PRINTER'S NO. 3039
No. 2283 Session of 1998
INTRODUCED BY WOGAN, McCALL, PERZEL, BELARDI, COY, DeLUCA, ROONEY, SERAFINI, MELIO, FICHTER, TRAVAGLIO, WOJNAROSKI, BELFANTI, E. Z. TAYLOR, GIGLIOTTI, TRELLO, SURRA, LAUGHLIN, OLASZ, J. TAYLOR, STABACK, ORIE, SHANER, MARSICO, VAN HORNE, TRICH, D. W. SNYDER AND STEELMAN, MARCH 11, 1998
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, MARCH 11, 1998
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 3 Law. 4 Section 11. Regulations. 5 Section 12. Exemptions. 6 Section 13. Home improvement contracts. 7 Section 14. Home Improvement Guaranty Fund. 8 Section 15. Claims against fund. 9 Section 16. Procedure for submitting claims. 10 Section 17. Reimbursement of fund. 11 Section 18. Notice of suspension or revocation. 12 Section 19. Effective date. 13 Section 1. Short title. 14 This act shall be known and may be cited as the Home 15 Improvement Consumer Protection Act. 16 Section 2. Definitions. 17 The following words and phrases when used in this act shall 18 have the meanings given to them in this section unless the 19 context clearly indicates otherwise: 20 "Bureau." The Bureau of Consumer Protection within the 21 Office of Attorney General of the Commonwealth. 22 "Certificate." A certificate of registration issued pursuant 23 to this act. 24 "Contractor." Any person, including a subcontractor or 25 employee of another contractor, who owns and operates a home 26 improvement business or who undertakes, offers to undertake or 27 agrees to perform any home improvement. The term does not 28 include a person for whom the total cash value of all of that 29 person's home improvements is less than $3,000 during any period 30 of 12 consecutive months. 19980H2283B3039 - 2 -
1 "Department." The Department of Labor and Industry of the 2 Commonwealth. 3 "Fund." The Home Improvement Guaranty Fund established in 4 section 14. 5 "Home improvement." The term includes, but is not limited 6 to, the repair, replacement, remodeling, alteration, conversion, 7 modernization, improvement, rehabilitation or sandblasting of or 8 addition to any land or building, or that portion thereof, which 9 is used or designed to be used as a private residence or the 10 construction, replacement, installation or improvement of 11 driveways, swimming pools, porches, garages, roofs, siding, 12 insulation, solar energy systems, security systems, flooring, 13 patios, fences, doors and windows and waterproofing in 14 connection with such land or building or that portion thereof 15 which is used or designed to be used as a private residence in 16 which the total cash price for all work agreed upon between the 17 contractor and owner exceeds $200. The term does not include: 18 (1) The construction of a new home. 19 (2) The sale of goods or materials by a seller who 20 neither arranges to perform nor performs, directly or 21 indirectly, any work or labor in connection with the 22 installation or application of the goods or materials. 23 (3) The sale of services furnished for commercial or 24 business use or for resale, provided commercial or business 25 service takes place somewhere other than at a private 26 residence. 27 (4) The sale of appliances, such as stoves, 28 refrigerators, freezers, room air conditioners and others 29 which are designed for and are easily removable from the 30 premises without material alteration thereof. 19980H2283B3039 - 3 -
1 (5) Any work performed without compensation by the owner 2 on the owner's private residence or residential rental 3 property. 4 "Home improvement contract." An agreement between a 5 contractor or salesperson and an owner for the performance of a 6 home improvement. 7 "Owner." A person who owns or resides in a private residence 8 and includes any agent of that person. An owner of a private 9 residence shall not be required to reside in such residence to 10 be deemed an owner under this act. A person who owns four or 11 more private residences shall not be deemed an owner except with 12 respect to the person's primary residence or the part of the 13 building which houses the primary residence of the owner. 14 "Person." An individual, partnership, limited partnership, 15 limited liability company, joint venture or corporation. 16 "Private residence." A single family dwelling, a multifamily 17 dwelling consisting of not more than three units or a single 18 unit located within any multifamily dwelling, including, but not 19 limited to, condominiums and co-op units. 20 "Salesperson." Any individual who negotiates or offers to 21 negotiate a home improvement contract with an owner or solicits 22 or otherwise endeavors to procure by any means whatsoever, 23 directly or indirectly, a home improvement contract from an 24 owner. 25 Section 3. Registration of contractors and salespersons. 26 (a) General rule.--No person shall hold himself out as a 27 contractor or salesperson, nor shall that person perform any 28 home improvement, without first obtaining a certificate from the 29 department as provided in this act, except that a person 30 registered as a contractor shall not be required to obtain a 19980H2283B3039 - 4 -
