisions of
8 this act shall be deemed a violation of the act of December 17,
9 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and
10 Consumer Protection Law.
11 (b) Suspension or revocation of registration.--Upon the
12 request of the Attorney General or a district attorney, a court
13 may, for just cause and after notice and hearing, suspend or
14 revoke a certificate of registration for violations of this act.
15 The court may suspend or revoke a certificate of registration as
16 follows:
17 (1) For the first violation, a suspension of up to six
18 months.
19 (2) For the second violation, a suspension of up to one
20 year.
21 (3) For the third and all subsequent violations, the
22 court may impose any term of suspension or revoke a
23 certificate of registration.
24 Section 11. Regulations.
25 The department may adopt rules and regulations necessary to
26 carry out the provisions of this act relating to registration,
27 and the bureau may adopt rules and regulations necessary to
28 carry out and enforce the other provisions of this act.
29 Section 12. Exemptions.
30 Sections 3, 4, 5, 6, 7, 12, 13, 14, 15, 16 and 18 shall not
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1 apply to any of the following persons or organizations:
2 (1) The Commonwealth, municipalities and political
3 subdivisions within the Commonwealth or any department or
4 agency of the Commonwealth or such municipalities.
5 (2) The government of the United States or any of its
6 departments or agencies.
7 (3) Any school, public or private, offering as part of a
8 vocational education program, courses and training in any
9 aspect of home improvement.
10 Section 13. Home improvement contracts.
11 (a) Requirements.--No home improvement contract shall be
12 valid or enforceable against an owner unless it:
13 (1) Is in writing and legible.
14 (2) Is signed by the owner and the contractor, or a
15 salesperson on behalf of a contractor.
16 (3) Contains the entire agreement between the owner and
17 the contractor.
18 (4) Contains the date of the transaction.
19 (5) Contains the name, address and certificate number of
20 the contractor.
21 (6) Contains the approximate starting date and
22 completion date.
23 (7) Is entered into by a registered contractor or a
24 registered salesperson.
25 (8) Provides a notice that gives the toll-free telephone
26 number of the department and states that:
27 (i) each contractor and salesperson must be
28 registered by the department; and
29 (ii) anyone may inquire of the department regarding
30 the status of a contractor or salesperson.
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1 (b) Rescission right.--All home improvement contracts shall
2 be subject to section 7 of the act of December 17, 1968
3 (P.L.1224, No.387), known as the Unfair Trade Practices and
4 Consumer Protection Law.
5 (c) Copy to be provided.--A contractor or salesperson shall
6 provide and deliver to the owner, without charge, a completed
7 copy of the home improvement contract at the time the contract
8 is executed.
9 Section 14. Home Improvement Guaranty Fund.
10 (a) Establishment.--The Home Improvement Guaranty Fund is
11 hereby established in the State Treasury and shall be
12 administered by the bureau in accordance with this act.
13 (b) Biennial fund fee.--Each salesperson who applies for a
14 certificate or renewal thereof pursuant to this act shall pay a
15 fee of $50 biennially, and each contractor who applies for a
16 certificate, or renewal thereof, pursuant to this act shall pay
17 a fee of $100 biennially to the fund. The fee shall be payable
18 with the fee for an application for a certificate or renewal
19 thereof as provided in section 5 and shall be refunded in full
20 in the event the applicant is denied a certificate.
21 (c) Minimum balance.--
22 (1) Payments received under subsection (b) shall be
23 credited to the fund which shall maintain a balance of at
24 least $2,000,000. If the bureau finds that, because of
25 pending claims, the amount of the fund may fall below
26 $1,000,000, the bureau shall assess each contractor $25 and
27 each salesperson $10. However, under this subsection the
28 bureau may not make more than one assessment in any calendar
29 year.
30 (2) Failure to make payments to the fund as required by
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1 this act shall result in suspension of registration. Barring
2 the existence of other grounds for suspension or revocation
3 of registration, the contractor's or salesperson's
4 certificate of registration shall be reinstated upon full
5 payment of all the required fees.
6 (d) Investment.--The moneys of the fund shall be invested
7 and the interest arising from the investments shall be credited
8 to the fund.
9 (e) Waiver of biennial fund fee.--In the event that the
10 bureau finds that the fund is adequately funded, the bureau
11 shall, during the first month of each fiscal year, adjust or
12 waive any biennial fund fee for the fiscal year.
