Regular Session 2017-2018 House Bill 1770 P.N. 2399

PRINTER'S NO. 2399

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1770

Session of

2017

INTRODUCED BY GALLOWAY, READSHAW, KINSEY, THOMAS, DAVIS, COX,

MILLARD, D. COSTA, DRISCOLL, V. BROWN AND VAZQUEZ,

SEPTEMBER 12, 2017

REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, SEPTEMBER 12, 2017

AN ACT

Providing for the regulation of home construction contracts and

for the registration of certain home builders; prohibiting

certain acts; providing for penalties; establishing the Home

Builder Guaranty Fund; and providing for claims against the

fund and for notification of defective or faulty building

material or product.

TABLE OF CONTENTS

Chapter 1. Preliminary Provisions

Section 101. Short title.

Section 102. Definitions.

Section 103. Nonapplicability.

Chapter 3. Home Builder Registration

Section 301. Registration of home builders.

Section 302. Procedures for registration as home builder.

Section 303. Application fees.

Section 304. Renewal of certificate.

Section 305. Proof of registration.

Chapter 5. Home Construction Contracts

Section 501. Home construction contracts.

Section 502. Building standards.

Section 503. Notification of defective or faulty building

material or product.

Chapter 7. Violations and Penalties

Section 701. Home construction fraud.

Section 702. Prohibited acts.

Section 703. Unfair Trade Practices and Consumer Protection

Law.

Chapter 9. Recovery from Fund

Section 901. Home Builder Guaranty Fund.

Section 902. Claims against fund.

Section 903. Procedure for submitting claims.

Section 904. Reimbursement of fund.

Chapter 11. Administration

Section 1101. Consumer information pamphlet.

Section 1102. Regulations.

Chapter 21. Miscellaneous Provisions

Section 2101. Preemption of local registration.

Section 2102. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101. Short title.

This act shall be known and may be cited as the New Home

Construction Consumer Protection Act.

Section 102. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

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"Arbitration clause." A process in which a neutral

arbitrator or panel of neutral arbitrators is engaged by the

parties to settle a dispute between a home builder and a

consumer.

"Assurance of voluntary compliance." As defined in section 5

of the act of December 17, 1968 (P.L.1224, No.387), known as the

Unfair Trade Practices and Consumer Protection Law.

"Bureau." The Bureau of Consumer Protection in the Office of

Attorney General.

"Certificate." A certificate of registration as a home

builder, issued by the bureau, which contains a registration

number assigned by the bureau.

"Consumer." A person who enters into a home construction

contract with a home builder. The term also includes a person

who has entered into a contract with a home builder to purchase

a new home but who has not yet settled on the purchase of the

new home.

"Fund." The Home Builder Guaranty Fund established in

section 901.

"Home builder."

(1) A person who enters into a home construction

contract with a consumer. The term includes an installer or

retailer of a mobile home or industrialized housing.

(2) The term does not include the following:

(i) A real estate developer who does not construct

homes.

(ii) A financial institution that lends funds for

the construction or purchase of residential dwellings in

this Commonwealth.

(iii) The manufacturer of industrialized housing or

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mobile homes, unless the manufacturer also installs

mobile homes or industrialized housing.

"Home construction contract." An agreement between a home

builder and a consumer for the construction of a new home which

includes all agreements for labor, services and materials to be

furnished and performed under the contract.

"New home." A newly constructed residential dwelling unit

and the fixtures and structures that are made a part of the unit

at the time of construction. The term includes the following:

(1) A residential building as defined by the act of

November 10, 1999 (P.L.491, No.45), known as the Pennsylvania

Construction Code Act.

(2) Industrialized housing as defined by the act of May

11, 1972 (P.L.286, No.70), known as the Industrialized

Housing Act.

(3) A mobile home as defined in 75 Pa.C.S. § 102

(relating to definitions).

"Person." An individual, partnership, limited partnership,

limited liability company, joint venture or corporation.

"Special order material." Any material, product or equipment

that is not a stock item and must be specially ordered from the

factory or distributor and which is produced or processed for a

specific home construction contract. Special order materials are

not returnable by the home builder for a refund or credit and

have no usefulness for other home construction contracts because

they are specially ordered for a specific home construction

contract.