1 salesperson's certificate. An individual who has provided 2 personal information to the department when registering on 3 behalf of a business is not required to register as an 4 individual so long as the person performs home improvements 5 solely on behalf of the registered business. 6 (b) Salespersons.-- 7 (1) No contractor shall employ or use the services of 8 any salesperson to procure business from an owner unless the 9 salesperson is registered under this act. 10 (2) No individual shall act as a home improvement 11 salesperson on behalf of an unregistered contractor. 12 (c) Liability.--No business entity registered pursuant to 13 this act shall be relieved of responsibility under this act for 14 the conduct and acts of its agents, employees, officers or 15 directors, nor shall any individual be relieved of 16 responsibility under this act by reason of his employment or 17 relationship with such business entity. 18 (d) Effects of unregistered status.--No unregistered 19 contractor or salesperson shall have standing to sue, countersue 20 or raise a defense of nonpayment in any dispute arising from a 21 home improvement. No unregistered contractor or salesperson may 22 file a mechanic's lien with respect to a home improvement. 23 (e) Public access to registration information.--The 24 department shall maintain a toll-free telephone number from 25 which a caller can obtain information as to whether a contractor 26 or salesperson is registered with the department pursuant to 27 this act. 28 Section 4. Procedures for registration. 29 (a) Application.--A person desiring a certificate as a 30 contractor or salesperson shall apply to the department in 19980H2283B3039 - 5 -
1 writing on a form provided by the department. The application 2 shall include, but not be limited to, the following information: 3 (1) For an individual applicant, the name, home address, 4 home telephone number and driver's license identification 5 number of the applicant, as well as the individual's business 6 name, address and telephone number if different. 7 (2) For a partnership applicant, the name, home address, 8 home telephone number and driver's license identification 9 number of each partner as well as the partnership name, 10 address and telephone number. 11 (3) For a corporation, limited liability company or 12 limited partnership applicant, the name, home address, home 13 telephone number and driver's license identification number 14 of each officer, each director or each individual holding 15 greater then a 10% stake in the business, as well as the 16 entity's business name, address and telephone number. 17 (4) For an out-of-State corporation, limited liability 18 or limited partnership, the name and address of the entity's 19 resident agent or registered office provider within this 20 Commonwealth. 21 (5) For a joint venture applicant, the name, address and 22 telephone number of the joint venture, as well as the name, 23 address and telephone number of each party to the joint 24 venture. When the parties to a joint venture include business 25 entities, the information required from such entities 26 pursuant to paragraphs (2) and (3) shall also be provided. 27 (6) If the applicant is applying for a contractor 28 registration, a complete description of the nature of the 29 contracting business of the applicant. 30 (7) A statement whether: 19980H2283B3039 - 6 -
1 (i) The individual making application, even if doing 2 so as part of a business entity application, has ever 3 been convicted of a criminal offense related to a home 4 improvement transaction, fraud, theft, a crime of 5 deception or a crime involving fraudulent business 6 practices, as well as a statement whether the applicant 7 has ever had a civil judgment entered against the 8 applicant or a business in which the applicant held an 9 interest that was related to a home improvement 10 transaction. 11 (ii) Whether the applicant's certificate or the 12 certificate of a business with which the individual 13 making application held an interest, has ever been 14 revoked or suspended pursuant to an order issued by a 15 court of competent jurisdiction. 16 (8) Any financial information deemed appropriate by the 17 department or the bureau. 18 (9) Whether within the last ten years the applicant has 19 ever been suspended or debarred from participating in any 20 Federal, State or local program through which funding or 21 other assistance is provided to consumers for home 22 improvements. 23 (b) Grounds for refusal of certificate.--The department may 24 not provide a certificate of registration to any applicant: 25 (1) who has had a certificate of registration revoked 26 within five years preceding the application; or 27 (2) whose officer or principal has had his registration 28 revoked within five years preceding the application. 29 (c) Contractual relationships.--In addition to the 30 information required in subsection (a), a contractor shall be 19980H2283B3039 - 7 -
