PRINTER'S NO. 446
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY READSHAW, KORTZ, D. COSTA, HARKINS, DELUCA, O'NEILL, COHEN AND YOUNGBLOOD, JANUARY 30, 2013
REFERRED TO COMMITEE ON CONSUMER AFFAIRS, JANUARY 30, 2013
1Providing for the regulation of home construction contracts and
2for the registration of certain home builders; prohibiting
3certain acts; providing for penalties; establishing the Home
4Builder Guaranty Fund; and providing for claims against the
6TABLE OF CONTENTS
7Section 1. Short title.
8Section 2. Definitions.
9Section 3. Registration of home builders.
10Section 4. Procedures for registration as home builder.
11Section 5. Application fees.
12Section 6. Renewal of certificate.
13Section 7. Proof of registration.
14Section 8. Home construction contracts.
15Section 9. Home construction fraud.
16Section 10. Prohibited acts.
17Section 11. Unfair Trade Practices and Consumer Protection Law.
18Section 12. Consumer information pamphlet.
19Section 13. Regulations.
1Section 14. Preemption of local registration.
2Section 15. Home Builder Guaranty Fund.
3Section 16. Claims against fund.
4Section 17. Procedure for submitting claims.
5Section 18. Reimbursement of fund.
6Section 19. Notice of suspension or revocation.
7Section 20. Exemptions.
8Section 21. Building standards.
9Section 22. Repeal.
10Section 23. Effective date.
13Section 1. Short title.
16Section 2. Definitions.
3"Consumer." A person who enters into a home construction
4contract with a home builder. The term also includes a person
5who has entered into a contract with a home builder to purchase
6a new home but who has not yet settled on the purchase of the
14(2) The term does not include the following:
23"Home construction contract." An agreement between a home
24builder and a consumer for the construction of a new home which
25includes all agreements for labor, services and materials to be
26furnished and performed under the contract.
30(1) A residential building as defined by the act of
10"Special order material." Any material, product or equipment
11that is not a stock item and must be specially ordered from the
12factory or distributor and which is produced or processed for a
13specific home construction contract. Special order materials are
14not returnable by the home builder for a refund or credit and
15have no usefulness for other home construction contracts because
16they are specially ordered for a specific home construction
18"Specifications." The plans, detailed drawings, lists of
19materials, stated allowances or other methods customarily used
20in the home building industry as a whole to describe with
21particularity the work, workmanship, materials and quality of
22materials for each new home.
23Section 3. Registration of home builders.
27(b) Public access to registration information.--The bureau
28shall maintain a toll-free telephone number from which a
29consumer can obtain information as to whether a home builder is
30registered with the bureau pursuant to this act, as well as
1information that may be obtained on the bureau's website.
2(c) Confidentiality of personal information.--The bureau
3shall create a policy for the disclosure of personal information
4to the public. The bureau may not disclose to the public a home
5builder's Social Security number, driver's license number or any
6confidential information prohibited by law from being disclosed.
16(e) Liability.--No business entity registered pursuant to
17this act shall be relieved of responsibility under this act for
18the conduct and acts of its agents, employees, officers or
19directors, nor shall any person be relieved of responsibility
20under this act by reason of his employment or relationship with
21such business entity.
22(f) Effects of unregistered status.--No unregistered home
23builder shall have standing to sue, countersue or raise a
24defense of nonpayment in any dispute arising from a home
25construction contract. No unregistered home builder may file a
26mechanic's lien with respect to the construction of a new home.
27Section 4. Procedures for registration as home builder.
6(B) Date of birth.
7(C) Home address and home telephone number.
11(E) Business name, address and telephone number.
14(G) Social Security number.
20(A) Name of each partner.
21(B) Date of birth of each partner.
1(G) Social Security number of each partner.
17(E) Entity's name, address and telephone number.
24(iv) For an out-of-State corporation, limited
25liability or limited partnership, the name and address of
26the entity's resident agent or registered office provider
27within this Commonwealth and any registration number or
28license number issued to the entity by its home state or
29political subdivision of such other state, if applicable.