"Specifications." The plans, detailed drawings, lists of

materials, stated allowances or other methods customarily used

in the home building industry as a whole to describe with

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particularity the work, workmanship, materials and quality of

materials for each new home.

Section 103. Nonapplicability.

This act shall not apply to any of the following persons or

organizations:

(1) The Commonwealth or any of its political

subdivisions.

(2) The Federal Government.

CHAPTER 3

HOME BUILDER REGISTRATION

Section 301. Registration of home builders.

(a) General rule.--No person shall hold himself out as a

home builder nor shall a person build a new home without first

registering with the bureau as provided for in this act.

(b) Public access to registration information.--The bureau

shall maintain a toll-free telephone number from which a

consumer can obtain information as to whether a home builder is

registered with the bureau under this act, as well as

information that may be obtained on the bureau's website.

shall create a policy for the disclosure of personal information

to the public. The bureau may not disclose to the public a home

builder's Social Security number, driver's license number or any

confidential information prohibited by law from being disclosed.

(d) No dual licenses.--A person registered or required to be

registered as a home builder under this act shall not be

eligible to obtain or renew a license under any of the

following:

(1) 7 Pa.C.S. Ch. 61 (relating to mortgage loan industry

licensing and consumer protection).

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(2) The act of December 22, 1989 (P.L.687, No.90), known

as the Mortgage Bankers and Brokers and Consumer Equity

Protection Act.

(e) Liability.--No business entity registered under this act

shall be relieved of responsibility under this act for the

conduct and acts of its agents, employees, officers or

directors, nor shall any person be relieved of responsibility

under this act by reason of his employment or relationship with

such business entity.

(f) Effects of unregistered status.--No unregistered home

builder shall have standing to sue, countersue or raise a

defense of nonpayment in any dispute arising from a home

construction contract. No unregistered home builder may file a

mechanics' lien with respect to the construction of a new home.

Section 302. Procedures for registration as home builder.

(a) Application.--

(1) A person shall apply to the bureau in writing, or

electronically via a secure Internet connection, if permitted

by the bureau, on a form provided by the bureau. The

application shall include the following information:

(i) For an individual applicant, all of the

following:

(A) Name.

(B) Date of birth.

(D) Driver's license number or an identification

card issued by the state in which the individual

resides.

(E) Business name, address and telephone number.

(F) Federal Employer Identification Number, if

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available.

(G) Social Security number.

(H) All prior business names and addresses of

home construction businesses operated by the

individual.

(ii) For a general partnership applicant, all of the

following:

(A) Name of each partner.

(B) Date of birth of each partner.

each partner.

(D) Driver's license number or an identification

card issued by the state in which the partner

resides, of each partner.

(E) Partnership name, address and telephone

number.

(F) Federal Employer Identification Number, if

available.

(G) Social Security number of each partner.

(H) All prior business names and addresses of

home construction businesses operated by each

partner.

(iii) For a corporation, limited liability company

or limited partnership, all of the following:

(A) Name of each officer, manager and general

partner.

(B) Date of birth of each officer, manager and

general partner.

each officer, manager and general partner.

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(D) Driver's license number or an identification

card issued by the state in which the individual

resides, of each officer, manager and general

partner.

(E) Entity's name, address and telephone number.

(F) Federal Employer Identification Number, if

available.

(G) Social Security number of each officer,

manager and general partner.

(H) The name of each director or each individual

holding greater than a 5% interest in the entity.

(iv) For an out-of-State corporation, limited

liability or limited partnership, the name and address of

the entity's resident agent or registered office provider

within this Commonwealth and any registration number or

license number issued to the entity by its home state or

political subdivision of such other state, if applicable.

(v) For a joint venture applicant, the name, address

and telephone number of the joint venture, as well as the

name, address and telephone number of each party to the

joint venture. When the parties to a joint venture

include business entities, the information required from

such entities under subsection (b) shall also be

provided.

(vi) A complete description of the nature of the

contracting business of the applicant.

(vii) A statement whether:

(A) The individual or individuals making

application, even if doing so as part of a business

entity application, has ever been convicted of a

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criminal offense related to a home building

transaction, fraud, theft, a crime of deception or a

crime involving fraudulent business practices, as

well as a statement whether the applicant has ever

filed a petition in bankruptcy or within the last 10

years received a final civil judgment entered against

the applicant or businesses in which the applicant

held an interest that was related to a home building

transaction.