1 required to notify the department of any employment or other 2 contractual relationship between the contractor and any 3 salesperson. Information under this subsection shall be updated 4 by the contractor, on a form provided by the department, on an 5 as-needed basis throughout the period of registration. A 6 contractor shall be required to submit said information within 7 ten days of entering into that relationship with a salesperson. 8 Section 5. Application fees. 9 (a) General rule.--Each application for a certificate for: 10 (1) A home improvement contractor or renewal of that 11 certificate shall be accompanied by a fee of $100. 12 (2) A salesperson or renewal of that certificate shall 13 be accompanied by a fee of $25. 14 (b) Dedicated use of fees.--Fifty percent of the application 15 fees collected shall be used by the department for the purposes 16 of fulfilling its obligations under this act relating to 17 registration. The balance of the application fees collected 18 shall be used by the bureau for the purposes of carrying out and 19 enforcing the provisions of this act. The department and the 20 bureau shall establish rules or regulations regarding payment, 21 collection and distribution of money payable to and received by 22 the department pursuant to this section. 23 (c) Multiple registrations.--Business entity applicants 24 shall be required to pay the application fee in this section and 25 the fund fee set forth in section 14 only as a business entity, 26 regardless of the number of individuals who provide registration 27 information pursuant to this act. 28 Section 6. Certificate of registration and renewal. 29 (a) Duty of department.--Upon receipt of a completed 30 application and fee, the department shall issue and deliver to 19980H2283B3039 - 8 -
1 the applicant a certificate to engage in the business for which 2 the application was made or refuse to issue the certificate 3 pursuant to this act or an order of a court of competent 4 jurisdiction. 5 (b) Nontransferability.--Certificates issued to home 6 improvement contractors or salespersons shall not be 7 transferable or assignable. 8 (c) Duration of certificate.--All certificates issued under 9 this act shall expire biennially. The expiration date shall be 10 placed upon the certificate. The fee for renewal of a 11 certificate shall be the same as the fee charged for an original 12 application under section 5. The information required pursuant 13 to section 4 shall also be required for renewal of 14 certification, as well as any additional information the 15 department or bureau deems appropriate. The department shall 16 provide a form for renewal of registration. 17 (d) Renewal obligation.--Failure to receive a notice of 18 expiration or a renewal application shall not exempt a 19 contractor or salesperson from the obligation to renew. 20 (e) Grounds for denial and revocation of registration.--The 21 department shall deny registration to any contractor or 22 salesperson against whom a civil judgment has been entered in 23 favor of an owner that was related to a home improvement 24 transaction if the transaction occurred after the effective date 25 of this act and the judgment remains unsatisfied. The 26 department, with bureau approval, may permit a contractor or 27 salesperson to receive a new or renewed certificate after the 28 contractor has entered into a written agreement whereby the 29 contractor agrees to pay the judgment in full in the form of 30 periodic payments over a specific period of time. If the 19980H2283B3039 - 9 -