30(v) For a joint venture applicant, the name, address
1and telephone number of the joint venture, as well as the
2name, address and telephone number of each party to the
3joint venture. When the parties to a joint venture
4include business entities, the information required from
5such entities pursuant to subsection (b) shall also be
9(vii) A statement whether:
10(A) The individual or individuals making
11application, even if doing so as part of a business
12entity application, has ever been convicted of a
13criminal offense related to a home building
14transaction, fraud, theft, a crime of deception or a
15crime involving fraudulent business practices, as
16well as a statement whether the applicant has ever
17filed a petition in bankruptcy or within the last ten
18years received a final civil judgment entered against
19the applicant or businesses in which the applicant
20held an interest that was related to a home building
22(B) The applicant's certificate or a similar
23certificate or license issued by any other state or
24political subdivision thereof has ever been revoked
25or suspended pursuant to an order issued by a court
26of competent jurisdiction and, if so, the current
27status of the certificate or similar certificate or
28license. The statement required by this clause shall
29include the same information with respect to any
30other business in which the person making application
1has or has ever had an interest.
2(viii) Whether within the last ten years the
3applicant has ever been suspended or debarred from
4participating in any Federal, State or local program
5through which public hearing or other assistance is
6provided to consumers for home building.
10(2) Information requested in paragraph (1)(i), (ii),
11(iii), (iv) and (v) shall be for a ten-year period, prior to
12the time of registration. The applicant shall provide
13information prior to the last ten years or as further
14clarification of the information provided, if the bureau
15requests such information.
16(b) Reporting of multiple registrations or licensures.--Any
17registered home builder in this Commonwealth who is registered
18or licensed as a home builder in any other state or political
19subdivision thereof shall report this information to the bureau
20on the initial and each biennial renewal application. Any
21disciplinary action taken in such other jurisdiction shall be
22reported to the bureau on the initial registration application
23or, if such action occurred subsequent to submission of an
24initial application, on the biennial registration application or
25within 90 days of final disposition of the action, whichever is
26sooner. Multiple registrations or licensures shall be noted by
27the bureau on the home builder's registration, and such state or
28political subdivision thereof shall be notified by the bureau of
29any disciplinary actions taken against the home builder in this
1(c) Change of information.--A home builder shall provide the
2bureau written notice of any change in the information submitted
3under this section within ten business days after the change is
5Section 5. Application fees.
6Each application for a home builder certificate shall be
7accompanied by a fee of $300. After completion of the
8application and payment of the fee, the bureau shall issue the
9home builder a certificate identifying the name of the
10individual builder, name and address of the business and a
12Section 6. Renewal of certificate.
13(a) General rule.--A home builder that meets the
14requirements of subsection (c) may obtain renewal of a
15registration before the registration expires for an additional
16two-year term. Once expired, a registration may not be renewed.
20(1) a renewal application form; and
21(2) a notice that states the date on which the current
22registration expires and the date by which the bureau must
23receive the renewal application for a renewal to be issued
24and mailed before the registration expires.
27(1) Would qualify for an initial registration.
30(3) Pays to the bureau a nonrefundable renewal fee based
4(i) Ten or fewer homes, $150.
5(ii) Eleven or more new homes, $300.
6Section 7. Proof of registration.
7A home builder shall include its registration number in all
8advertisements, including business cards, distributed within
9this Commonwealth and on all contracts, estimates and proposals
10with consumers of home construction services in this
11Commonwealth. A home builder shall display its registration
12number on all properties at which he is performing services
13pursuant to a home construction contract.
14Section 8. Home construction contracts.
19(2) is signed by all of the following:
20(i) the consumer or his agent; and
21(ii) the home builder or his agent;
25(4) contains the date the contract was signed;
1(7) includes a description of the work to be performed,
2the materials to be used and a set of specifications that
3cannot be changed without a written change order signed by
4the consumer and the home builder;
7(9) includes the amount of any down payment plus any
8amount advanced for the purchase of special order materials.