(B) The applicant's certificate or a similar

certificate or license issued by any other state or

political subdivision thereof has ever been revoked

or suspended pursuant to an order issued by a court

of competent jurisdiction and, if so, the current

status of the certificate or similar certificate or

license. The statement required by this clause shall

include the same information with respect to any

other business in which the person making application

has or has ever had an interest.

(viii) Whether within the last 10 years the

applicant has ever been suspended or debarred from

participating in any Federal, State or local program

through which public hearing or other assistance is

provided to consumers for home building.

(ix) Proof of general liability insurance covering

personal injury and property damage caused by the work of

a home builder.

(2) Information requested in paragraph (1)(i), (ii),

(iii), (iv) and (v) shall be for a 10-year period, prior to

the time of registration. The applicant shall provide

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information prior to the last 10 years or as further

clarification of the information provided, if the bureau

requests such information.

(b) Reporting of multiple registrations or licensures.--Any

registered home builder in this Commonwealth who is registered

or licensed as a home builder in any other state or political

subdivision thereof shall report this information to the bureau

on the initial and each biennial renewal application. Any

disciplinary action taken in such other jurisdiction shall be

reported to the bureau on the initial registration application

or, if such action occurred subsequent to submission of an

initial application, on the biennial registration application or

within 90 days of final disposition of the action, whichever is

sooner. Multiple registrations or licensures shall be noted by

the bureau on the home builder's registration, and such state or

political subdivision thereof shall be notified by the bureau of

any disciplinary actions taken against the home builder in this

Commonwealth.

bureau written notice of any change in the information submitted

under this section within 10 business days after the change is

effective.

Section 303. Application fees.

Each application for a home builder certificate shall be

accompanied by a fee of $300. After completion of the

application and payment of the fee, the bureau shall issue the

home builder a certificate identifying the name of the

individual builder, name and address of the business and a

registration number.

Section 304. Renewal of certificate.

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(a) General rule.--A home builder that meets the

requirements of subsection (c) may obtain renewal of a

registration before the registration expires for an additional

two-year term. Once expired, a registration may not be renewed.

(b) Renewal application.--At least 60 days before a home

builder's registration expires, the bureau shall mail to the

home builder the following:

(1) a renewal application form; and

(2) a notice that states the date on which the current

registration expires and the date by which the bureau must

receive the renewal application for a renewal to be issued

and mailed before the registration expires.

registration of each home builder that:

(1) Would qualify for an initial registration.

(2) Submits to the bureau a renewal application on the

form provided by the bureau.

(3) Pays to the bureau a nonrefundable renewal fee based

on the number of building permits for the construction of new

homes issued to the registrant in the preceding calendar year

as follows:

(i) Ten or fewer homes, $150.

(ii) Eleven or more new homes, $300.

Section 305. Proof of registration.

A home builder shall include its registration number in all

advertisements, including business cards, distributed within

this Commonwealth and on all contracts, estimates and proposals

with consumers of home construction services in this

Commonwealth. A home builder shall display its registration

number on all properties at which he is performing services

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pursuant to a home construction contract.

CHAPTER 5

HOME CONSTRUCTION CONTRACTS

Section 501. Home construction contracts.

(a) Requirements.--No home construction contract shall be

valid or enforceable against a consumer unless it:

(1) is in writing and legible and contains the

registration number of the home builder;

(2) is signed by all of the following:

(i) the consumer or his agent; and

(ii) the home builder or his agent;

(3) contains the entire agreement between the consumer

and the home builder, including attached copies of all

required notices;

(4) contains the date the contract was signed;

(5) contains the name, address and telephone number of

the home builder. For purposes of this paragraph, a post

office box number alone shall not be considered an address;

(6) contains the approximate starting date and

completion date for the work described in the contract;

(7) includes a description of the work to be performed,

the materials to be used and a set of specifications that

cannot be changed without a written change order signed by

the consumer and the home builder;

(8) includes the total sale price due under the

contract;

(9) includes the amount of any down payment plus any

amount advanced for the purchase of special order materials.