1 contractor or salesperson does not pay in accordance with the 2 terms of the agreement, the department shall immediately revoke 3 the contractor's or salesperson's certificate of registration. 4 Section 7. Certificate holder to exhibit and advertise 5 certificate. 6 Contractors and salespersons shall exhibit their certificates 7 upon request by any interested party, state in any advertisement 8 the fact that they are registered, and include their 9 registration numbers. 10 Section 8. Prohibited acts. 11 No person shall: 12 (1) Present or attempt to present, as his own, the 13 certificate of another person. 14 (2) Knowingly give false information when applying for a 15 certificate or a renewal of a certificate. 16 (3) Present himself falsely as or impersonate a 17 registered home improvement contractor or salesperson. 18 (4) Use or attempt to use a certificate which has 19 expired or which has been revoked. 20 (5) Offer to make or make any home improvement without 21 having a current certificate under this act. 22 (6) Represent in any manner that his registration 23 constitutes an endorsement of the quality of his workmanship 24 or of his competency by the department or the bureau. 25 (7) Fail to refund the amount paid for a home 26 improvement within ten days of a written request mailed or 27 delivered to the contractor's last known address, if: 28 (i) No substantial portion of the contracted work 29 has been performed at the time of the request. 30 (ii) More than 30 days has elapsed since the 19980H2283B3039 - 10 -
1 starting date specified in the written contract or the 2 date of the contract if such contract does not specify a 3 starting date. 4 (8) Accept a completion certificate or other proof that 5 performance of a home improvement contract is complete or 6 satisfactorily concluded with knowledge that the document or 7 proof is false and the performance is incomplete. 8 (9) Utter, offer or use a completion certificate or 9 other proof that a home improvement contract is complete or 10 satisfactorily concluded: 11 (i) to make or accept an assignment or negotiation 12 of the right to receive payment under a home improvement 13 contract; or 14 (ii) to get or grant credit or a loan on security of 15 the right to receive payment under a home improvement 16 contract; 17 when the person knows or has reason to know that such 18 document or proof is false. 19 (10) Abandon or fail to perform, without justification, 20 a home improvement contract. 21 (11) Deviate materially from the plans or specifications 22 without the express, verifiable consent of the owner. 23 (12) Prepare, arrange, accept or participate in 24 arranging a mortgage, promissory note or other evidence of 25 debt for performing or selling a home improvement with 26 knowledge that the evidence of debt states a greater monetary 27 obligation than the consideration, including a time sale 28 price, for a home improvement. 29 (13) Advertise or offer, by any means, to perform a home 30 improvement if the person does not intend: 19980H2283B3039 - 11 -
1 (i) to accept a home improvement contract; 2 (ii) to perform the home improvement; or 3 (iii) to charge for the home improvement at the 4 price advertised or offered. 5 (14) Violate a building law or ordinance of this 6 Commonwealth or political subdivision, a safety or labor law 7 of this Commonwealth or political subdivision, or the act of 8 June 2, 1915 (P.L.736, No.338), known as the Workers' 9 Compensation Act. 10 (15) Fail to pay all taxes associated with home 11 improvement sales or contracting. 12 (16) Perform or sell a home improvement with or through 13 another person who is required to hold a certificate pursuant 14 to this act but who does not hold the certificate. 15 (17) Act as a contractor or sell a home improvement 16 under a name other than that which is stated on the person's 17 certificate. 18 (18) Demand or receive any payment for a home 19 improvement before the home improvement contract is signed. 20 (19) Receive a deposit of more than one-third of the 21 home improvement contract price. 22 (20) While acting as a salesperson, fail to account for 23 or remit to the contractor whom the salesperson represents a 24 payment received in connection with a home improvement. 25 (21) Fail to pay fees or assessments required by this 26 act. 27 (22) Be suspended or debarred from a Federal, State or 28 local program as described in section 4(a)(9). 29 Section 9. Home improvement fraud. 30 (a) Offense defined.--A person commits the offense of home 19980H2283B3039 - 12 -
1 improvement fraud if, with intent to defraud or injure anyone or 2 with knowledge that he is facilitating a fraud or injury to be 3 perpetrated by anyone, the actor: 4 (1) makes a false or misleading statement for the 5 purpose of inducing, encouraging or soliciting a person to 6 enter into any written or oral contract or agreement for a 7 home improvement or purchase of home improvement materials; 8 (2) performs services or uses materials which cause the 9 cost of the home improvement to exceed any previously agreed- 10 to price without the permission of the consumer; 11 (3) misrepresents or conceals, while soliciting for a 12 home improvement or purchasing home improvement materials, 13 the contractor's or salesperson's real name, the name of the 14 contractor's