9The amount of the down payment and the cost of the special
10order materials must be listed separately;
11(10) includes the names, addresses and telephone numbers
12of all subcontractors on the project known at the date of
13signing the contract. For the purposes of this paragraph, a
14post office box number alone shall not be considered an
16(11) except as provided in section 14, provides that the
17home builder agrees to maintain liability insurance covering
18personal injury in an amount not less than $300,000 and
19insurance covering property damage caused by the work of a
20home builder in an amount not less than $300,000 and
21identifies the current amount of insurance coverage
22maintained at the time of signing the contract;
1provisions of section 7 of the act of December 17, 1968
2(P.L.1224, No.387), known as the Unfair Trade Practices and
3Consumer Protection Law, shall be permitted to rescind the
4contract without penalty regardless of where the contract was
5signed, within three business days following the date of
6signing. A home construction contract that does not contain a
7notice of this right of rescission is voidable by the consumer.
11(d) Arbitration clause.--Nothing in this act shall preclude
12the court from setting aside an arbitration clause on any basis
13permitted under Pennsylvania law. If the contract contains an
14arbitration clause, it shall meet the following requirements or
15be deemed void by the court upon motion of either party, filed
16prior to the commencement of arbitration:
17(1) the text of the clause must be in capital letters;
4(1) A hold harmless clause in favor of the home builder.
18(8) A clause by which the consumer relieves the home
19builder from liability for acts committed by the home builder
20or the home builder's agents in the collection of any
21payments or in repossession of any goods.
26(i) the contract establishes a procedure by which
27the consumer can choose not to renew the provision or
28provisions, thereby avoiding any new fees or charges, by
29providing written notice to the home builder via first
30class mail postmarked no later than three business days
1prior to any renewal;
4(iii) the contract includes a provision requiring
5the home builder to notify the consumer of any automatic
6or recurring renewal, and the consumer's option to cancel
7such renewal, by mail not earlier than 20 days and not
8later than ten days prior to the date of any such
10(f) Home builder's recovery right.--Nothing in this section
11shall preclude a home builder who has complied with subsection
12(a) from the recovery of payment for work performed based on the
13reasonable value of services which were requested by the
14consumer if a court determines that it would be inequitable to
15deny such recovery.
16Section 9. Home construction fraud.
19(1) makes a materially false statement to induce,
20encourage or solicit a person to enter into any written or
21oral agreement for home building services or to justify an
22increase in the previously agreed-upon price;
23(2) receives any advance payment for home building
24services and fails to perform or provide such services when
25specified in the contract taking into account any force
26majeure or unforeseen labor strike that would extend the time
27frame or unless extended by agreement with the consumer and
28fails to return the payment received for such services which
29were not provided by that date;
30(3) while soliciting a person to enter into an agreement
1for home building services, misrepresents or conceals the
2home builder's real name, the name of the home building
3business, liability insurance information or home builder's
4business address or any other identifying information;
5(4) subsequent to entering into an agreement for home
6building services, changes the name of the home building
7business, liability insurance information, the home builder's
8address or any other identifying information without advising
9the consumer in writing within ten days following any such
22(2) Where a person commits an offense under subsection
23(a) and the victim is 60 years of age or older, the grading
24of the offense shall be one grade higher than specified in
25paragraph (1). This paragraph shall not be applicable to a
26person whose sentence would be enhanced pursuant to paragraph
1constitute a felony of the second degree. For this paragraph
2to be applicable, the second or subsequent offense must have
3occurred after the first conviction. Paragraph (2) shall not
4be applicable to a person whose sentence would be enhanced
5pursuant to this paragraph.
6(4) In addition to any other penalty imposed by this
7act, the court may revoke or suspend the certificate of
8registration issued under section 5. At the time of
9sentencing, the court shall state the reasons for such
10revocation or suspension. A person whose registration has
11been revoked or suspended may petition the court of original
12jurisdiction for reinstatement after a period of five years
13from the date of revocation or suspension, or as specified in
14the court's order.