13 Section 15. Claims against fund.
14 (a) General rule.--An owner may be compensated from the fund
15 for an actual loss that results from an act or omission or a
16 violation of this act by a registered contractor or salesperson
17 as found by a court of competent jurisdiction, upon the final
18 determination of or expiration of time for appeal in connection
19 with any such judgment. In the event the bureau and a contractor
20 or salesperson enter into an assurance of voluntary compliance,
21 as described in section 5 of the act of December 17, 1968
22 (P.L.1224, No.387), known as the Unfair Trade Practices and
23 Consumer Protection Law, which requires payment of restitution
24 to an owner and the contractor or salesperson fails to pay as
25 required by the terms of the assurance of voluntary compliance,
26 the bureau shall issue an order of payment from the fund to the
27 owner. The payment made pursuant to an assurance of voluntary
28 compliance shall be considered a claim for purposes of
29 reimbursement of the fund, however, subsection (g) shall not be
30 applicable.
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1 (b) Acts of subcontractors, salespersons and employees.--For
2 purposes of recovery from the fund, the act or omission of a
3 registered contractor or registered salesperson includes the act
4 or omission of a subcontractor, salesperson or employee of the
5 registered contractor or registered salesperson whether or not
6 any express agency relationship exists.
7 (c) Denial of claim.--The bureau may deny a claim if the
8 bureau finds that the claimant:
9 (1) unreasonably rejected good faith efforts by the
10 contractor or salesperson to resolve the claim; or
11 (2) failed to make good faith efforts to collect the
12 amount due from the contractor or salesperson.
13 (d) Limitation on recovery.--
14 (1) The bureau may not provide from the fund:
15 (i) More than $10,000 to one claimant for acts or
16 omissions of one contractor or salesperson.
17 (ii) More than $50,000 to all claimants for acts or
18 omissions of one contractor or salesperson unless, after
19 the bureau has paid out $50,000 on account of acts or
20 omissions of the contractor or salesperson, the
21 contractor or salesperson reimburses the fund. However,
22 in no case shall any one contractor or salesperson be
23 indebted, at any one time, to the fund for more than
24 $50,000.
25 (iii) An amount for any attorney fees, consequential
26 damages, court costs, interest, personal injury damages
27 or punitive damages.
28 (iv) An amount as a result of a default judgment in
29 court.
30 (2) In addition to the limits set forth in paragraph
19990H0608B0636 - 21 -
1 (1), a claimant may not recover from the fund more than that
2 claimant's actual loss, to a maximum of $10,000, for a claim
3 made on one contract. A court may, however, allocate
4 responsibility on one contract between contractors and
5 salespersons to a maximum combined responsibility of $10,000.
6 (e) Excluded claimants.--
7 (1) A claim against the fund based on the act or
8 omission of a particular contractor or salesperson shall not
9 be made by:
10 (i) a spouse or other immediate relative of the
11 contractor or salesperson, or of a party which holds a
12 financial stake in the business of the contractor or
13 salesperson;
14 (ii) an employee, officer, director, partner or
15 other party which holds a financial stake in the business
16 of the contractor or salesperson; or
17 (iii) an immediate relative of an employee, officer,
18 director, partner or other party which holds a financial
19 stake in the business of the contractor or salesperson.
20 (2) An owner may make a claim against the fund only if
21 the owner:
22 (i) resides in the residence as to which the claim
23 is made; or
24 (ii) does not own more than two dwelling places,
25 unless the dwelling place as to which the claim is made
26 is the primary residence of the owner or the part of the
27 building which houses the primary residence of the owner.
28 (f) Limitations period.--A claim must be made against the
29 fund within two years after the claimant obtains an entry of
30 final judgment or decree against the contractor or salesperson
19990H0608B0636 - 22 -
1 and all appeal rights have expired or been exhausted, or, in the
2 case of an assurance of voluntary compliance, within the later
3 of two years of entry into such assurance or one year after
4 nonpayment according to the terms of the assurance.
5 (g) Offer of proof.--In order to recover from the fund the
6 claimant must offer proof to the bureau that the claimant has
7 caused to be issued a writ of execution upon a judgment obtained
8 against the contractor or salesperson, and the officer executing
9 the same has made a return showing that no bank accounts or real
10 property of the contractor liable to be levied upon in
11 satisfaction of the judgment could be found, or that the amount
12 realized on the sale of them or of such of them as were found,
13 under the execution, was insufficient to satisfy the judgment or
14 stating the amount realized and the balance remaining due on the
15 judgment after application thereon of the amount realized. A
16 true and attested copy of the executing officer's return must be
17 attached to an application for fund reimbursement.
18 (h) Partial payments for fund integrity.--In order to
19 preserve the integrity of the fund, the bureau may order payment
20 out of the fund of an amount less than the order issued by the
21 court. The balance remaining due to the claimant shall be paid
22 from the fund pursuant to subsection (i).
23 (i) Special order of payment.--If the money in the fund is
24 insufficient to satisfy any duly authorized claim or portion
25 thereof, the bureau shall, when sufficient money exists in the
26 fund, satisfy the unpaid claims or portions thereof, in the
27 order that those claims or portions thereof were originally
28 determined.