business, the contractor's business address or 15 any other identifying information; 16 (4) damages the property of a person with the intent of 17 having that person enter into a written or oral agreement or 18 contract for home improvement or purchase of home improvement 19 materials; 20 (5) misrepresents himself, herself or another to be an 21 employee or agent of any unit of the Federal, Commonwealth or 22 municipal government or any other governmental unit, or an 23 employee or agent of any public utility, with the intent to 24 cause a person to enter into, with himself, herself or 25 another, any contract or agreement for home improvement or 26 purchase of home improvement materials; 27 (6) executes or materially alters a home improvement 28 contract, mortgage, promissory note or other document 29 incident to performing or selling a home improvement; or 30 (7) directly or indirectly publishes a false, deceptive 19980H2283B3039 - 13 -
1 or misleading advertisement about home improvement. 2 (b) Grading of the offense.-- 3 (1) A violation of subsection (a)(1), (3), (4), (5) or 4 (6) constitutes: 5 (i) a felony of the third degree if the amount of 6 the contract or agreement solicited, or the amount of the 7 damage pursuant to paragraph (4), exceeds $1,000; 8 (ii) a misdemeanor of the first degree if the amount 9 of the contract or agreement solicited, or the amount of 10 the damage pursuant to paragraph (4), is $1,000 or less; 11 or 12 (iii) a misdemeanor of the first degree if the 13 amount involved cannot be satisfactorily ascertained. 14 (2) A violation of subsection (a)(2) constitutes: 15 (i) a felony of the third degree if the amount of 16 the overcharge is greater than 25% over the previously 17 agreed-to price; 18 (ii) a misdemeanor of the first degree if the amount 19 of the overcharge is 25% or less of the previously 20 agreed-to price; or 21 (iii) a misdemeanor of the first degree if the 22 amount of the overcharge cannot be satisfactorily 23 ascertained. 24 (3) A violation of subsection (a)(7) constitutes a 25 misdemeanor of the first degree. 26 (4) Amounts involved pursuant to one scheme or course of 27 conduct, whether involving one or more victims, may be 28 aggregated in determining the grade of the offense pursuant 29 to paragraph (1) or (2). 30 (5) Where the person commits an offense under subsection 19980H2283B3039 - 14 -
1 (a) and the victim of the offense is 60 years of age or 2 older, the grading of the offense shall be one grade higher 3 than specified in paragraphs (1), (2) and (3). 4 (6) Notwithstanding any other provisions of this 5 section, where the 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, each element of the second or subsequent offense 10 must have occurred after the first conviction. Paragraph (5) 11 shall not be applicable to individuals convicted pursuant to 12 this paragraph. 13 (7) In addition to any other penalty imposed by the 14 court, the court may revoke or suspend the certificate of 15 registration issued under 12 Pa.C.S. Ch. 53 (relating to home 16 improvement practices). At the time of sentencing, the court 17 shall state the reasons for such 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 19980H2283B3039 - 15 -
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 (d) Definition.--As used in this section, the term "home 7 improvement" means the same as "home improvement" in 12 Pa.C.S. 8 § 5302 (relating to definitions). 9 Section 10. Unfair Trade Practices and Consumer Protection Law. 10 (a) General rule.--A violation of any of the provisions of 11 this act shall be deemed a violation of the act of December 17, 12 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and 13 Consumer Protection Law. 14 (b) Suspension or revocation of registration.--Upon the 15 request of the Attorney General or a district attorney, a court 16 may suspend or revoke a certificate of registration for 17 violations of this act. The court may suspend or revoke a 18 certificate of registration as follows: 19 (1) For the first violation, a suspension of up to one 20 year. 21 (2) For the second violation, a suspension of up to two 22 years. 23 (3) For the third and all subsequent violations, the 24 court may impose any term of suspension or revoke a 25 certificate of registration. 26 Section 11. Regulations. 27 The department may adopt rules and regulations necessary to 28 carry out the provisions of this act relating to registration, 29 and the bureau may adopt rules and regulations necessary to 30 carry out and enforce the other provisions of this act. 19980H2283B3039 - 16 -