The amount of the down payment and the cost of the special

order materials must be listed separately;

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(10) includes the names, addresses and telephone numbers

of all subcontractors on the project known at the date of

signing the contract. For the purposes of this paragraph, a

post office box number alone shall not be considered an

address;

(11) except as provided in section 2101, provides that

the home builder agrees to maintain liability insurance

covering personal injury in an amount not less than $300,000

and insurance covering property damage caused by the work of

a home builder in an amount not less than $300,000 and

identifies the current amount of insurance coverage

maintained at the time of signing the contract;

(12) includes the toll-free telephone number under

section 301(b) and a notice of the right of rescission under

subsection (b); and

(13) is accompanied by a copy of the consumer

information pamphlet established by the bureau and supplied

to the home builder under Chapter 11.

(b) Right of rescission.--A person signing a home

construction contract, except as provided in the emergency

provisions of section 7 of the act of December 17, 1968

(P.L.1224, No.387), known as the Unfair Trade Practices and

Consumer Protection Law, shall be permitted to rescind the

contract without penalty regardless of where the contract was

signed, within three business days following the date of

signing. A home construction contract that does not contain a

notice of this right of rescission is voidable by the consumer.

deliver to the consumer, without charge, a completed copy of the

home building contract at the time the contract is executed.

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(d) Arbitration clause.--Nothing in this act shall preclude

the court from setting aside an arbitration clause on any basis

permitted under the laws of this Commonwealth. If the contract

contains an arbitration clause, it shall meet the following

requirements or be deemed void by the court upon motion of

either party, filed prior to the commencement of arbitration:

(1) the text of the clause must be in capital letters;

(2) the text shall be printed in 12-point boldface type,

and the arbitration clause must appear on a separate page

from the rest of the contract;

(3) the clause shall contain a separate line for each of

the parties to indicate their assent to be bound thereby;

(4) the clause shall not be effective unless both

parties have assented as evidenced by signature and date,

which shall be the date on which the contract was executed;

(5) the clause shall state clearly whether the decision

of the arbitration is binding on the parties or may be

appealed to the court of common pleas; and

(6) the clause shall state whether the facts of the

dispute, related documents and the decision are confidential.

(e) Voidable clause.--If a home construction contract

contains any of the following clauses, the home construction

contract shall be voidable by the consumer:

(1) A hold harmless clause in favor of the home builder.

(2) A waiver of Federal, State or local health, life,

safety or building code requirements.

(3) A confession of judgment clause against the

consumer.

(4) A waiver by the consumer of any right to a jury

trial in any action brought by or against the consumer.

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(5) An assignment by the consumer of or order for

payment of wages or other compensation by the consumer for

services performed by the home builder.

(6) A provision by which the consumer agrees not to

assert any claim or defense arising out of the contract.

(7) A provision that the home builder shall be awarded

attorney fees and costs.

(8) A clause by which the consumer relieves the home

builder from liability for acts committed by the home builder

or the home builder's agents in the collection of any

payments or in repossession of any goods.

(9) A waiver by the consumer of any rights provided

under this act.

(10) A provision providing for the automatic or

recurring renewal of any provisions of the agreement, unless:

(i) the contract establishes a procedure by which

the consumer can choose not to renew the provision or

provisions, thereby avoiding any new fees or charges, by

providing written notice to the home builder via first

class mail postmarked no later than three business days

prior to any renewal;

(ii) such procedure is clearly and conspicuously

disclosed in the agreement; and

(iii) the contract includes a provision requiring

the home builder to notify the consumer of any automatic

or recurring renewal, and the consumer's option to cancel

such renewal, by mail not earlier than 20 days and not

later than 10 days prior to the date of any such renewal.

(f) Home builder's recovery right.--Nothing in this section

shall preclude a home builder who has complied with subsection

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(a) from the recovery of payment for work performed based on the

reasonable value of services which were requested by the

consumer if a court determines that it would be inequitable to

deny such recovery.

Section 502. Building standards.

All work performed by a home builder under a home

construction contract shall comply with the requirements of the

International Residential Code and the International Existing

Building Code as currently adopted by the Department of Labor

and Industry under the act of November 10, 1999 (P.L.491,

No.45), known as the Pennsylvania Construction Code Act,

regardless of whether a permit or inspection is required by the

municipality in which the work is being performed.

Section 503. Notification of defective or faulty building

material or product.