19(2) In addition to the authority conferred upon the
20Attorney General by the act of October 15, 1980 (P.L.950,
21No.164), known as the Commonwealth Attorneys Act, the
22Attorney General shall have the authority to investigate and
23institute criminal proceedings for any violation of this
24section or any series of such violations involving more than
25one county of this Commonwealth or involving any county of
26this Commonwealth and another state. No person charged with a
27violation of this section by the Attorney General shall have
28standing to challenge the authority of the Attorney General
29to investigate or prosecute the case, and, if any such
30challenge is made, the challenge shall be dismissed and no
3Section 10. Prohibited acts.
4(a) Specific conduct.--No person shall:
5(1) Fail to register as required by this act.
6(2) Fail to refund the amount paid under a home
7construction contract within ten days of either the
8acceptance and execution of a return receipt for certified
9mail containing a written request for a refund or the refusal
10to accept the certified mail sent to the home builder's last
11known address if all of the following apply:
16(3) Accept a municipal certificate of occupancy or other
17proof that performance of a home construction contract is
18complete or satisfactorily concluded with knowledge that the
19document or proof is false and the performance is incomplete.
20(4) Utter, offer or use a completion certificate or
21other proof that a home construction contract is complete or
22satisfactorily concluded when the person knows or has reason
23to know that the document or proof is false and is made to
24accomplish any of the following:
1(5) Abandon or fail to perform, without justification,
2any home construction contract. For purposes of this
3paragraph, the term "justification" shall include nonpayment
4by the consumer as required under the contract or any other
5violation of the contract by the consumer.
6(6) Deviate from or disregard plans or specifications,
7in any material respect, without a written change order dated
8and signed by both the home builder and consumer, which
9contains the accompanying price changes for each deviation.
10(7) Prepare, arrange, accept or participate in the
11financing of a home construction contract with knowledge that
12the home construction contract states a greater monetary
13obligation than the actual price.
16(i) Accept a home construction contract.
17(ii) Perform a home construction contract.
21(b) Criminal penalty.--In addition to any other penalty
22provided by law, a person who knowingly violates any provision
23of this act for which a criminal penalty is not otherwise
24provided commits a summary offense subject to the fine
25established in 18 Pa.C.S. § 1105 (relating to sentence of
26imprisonment for summary offenses).
27Section 11. Unfair Trade Practices and Consumer Protection Law.
4Section 12. Consumer information pamphlet.
5The bureau shall develop, in consultation with the home
6building industry, a consumer information pamphlet that sets
7forth the rights and remedies for consumers as provided for in
8this act, the toll-free number established under section 3 and
9any other information that the bureau considers reasonably
10necessary to assist consumers. The bureau shall provide each
11registered home builder with copies of this pamphlet to
12distribute to consumers.
13Section 13. Regulations.
16Section 14. Preemption of local registration.
17Registration under this act shall preclude any requirement of
18payment of a fee or registration or licensing of any home
19builder by any political subdivision. Political subdivisions
20shall be permitted to require building permits and local
21enforcement of the building code for that political subdivision,
22for which a reasonable fee may be charged. Except for a building
23permit for construction to be performed directly by a landowner
24solely for the landowner's own use, the political subdivision
25may not issue a permit for home building unless the permit
26includes the home builder's registration number. This provision
27does not affect a political subdivision's responsibilities or
28authority under the act of November 10, 1999 (P.L.491, No.45),
29known as the Pennsylvania Construction Code Act, or the
30requirements under section 302(e) of the act of June 2, 1915
1(P.L.736, No.338), known as the Workers' Compensation Act,
2regarding workers' compensation. This provision does not affect
3existing licensing standards in effect on the effective date of
4this act with respect to electricians, plumbers, sheet metal
5workers, warm air installers and fire suppression workers, where
6licensing is conditioned on requirements of testing or
7possession of certificates obtained through specific training in
8electricity, plumbing, sheet metal work, warm air installation
9and fire suppression. This provision does not affect standards
10for liability insurance adopted by a political subdivision prior
11to January 1, 2008, and which are in effect on the effective
12date of this section.
13Section 15. Home Builder Guaranty Fund.