1 Section 12. Exemptions. 2 Sections 3, 4, 5, 6, 7, 12, 13, 14, 15, 16 and 18 shall not 3 apply to any of the following persons or organizations: 4 (1) The Commonwealth, municipalities and political 5 subdivisions within the Commonwealth or any department or 6 agency of the Commonwealth or such municipalities. 7 (2) The government of the United States or any of its 8 departments or agencies. 9 (3) Any school, public or private, offering as part of a 10 vocational education program, courses and training in any 11 aspect of home improvement. 12 Section 13. Home improvement contracts. 13 (a) Requirements.--No home improvement contract shall be 14 valid or enforceable against an owner unless it: 15 (1) Is in writing and legible. 16 (2) Is signed by the owner and the contractor, or a 17 salesperson on behalf of a contractor. 18 (3) Contains the entire agreement between the owner and 19 the contractor. 20 (4) Contains the date of the transaction. 21 (5) Contains the name, address and certificate number of 22 the contractor. 23 (6) Contains the approximate starting date and 24 completion date. 25 (7) Is entered into by a registered contractor or a 26 registered salesperson. 27 (8) Provides a notice that gives the toll-free telephone 28 number of the department and states that: 29 (i) each contractor and salesperson must be 30 registered by the department; and 19980H2283B3039 - 17 -
1 (ii) anyone may inquire of the department regarding 2 the status of a contractor or salesperson. 3 (b) Rescission right.--All home improvement contracts shall 4 be subject to section 7 of the act of December 17, 1968 5 (P.L.1224, No.387), known as the Unfair Trade Practices and 6 Consumer Protection Law. 7 (c) Copy to be provided.--A contractor or salesperson shall 8 provide and deliver to the owner, without charge, a completed 9 copy of the home improvement contract at the time the contract 10 is executed. 11 Section 14. Home Improvement Guaranty Fund. 12 (a) Establishment.--The Home Improvement Guaranty Fund is 13 hereby established in the State Treasury and shall be 14 administered by the bureau in accordance with this act. 15 (b) Biennial fund fee.--Each salesperson who applies for a 16 certificate or renewal thereof pursuant to this act shall pay a 17 fee of $50 biennially, and each contractor who applies for a 18 certificate, or renewal thereof, pursuant to this act shall pay 19 a fee of $100 biennially to the fund. The fee shall be payable 20 with the fee for an application for a certificate or renewal 21 thereof as provided in section 5 and shall be refunded in full 22 in the event the applicant is denied a certificate. 23 (c) Minimum balance.-- 24 (1) Payments received under subsection (b) shall be 25 credited to the fund which shall maintain a balance of at 26 least $2,000,000. If the bureau finds that, because of 27 pending claims, the amount of the fund may fall below 28 $1,000,000, the bureau shall assess each contractor $25 and 29 each salesperson $10. However, under this subsection the 30 bureau may not make more than two such assessments in any 19980H2283B3039 - 18 -
1 calendar year. 2 (2) Failure to make payments to the fund as required by 3 this act shall result in suspension of registration. Barring 4 the existence of other grounds for suspension or revocation 5 of registration, the contractor's or salesperson's 6 certificate of registration shall be reinstated upon full 7 payment of all the required fees. 8 (d) Investment.--The moneys of the fund shall be invested 9 and the interest arising from the investments shall be credited 10 to the fund. 11 (e) Waiver of biennial fund fee.--In the event that the 12 bureau finds that the fund is adequately funded, the bureau may, 13 during the first month of each fiscal year, adjust or waive any 14 biennial fund fee for the fiscal year. 15 Section 15. Claims against fund. 16 (a) General rule.--An owner may be compensated from the fund 17 for an actual loss that results from an act or omission or a 18 violation of this act by a registered contractor or salesperson 19 as found by a court of competent jurisdiction, upon the final 20 determination of or expiration of time for appeal in connection 21 with any such judgment. In the event the bureau and a contractor 22 or salesperson enter into an assurance of voluntary compliance, 23 as described in section 5 of the act of December 17, 1968 24 (P.L.1224, No.387), known as the Unfair Trade Practices and 25 Consumer Protection Law, which requires payment of restitution 26 to an owner and the contractor or salesperson fails to pay as 27 required by the terms of the assurance of voluntary compliance, 28 the bureau shall issue an order of payment from the fund to the 29 owner. The payment made pursuant to an assurance of voluntary 30 compliance shall be considered a claim for purposes of 19980H2283B3039 - 19 -