For 30 years after a new home is complete, if a home builder

is made aware of a defective building material, product, special

order material or building technique the home builder used in

the construction of a new home, the home builder must provide

written notification of the defective building material,

product, special order material or building technique to the

consumer within three months. The notification shall include a

detailed description of the defect and the date the defective

building material, product, special order material or building

technique was installed or used on the new home.

CHAPTER 7

VIOLATIONS AND PENALTIES

Section 701. Home construction fraud.

(a) Offense defined.--A person commits the offense of home

construction fraud if the person intentionally or knowingly:

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(1) makes a materially false statement to induce,

encourage or solicit a person to enter into any written or

oral agreement for home building services or to justify an

increase in the previously agreed-upon price;

(2) receives any advance payment for home building

services and fails to perform or provide such services when

specified in the contract, taking into account any force

majeure or unforeseen labor strike that would extend the time

frame or any extension agreement negotiated with the

consumer, and fails to return the payment received for such

services which were not provided by that date;

(3) while soliciting a person to enter into an agreement

for home building services, misrepresents or conceals the

home builder's real name, the name of the home building

business, liability insurance information or home builder's

business address or any other identifying information;

(4) subsequent to entering into an agreement for home

building services, changes the name of the home building

business, liability insurance information, the home builder's

address or any other identifying information without advising

the consumer in writing within 10 days following any such

change;

(5) misrepresents an item as a special order material or

misrepresents the cost of the special order material;

(6) alters a home construction contract, mortgage,

promissory note or other document incident to building a new

home without the consent of the consumer; or

(7) directly or indirectly publishes a false or

deceptive advertisement in violation of State law governing

advertising about home building.

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(b) Grading.--

(1) A violation of subsection (a)(1), (2), (3), (4), (5)

or (6) constitutes a felony of the third degree.

(2) Where a person commits an offense under subsection

(a) and the victim is 60 years of age or older, the grading

of the offense shall be one grade higher than specified in

paragraph (1). This paragraph shall not be applicable to a

person whose sentence would be enhanced under paragraph (3).

(3) Notwithstanding any other provisions of this

section, where a person commits a second or subsequent

offense described in subsection (a), the offense will

constitute a felony of the second degree. For this paragraph

to be applicable, the second or subsequent offense must have

occurred after the first conviction. Paragraph (2) shall not

be applicable to a person whose sentence would be enhanced

under this paragraph.

(4) In addition to any other penalty imposed by this

act, the court may revoke or suspend the certificate of

registration issued under Chapter 3. At the time of

sentencing, the court shall state the reasons for such

revocation or suspension. A person whose registration has

been revoked or suspended may petition the court of original

jurisdiction for reinstatement after a period of five years

from the date of revocation or suspension, or as specified in

the court's order. The office of the Court Administrator of

Pennsylvania shall report to the bureau any suspension or

revocation of a certificate ordered by a court.

(1) The district attorneys of the several counties shall

have the authority to investigate and to institute criminal

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proceedings for any violation of this section.

(2) In addition to the authority conferred upon the

Attorney General by the act of October 15, 1980 (P.L.950,

No.164), known as the Commonwealth Attorneys Act, the

Attorney General shall have the authority to investigate and

institute criminal proceedings for any violation of this

section or any series of such violations involving more than

one county of this Commonwealth or involving any county of

this Commonwealth and another state. No person charged with a

violation of this section by the Attorney General shall have

standing to challenge the authority of the Attorney General

to investigate or prosecute the case, and, if any such

challenge is made, the challenge shall be dismissed and no

relief shall be available in the courts of this Commonwealth

to the person making the challenge.

Section 702. Prohibited acts.

(a) Specific conduct.--No person shall:

(1) Fail to register as required by this act.

(2) Fail to refund the amount paid under a home

construction contract within 10 days of either the acceptance

and execution of a return receipt for certified mail

containing a written request for a refund or the refusal to

accept the certified mail sent to the home builder's last

known address if all of the following apply:

(i) no substantial portion of the contracted work

has been performed at the time of the request; and

(ii) more than 45 days have elapsed since the

starting date specified in the written contract.

(3) Accept a municipal certificate of occupancy or other

proof that performance of a home construction contract is

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complete or satisfactorily concluded with knowledge that the

document or proof is false and the performance is incomplete.