14(a) Establishment.--The Home Builder Guaranty Fund is hereby
15established in the State Treasury and shall be administered by
16the bureau in accordance with this act. All moneys deposited in
17the fund shall not be considered general revenue of the
18Commonwealth but shall be used only to effectuate the purposes
19of this act.
20(b) Guaranty fund fee.--A home builder must pay a guaranty
21fund fee of $50 for each construction or building permit issued
22by a political subdivision. The fee shall be collected by the
23political subdivision issuing the permit and be in addition to
24any other fees imposed for a permit.
28(d) Minimum balance.--
1least $2,000,000. If the bureau finds that, because of
2pending claims, the amount of the fund may fall below
3$1,000,000, the bureau shall assess each home builder $25.
4However, under this subsection the bureau may not make more
5than one assessment in any calendar year.
6(2) Failure to make payments to the fund as required by
7this act shall result in suspension of registration. Barring
8the existence of other grounds for suspension or revocation
9of registration, the certificate shall be reinstated upon
10full payment of all required fees.
14(f) Waiver of biennial fund fee.--In the event that the
15bureau finds that the fund is adequately funded, the bureau
16shall, during the first month of each fiscal year, adjust or
17waive any biennial fund fee for the fiscal year.
18Section 16. Claims against fund.
19(a) General rule.--A consumer may be compensated from the
20fund for an actual loss that results from an act or omission by
21a home builder in the performance of a home construction
22contract or a violation of this act by a home builder as found
23by a court of competent jurisdiction, upon the final
24determination of or expiration of time for appeal in connection
25with any such judgment or if a consumer is prevented from
26collecting the entirety of a final judgment as a result of the
27home builder's filing for bankruptcy protection under Federal
28law. In the event the bureau and the home builder enter into an
29assurance of voluntary compliance, which requires payment of
30restitution to a consumer and the home builder fails to pay as
1required by the terms of the assurance of voluntary compliance,
2the bureau shall issue an order of payment from the fund to the
3consumer. The payment made pursuant to an assurance of voluntary
4compliance shall be considered a claim for the purposes of
5reimbursement of the fund; however, subsection (f) shall not be
7(b) Acts of subcontractors and employees.--For purposes of
8recovery from the fund, the act or omission of a home builder
9includes the act or omission of a subcontractor or employee of
10the home builder whether or not any express agency relationship
11exists so long as the subcontractor or employee acted within the
12scope of the home construction contract.
13(c) Limitation on recovery.--
14(1) The bureau may not provide from the fund:
17(ii) More than $200,000 to all consumers for acts or
18omissions of one home builder unless, after the bureau
19has paid out $200,000 on account of acts or omissions of
20the home builder, the home builder reimburses the fund.
21However, in no case shall any one home builder be
22indebted, at any one time, to the fund for more than
24(iii) An amount for any attorney fees, consequential
25damages, court costs, interest, personal injury damages
26or punitive damages, except as may be provided in an
27assurance of voluntary compliance.
1made on one contract.
12In the event the consumer does not receive payment in
13full of a judgment amount from the fund, the judgment shall
14be deemed to be satisfied only to the extent of the payment
15received, and the judgment shall continue in full force and
16effect with respect to the amount still owed until the
17consumer receives payment in full.
30(e) Limitation period.--A claim must be made against the
1fund within two years after the consumer obtains an entry of
2final judgment or decree against the home builder and all appeal
3rights have expired or been exhausted, or, in the case of an
4assurance of voluntary compliance, within the later of two years
5of entry into such assurance or one year after nonpayment
6according to the terms of the assurance.
7(f) Offer of proof.--In order to recover from the fund a
8consumer must offer proof to the bureau that the consumer has
9exhausted all reasonable actions available at law and in equity
10to collect the unpaid amount of a final judgment.
11(g) Partial payments for fund integrity.--In order to
12preserve the integrity of the fund, the bureau may order payment
13out of the fund of an amount less than the judgment amount or
14the amount agreed to be paid in an assurance of voluntary
15compliance. The balance remaining due to the consumer shall be
16paid from the fund pursuant to subsection (h).