1 reimbursement of the fund, however, subsection (g) shall not be 2 applicable. 3 (b) Acts of subcontractors, salespersons and employees.--For 4 purposes of recovery from the fund, the act or omission of a 5 registered contractor or registered salesperson includes the act 6 or omission of a subcontractor, salesperson or employee of the 7 registered contractor or registered salesperson whether or not 8 any express agency relationship exists. 9 (c) Denial of claim.--The bureau may deny a claim if the 10 bureau finds that the claimant: 11 (1) unreasonably rejected good faith efforts by the 12 contractor or salesperson to resolve the claim; or 13 (2) failed to make good faith efforts to collect the 14 amount due from the contractor or salesperson. 15 (d) Limitation on recovery.-- 16 (1) The bureau may not provide from the fund: 17 (i) More than $10,000 to one claimant for acts or 18 omissions of one contractor or salesperson. 19 (ii) More than $50,000 to all claimants for acts or 20 omissions of one contractor or salesperson unless, after 21 the bureau has paid out $50,000 on account of acts or 22 omissions of the contractor or salesperson, the 23 contractor or salesperson reimburses the fund. However, 24 in no case shall any one contractor or salesperson be 25 indebted, at any one time, to the fund for more than 26 $50,000. 27 (iii) An amount for any attorney fees, consequential 28 damages, court costs, interest, personal injury damages 29 or punitive damages. 30 (iv) An amount as a result of a default judgment in 19980H2283B3039 - 20 -
1 court. 2 (2) In addition to the limits set forth in paragraph 3 (1), a claimant may not recover from the fund more than that 4 claimant's actual loss, to a maximum of $10,000, for a claim 5 made on one contract. A court may, however, allocate 6 responsibility on one contract between contractors and 7 salespersons to a maximum combined responsibility of $10,000. 8 (e) Excluded claimants.-- 9 (1) A claim against the fund based on the act or 10 omission of a particular contractor or salesperson shall not 11 be made by: 12 (i) a spouse or other immediate relative of the 13 contractor or salesperson, or of a party which holds a 14 financial stake in the business of the contractor or 15 salesperson; 16 (ii) an employee, officer, director, partner or 17 other party which holds a financial stake in the business 18 of the contractor or salesperson; or 19 (iii) an immediate relative of an employee, officer, 20 director, partner or other party which holds a financial 21 stake in the business of the contractor or salesperson. 22 (2) An owner may make a claim against the fund only if 23 the owner: 24 (i) resides in the residence as to which the claim 25 is made; or 26 (ii) does not own more than three dwelling places, 27 unless the dwelling place as to which the claim is made 28 is the primary residence of the owner or the part of the 29 building which houses the primary residence of the owner. 30 (f) Limitations period.--A claim must be made against the 19980H2283B3039 - 21 -
1 fund within two years after the claimant obtains an entry of 2 final judgment or decree against the contractor or salesperson 3 and all appeal rights have expired or been exhausted, or, in the 4 case of an assurance of voluntary compliance, within the later 5 of two years of entry into such assurance or one year after 6 nonpayment according to the terms of the assurance. 7 (g) Offer of proof.--In order to recover from the fund the 8 claimant must offer proof to the bureau that the claimant has 9 caused to be issued a writ of execution upon a judgment obtained 10 against the contractor or salesperson, and the officer executing 11 the same has made a return showing that no bank accounts or real 12 property of the contractor liable to be levied upon in 13 satisfaction of the judgment could be found, or that the amount 14 realized on the sale of them or of such of them as were found, 15 under the execution, was insufficient to satisfy the judgment or 16 stating the amount realized and the balance remaining due on the 17 judgment after application thereon of the amount realized. A 18 true and attested copy of the executing officer's return must be 19 attached to an application for fund reimbursement. 20 (h) Partial payments for fund integrity.--In order to 21 preserve the integrity of the fund, the bureau may order payment 22 out of the fund of an amount less than the order issued by the 23 court. The balance remaining due to the claimant shall be paid 24 from the fund pursuant to subsection (i). 25 (i) Special order of payment.--If the money in the fund is 26 insufficient to satisfy any duly authorized claim or portion 27 thereof, the bureau shall, when sufficient money exists in the 28 fund, satisfy the unpaid claims or portions thereof, in the 29 order that those claims or portions thereof were originally 30 determined. 19980H2283B3039 - 22 -