(4) Utter, offer or use a completion certificate or

other proof that a home construction contract is complete or

satisfactorily concluded when the person knows or has reason

to know that the document or proof is false and is made to

accomplish any of the following:

(i) Make or accept an assignment or negotiation of

the right to receive payment under a home construction

contract.

(ii) Get or grant credit or a loan on security of

the right to receive payment under a home construction

contract.

(5) Abandon or fail to perform, without justification,

any home construction contract. For purposes of this

paragraph, the term "justification" shall include nonpayment

by the consumer as required under the contract or any other

violation of the contract by the consumer.

(6) Deviate from or disregard plans or specifications,

in any material respect, without a written change order dated

and signed by both the home builder and consumer, which

contains the accompanying price changes for each deviation.

(7) Prepare, arrange, accept or participate in the

financing of a home construction contract with knowledge that

the home construction contract states a greater monetary

obligation than the actual price.

(8) Advertise or offer, by any means, to build new homes

if the person does not intend to do any of the following:

(i) Accept a home construction contract.

(ii) Perform a home construction contract.

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(9) Demand or receive any payment for a home

construction contract before the home construction contract

is signed.

(b) Criminal penalty.--In addition to any other penalty

provided by law, a person who knowingly violates any provision

of this act for which a criminal penalty is not otherwise

provided commits a summary offense subject to the fine

established in 18 Pa.C.S. § 1105 (relating to sentence of

imprisonment for summary offenses).

Section 703. Unfair Trade Practices and Consumer Protection

Law.

A violation of any of the provisions of this act shall be

deemed a violation of the act of December 17, 1968 (P.L.1224,

No.387), known as the Unfair Trade Practices and Consumer

Protection Law. Nothing in this act shall preclude a consumer

from exercising any right provided under the Unfair Trade

Practices and Consumer Protection Law.

CHAPTER 9

RECOVERY FROM FUND

Section 901. Home Builder Guaranty Fund.

(a) Establishment.--The Home Builder Guaranty Fund is

established in the State Treasury and shall be administered by

the bureau in accordance with this act. All money deposited in

the fund shall not be considered general revenue of the

Commonwealth but shall be used only to effectuate the purposes

of this act.

(b) Guaranty fund fee.--A home builder must pay a guaranty

fund fee of $50 for each construction or building permit issued

by a political subdivision. The fee shall be collected by the

political subdivision issuing the permit and be in addition to

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any other fees imposed for a permit.

basis, each political subdivision must remit the guaranty fund

fees collected to the bureau for deposit into the fund.

(d) Minimum balance.--

(1) Payments received under subsection (b) shall be

credited to the fund, which shall maintain a balance of at

least $2,000,000. If the bureau finds that, because of

pending claims, the amount of the fund may fall below

$1,000,000, the bureau shall assess each home builder $25.

However, under this subsection the bureau may not make more

than one assessment in any calendar year.

(2) Failure to make payments to the fund as required by

this act shall result in suspension of registration. Barring

the existence of other grounds for suspension or revocation

of registration, the certificate shall be reinstated upon

full payment of all required fees.

(e) Investment.--The money of the fund shall be invested and

the interest arising from the investments shall be credited to

the fund.

(f) Waiver of biennial fund fee.--In the event that the

bureau finds that the fund is adequately funded, the bureau

shall, during the first month of each fiscal year, adjust or

waive any biennial fund fee for the fiscal year.

Section 902. Claims against fund.

(a) General rule.--A consumer may be compensated from the

fund for an actual loss that results from an act or omission by

a home builder in the performance of a home construction

contract or a violation of this act by a home builder as found

by a court of competent jurisdiction, upon the final

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determination of or expiration of time for appeal in connection

with any such judgment or if a consumer is prevented from

collecting the entirety of a final judgment as a result of the

home builder's filing for bankruptcy protection under Federal

law. In the event the bureau and the home builder enter into an

assurance of voluntary compliance, which requires payment of

restitution to a consumer and the home builder fails to pay as

required by the terms of the assurance of voluntary compliance,

the bureau shall issue an order of payment from the fund to the

consumer. The payment made pursuant to an assurance of voluntary

compliance shall be considered a claim for the purposes of

reimbursement of the fund; however, subsection (f) shall not be

applicable.