29 (j) Investigation by bureau.--As provided in section 17, if
30 the bureau pays any amount from the fund as a result of a claim
19990H0608B0636 - 23 -
1 against a contractor or salesperson, the bureau may conduct an
2 investigation to determine if the contractor or salesperson is
3 possessed of assets liable to be sold or applied in satisfaction
4 of the claim on the fund. If the bureau discovers any such
5 assets, the bureau may take any lawful action necessary for the
6 reimbursement of the fund.
7 (k) Revocation caused by payment of claim.--If the bureau
8 makes a payment of an amount as a result of a claim against a
9 contractor or salesperson, the department shall revoke the
10 certificate of the contractor or salesperson and the contractor
11 or salesperson shall not be eligible to receive a new or renewed
12 certificate until that contractor or salesperson has repaid such
13 amount in full, plus interest, from the time the payment is made
14 from the fund, except that the department, with bureau approval,
15 may permit a contractor or salesperson to receive a new or
16 renewed certificate after that contractor or salesperson has
17 entered into an agreement with the bureau whereby the contractor
18 or salesperson agrees to repay the fund in full in the form of
19 periodic payments over a set period of time. If the contractor
20 or salesperson fails to pay in accordance with the terms of the
21 agreement, the department shall automatically suspend the
22 contractor's or salesperson's certificate.
23 Section 16. Procedure for submitting claims.
24 (a) Initial claim.--In order to recover from the fund, a
25 claimant must submit to the bureau the documentation required
26 under section 15(g), if applicable, and the following
27 information on a form provided by the bureau:
28 (1) The amount claimed based on the actual loss.
29 (2) The facts giving rise to the claim.
30 (3) Any other evidence that supports the claim.
19990H0608B0636 - 24 -
1 (4) Any other information that the bureau requires.
2 (b) Copy of claim to contractor.--On receipt of a claim
3 pursuant to this section, the bureau shall send a copy of the
4 claim to the contractor alleged to be responsible for the actual
5 loss. The contractor shall file a response or objection to the
6 claim within 30 days of receipt of the notice of such claim.
7 Failure to respond to the claim shall constitute a waiver of any
8 defense or objection to the claim.
9 (c) General order of payment.--Except as otherwise provided
10 in this act, the bureau shall pay from the fund approved claims
11 in the order that they are submitted.
12 Section 17. Reimbursement of fund.
13 (a) General rule.--After the bureau pays a claim from the
14 fund:
15 (1) The bureau shall be subrogated to all rights of the
16 claimant in the claim up to the amount paid.
17 (2) The claimant shall assign to the bureau all rights
18 of the claimant in the claim up to the amount paid.
19 (3) The bureau has a right to reimbursement of the fund
20 by the contractor or salesperson for:
21 (i) The amount paid from the fund.
22 (ii) Interest on the amount at an annual rate of 5%
23 as adjusted by the Consumer Price Index on an annual
24 basis.
25 All money that the bureau recovers on a claim shall be deposited
26 in the fund.
27 (b) Suit for nonpayment.--If, within 30 days after the
28 bureau gives notice, a contractor or salesperson on whose
29 account a claim was paid shall fail to reimburse the fund in
30 full, the bureau may initiate an action against the contractor
19990H0608B0636 - 25 -
1 or salesperson in a court of competent jurisdiction for the
2 unreimbursed amount.
3 (c) Judgment.--The bureau is entitled to a judgment for the
4 unreimbursed amount if the bureau proves that:
5 (1) A claim was paid from the fund on account of the
6 contractor or salesperson.
7 (2) The contractor or salesperson has not reimbursed the
8 fund in full.
9 (3) The bureau directed payment based on a final
10 judgment of a court of competent jurisdiction or an assurance
11 of voluntary compliance.
12 (d) Withholding of tax refund.--The bureau may request the
13 Department of Revenue to withhold the annual tax refund due any
14 individual or business on whose account or under whose business
15 a claim was paid from the fund and who is delinquent for at
16 least one year in making payments to the bureau for the purpose
17 of reimbursing the fund. Any tax refund withheld by the
18 Department of Revenue pursuant to this subsection shall be
19 deposited in the fund by that department. The bureau and the
20 Department of Revenue shall jointly establish procedures to
21 carry out the requirements of this subsection.
22 (e) Bankruptcy proceedings.--For the purpose of excepting to
23 a discharge of an individual or business under Federal
24 bankruptcy law, the bureau shall be a creditor of the individual
25 or business for the amount paid from the fund.
26 Section 18. Notice of suspension or revocation.
27 The Administrative Office of Pennsylvania Courts shall report
28 to the department and the bureau any suspension or revocation of
29 a certificate of registration ordered by a court.
30 Section 19. Effective date.
19990H0608B0636 - 26 -
1 This act shall take effect in 180 days.
B11L12RLE/19990H0608B0636 - 27 -