1 (j) Investigation by bureau.--As provided in section 17, if 2 the bureau pays any amount from the fund as a result of a claim 3 against a contractor or salesperson, the bureau may conduct an 4 investigation to determine if the contractor or salesperson is 5 possessed of assets liable to be sold or applied in satisfaction 6 of the claim on the fund. If the bureau discovers any such 7 assets, the bureau may take any action necessary for the 8 reimbursement of the fund. 9 (k) Revocation caused by payment of claim.--If the bureau 10 makes a payment of an amount as a result of a claim against a 11 contractor or salesperson, the department shall revoke the 12 certificate of the contractor or salesperson and the contractor 13 or salesperson shall not be eligible to receive a new or renewed 14 certificate until that contractor or salesperson has repaid such 15 amount in full, plus interest, from the time the payment is made 16 from the fund, except that the department, with bureau approval, 17 may permit a contractor or salesperson to receive a new or 18 renewed certificate after that contractor or salesperson has 19 entered into an agreement with the bureau whereby the contractor 20 or salesperson agrees to repay the fund in full in the form of 21 periodic payments over a set period of time. If the contractor 22 or salesperson fails to pay in accordance with the terms of the 23 agreement, the department shall automatically suspend the 24 contractor's or salesperson's certificate. 25 Section 16. Procedure for submitting claims. 26 (a) Initial claim.--In order to recover from the fund, a 27 claimant must submit to the bureau the documentation required 28 under section 15(g), if applicable, and the following 29 information on a form provided by the bureau: 30 (1) The amount claimed based on the actual loss. 19980H2283B3039 - 23 -
1 (2) The facts giving rise to the claim. 2 (3) Any other evidence that supports the claim. 3 (4) Any other information that the bureau requires. 4 (b) Copy of claim to contractor.--On receipt of a claim 5 pursuant to this section, the bureau shall send a copy of the 6 claim to the contractor alleged to be responsible for the actual 7 loss. 8 (c) General order of payment.--Except as otherwise provided 9 in this act, the bureau shall pay from the fund approved claims 10 in the order that they are submitted. 11 Section 17. Reimbursement of fund. 12 (a) General rule.--After the bureau pays a claim from the 13 fund: 14 (1) The bureau shall be subrogated to all rights of the 15 claimant in the claim up to the amount paid. 16 (2) The claimant shall assign to the bureau all rights 17 of the claimant in the claim up to the amount paid. 18 (3) The bureau has a right to reimbursement of the fund 19 by the contractor or salesperson for: 20 (i) The amount paid from the fund. 21 (ii) Interest on the amount at an annual rate of at 22 least 10%, as set by the bureau. 23 All money that the bureau recovers on a claim shall be deposited 24 in the fund. 25 (b) Suit for nonpayment.--If, within 30 days after the 26 bureau gives notice, a contractor or salesperson on whose 27 account a claim was paid shall fail to reimburse the fund in 28 full, the bureau may initiate an action against the contractor 29 or salesperson in a court of competent jurisdiction for the 30 unreimbursed amount. 19980H2283B3039 - 24 -
1 (c) Judgment.--The bureau is entitled to a judgment for the 2 unreimbursed amount if the bureau proves that: 3 (1) A claim was paid from the fund on account of the 4 contractor or salesperson. 5 (2) The contractor or salesperson has not reimbursed the 6 fund in full. 7 (3) The bureau directed payment based on a final 8 judgment of a court of competent jurisdiction or an assurance 9 of voluntary compliance. 10 (d) Withholding of tax refund.--The bureau may refer to the 11 Department of Revenue for collection, a debt owed to the bureau 12 by an individual or business on whose account or under whose 13 business a claim was paid from the fund and who is at least one 14 year behind in reimbursement payments to the fund. 15 (e) Bankruptcy proceedings.--For the purpose of excepting to 16 a discharge of an individual or business under Federal 17 bankruptcy law, the bureau shall be a creditor of the individual 18 or business for the amount paid from the fund. 19 Section 18. Notice of suspension or revocation. 20 The Administrative Office of Pennsylvania Courts shall report 21 to the department and the bureau any suspension or revocation of 22 a certificate of registration ordered by a court. 23 Section 19. Effective date. 24 This act shall take effect in 180 days. C3L12DMS/19980H2283B3039 - 25 -