(b) Acts of subcontractors and employees.--For purposes of

recovery from the fund, the act or omission of a home builder

includes the act or omission of a subcontractor or employee of

the home builder whether or not any express agency relationship

exists so long as the subcontractor or employee acted within the

scope of the home construction contract.

(1) The bureau may not provide from the fund:

(i) More than $30,000 to one consumer for acts or

omissions of one home builder.

(ii) More than $200,000 to all consumers for acts or

omissions of one home builder unless, after the bureau

has paid out $200,000 on account of acts or omissions of

the home builder, the home builder reimburses the fund.

However, in no case shall any one home builder be

indebted, at any one time, to the fund for more than

$200,000.

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(iii) An amount for any attorney fees, consequential

damages, court costs, interest, personal injury damages

or punitive damages, except as may be provided in an

assurance of voluntary compliance.

(2) In addition to the limits set forth in paragraph

(1), a consumer may not recover from the fund more than that

consumer's actual loss, to a maximum of $30,000, for a claim

made on one contract.

(3) Nothing in this section shall preclude a consumer

from recovering or seeking to recover from a home builder:

(i) the difference between the amount of the

judgment against the home builder received by the

consumer and the amount actually paid to the consumer

from the fund; or

(ii) the difference between the amount a home

builder agrees to pay a consumer under an assurance of

voluntary compliance and the amount actually paid to the

consumer from the fund.

In the event the consumer does not receive payment in full of

a judgment amount from the fund, the judgment shall be deemed

to be satisfied only to the extent of the payment received,

and the judgment shall continue in full force and effect with

respect to the amount still owed until the consumer receives

payment in full.

(d) Excluded claimants.--A claim against the fund based on

the act or omission of a particular builder shall not be made

by:

(1) a spouse or other immediate relative of the home

builder, or of a party which holds a financial stake in the

business of the home builder;

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(2) an employee, officer, director, partner or other

party which holds a financial interest in the business of the

home builder; or

(3) an immediate relative of an employee, officer,

director, partner or other party which holds a financial

interest in the business of the home builder.

(e) Limitation period.--A claim must be made against the

fund within two years after the consumer obtains an entry of

final judgment or decree against the home builder and all appeal

rights have expired or been exhausted, or, in the case of an

assurance of voluntary compliance, within the later of two years

of entry into such assurance or one year after nonpayment

according to the terms of the assurance.

(f) Offer of proof.--In order to recover from the fund a

consumer must offer proof to the bureau that the consumer has

exhausted all reasonable actions available at law and in equity

to collect the unpaid amount of a final judgment.

(g) Partial payments for fund integrity.--In order to

preserve the integrity of the fund, the bureau may order payment

out of the fund of an amount less than the judgment amount or

the amount agreed to be paid in an assurance of voluntary

compliance. The balance remaining due to the consumer shall be

paid from the fund under subsection (h).

(h) Special order of payment.--If the money in the fund is

insufficient to satisfy any duly authorized claim or portion

thereof, the bureau shall, when sufficient money exists in the

fund, satisfy the unpaid claims or portions thereof, in the

order that those claims or portions thereof were originally

determined.

(i) Investigation by bureau.--As provided in section 903, if

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the bureau pays any amount from the fund as a result of a claim

against a home builder, the bureau may conduct an investigation

to determine if the home builder is possessed of assets liable

to be sold or applied in satisfaction of the claim on the fund.

If the bureau discovers any such assets, the bureau may take any

lawful action necessary for the reimbursement of the fund.

(j) Revocation caused by payment of claim.--If the bureau

makes a payment of an amount as a result of a claim against a

home builder, the bureau shall revoke the certificate of the

home builder, and the home builder shall not be eligible to

receive a new or renewed certificate until the home builder has

repaid such amount in full, plus interest, from the time the

payment is made from the fund, except that the bureau may permit

a home builder to receive a new or renewed certificate after the

home builder has entered into an agreement with the bureau

whereby the home builder agrees to repay the fund in full in the

form of periodic payments over a set period of time. If the home

builder fails to pay in accordance with the terms of the

agreement, the bureau shall automatically suspend the home

builder's certificate.

Section 903. Procedure for submitting claims.