17(h) Special order of payment.--If the money in the fund is
18insufficient to satisfy any duly authorized claim or portion
19thereof, the bureau shall, when sufficient money exists in the
20fund, satisfy the unpaid claims or portions thereof, in the
21order that those claims or portions thereof were originally
23(i) Investigation by bureau.--As provided in section 17, if
24the bureau pays any amount from the fund as a result of a claim
25against a home builder, the bureau may conduct an investigation
26to determine if the home builder is possessed of assets liable
27to be sold or applied in satisfaction of the claim on the fund.
28If the bureau discovers any such assets, the bureau may take any
29lawful action necessary for the reimbursement of the fund.
30(j) Revocation caused by payment of claim.--If the bureau
1makes a payment of an amount as a result of a claim against a
2home builder, the bureau shall revoke the certificate of the
3home builder, and the home builder shall not be eligible to
4receive a new or renewed certificate until the home builder has
5repaid such amount in full, plus interest, from the time the
6payment is made from the fund, except that the bureau may permit
7a home builder to receive a new or renewed certificate after the
8home builder has entered into an agreement with the bureau
9whereby the home builder agrees to repay the fund in full in the
10form of periodic payments over a set period of time. If the home
11builder fails to pay in accordance with the terms of the
12agreement, the bureau shall automatically suspend the home
14Section 17. Procedure for submitting claims.
15(a) Initial claim.--In order to recover from the fund, a
16consumer must submit to the bureau the documentation required
17under section 16(f), together with a copy of the judgment and
18evidence that the judgment has not been appealed or a copy of
19the assurance of voluntary compliance and a certification that
20the home builder has failed to pay or evidence that the consumer
21has been prevented from collecting the entirety of a final
22judgment as a result of the home builder's filing for bankruptcy
23protection under Federal law. In the latter event, the consumer
24shall only be entitled to collect from the fund the amount he
25was prevented from collecting as a result of the filing.
26(b) Copy of claim to home builder.--On receipt of a claim
27pursuant to this section, the bureau shall send a copy of the
28claim to the home builder alleged to be responsible for the
29actual loss. The home builder shall file a response or objection
30to the claim within 30 days of the receipt of the notice of such
1claim. Failure to respond to the claim shall constitute a waiver
2of any defense or objection to the claim. The only defense a
3home builder may raise in his response is a defense of payment
4in full of the claim.
8Section 18. Reimbursement of fund.
17(i) The amount paid from the fund.
23(b) Suit for nonpayment.--If, within 30 days after the
24bureau gives notice, a home builder on whose account a claim was
25paid fails to reimburse the fund in full, the bureau may
26initiate an action against the home builder in a court of
27competent jurisdiction for the unreimbursed amount.
30(1) a claim was paid from the fund on account of the
7(d) Withholding of tax refund.--If a person is delinquent
8for at least one year in making payments to the bureau for the
9purposes of reimbursing the fund, the Department of Revenue
10shall credit the amount of any refundable overpayment of tax
11imposed by Article III of the act of March 4, 1971 (P.L.6,
12No.2), known as the Tax Reform Code of 1971, against the
13delinquency in respect to this act on the part of the person who
14made the overpayment.
15(e) Bankruptcy proceedings.--For the purpose of excepting to
16a discharge of an individual or business under Federal
17bankruptcy law, the bureau shall be a creditor of the individual
18or business for the amount paid from the fund.
19Section 19. Notice of suspension or revocation.
23Section 20. Exemptions.
28(2) The Federal Government.
29Section 21. Building standards.
30All work performed by a home builder under a home
1construction contract shall comply with the requirements of the
2International Residential Code and the International Existing
3Building Code as currently adopted by the Department of Labor
4and Industry under the act of November 10, 1999 (P.L.491,
5No.45), known as the Pennsylvania Construction Code Act,
6regardless of whether a permit or inspection is required by the
7municipality in which the work is being performed.
8Section 22. Repeal.
11Section 23. Effective date.
12This act shall take effect in 180 days.