(a) Initial claim.--In order to recover from the fund, a

consumer must submit to the bureau the documentation required

under section 902(f), together with a copy of the judgment and

evidence that the judgment has not been appealed or a copy of

the assurance of voluntary compliance and a certification that

the home builder has failed to pay or evidence that the consumer

has been prevented from collecting the entirety of a final

judgment as a result of the home builder's filing for bankruptcy

protection under Federal law. In the latter event, the consumer

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shall only be entitled to collect from the fund the amount he

was prevented from collecting as a result of the filing.

(b) Copy of claim to home builder.--On receipt of a claim

under this section, the bureau shall send a copy of the claim to

the home builder alleged to be responsible for the actual loss.

The home builder shall file a response or objection to the claim

within 30 days of the receipt of the notice of such claim.

Failure to respond to the claim shall constitute a waiver of any

defense or objection to the claim. The only defense a home

builder may raise in his response is a defense of payment in

full of the claim.

in this act, the bureau shall pay from the fund approved claims

in the order that they are submitted.

Section 904. Reimbursement of fund.

(a) General rule.--After the bureau pays a claim from the

fund:

(1) The bureau shall be subrogated to all rights of the

consumer in the claim up to the amount paid.

(2) The consumer shall assign to the bureau all rights

of the consumer in the claim up to the amount paid.

(3) The bureau has a right to reimbursement of the fund

by the home builder for:

(i) The amount paid from the fund.

(ii) Interest on the amount at an annual rate of 5%

as adjusted by the Consumer Price Index on an annual

basis.

All money that the bureau recovers on a claim shall be deposited

in the fund.

(b) Suit for nonpayment.--If, within 30 days after the

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bureau gives notice, a home builder on whose account a claim was

paid fails to reimburse the fund in full, the bureau may

initiate an action against the home builder in a court of

competent jurisdiction for the unreimbursed amount.

unreimbursed amount if the bureau proves that:

(1) a claim was paid from the fund on account of the

home builder;

(2) the home builder has not reimbursed the fund in

full; and

(3) the bureau directed payment based on a final

judgment of a court of competent jurisdiction or an assurance

of voluntary compliance.

(d) Withholding of tax refund.--If a person is delinquent

for at least one year in making payments to the bureau for the

purposes of reimbursing the fund, the Department of Revenue

shall credit the amount of any refundable overpayment of tax

imposed by Article III of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971, against the

delinquency in respect to this act on the part of the person who

made the overpayment.

(e) Bankruptcy proceedings.--For the purpose of excepting to

a discharge of an individual or business under Federal

bankruptcy law, the bureau shall be a creditor of the individual

or business for the amount paid from the fund.

CHAPTER 11

ADMINISTRATION

Section 1101. Consumer information pamphlet.

The bureau shall develop, in consultation with the home

building industry, a consumer information pamphlet that sets

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forth the rights and remedies for consumers as provided for in

this act, the toll-free telephone number established under

section 301 and any other information that the bureau considers

reasonably necessary to assist consumers. The bureau shall

provide each registered home builder with copies of this

pamphlet to distribute to consumers.

Section 1102. Regulations.

The bureau may adopt rules and regulations necessary to carry

out the provisions of this act.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101. Preemption of local registration.

Registration under this act shall preclude any requirement of

payment of a fee or registration or licensing of any home

builder by any political subdivision. Political subdivisions

shall be permitted to require building permits and local

enforcement of the building code for that political subdivision,

for which a reasonable fee may be charged. Except for a building

permit for construction to be performed directly by a landowner

solely for the landowner's own use, the political subdivision

may not issue a permit for home building unless the permit

includes the home builder's registration number. This provision

does not affect a political subdivision's responsibilities or

authority under the act of November 10, 1999 (P.L.491, No.45),

known as the Pennsylvania Construction Code Act, or the

requirements under section 302(e) of the act of June 2, 1915

(P.L.736, No.338), known as the Workers' Compensation Act,

regarding workers' compensation. This provision does not affect

existing licensing standards in effect on the effective date of

this act with respect to electricians, plumbers, sheet metal

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workers, warm air installers and fire suppression workers, where

licensing is conditioned on requirements of testing or

possession of certificates obtained through specific training in

electricity, plumbing, sheet metal work, warm air installation

and fire suppression. This provision does not affect standards

for liability insurance adopted by a political subdivision prior

to January 1, 2015, and which are in effect on the effective

date of this section.

Section 2102. Effective date.

This act shall take effect in 180 days.

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