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PRIOR PRINTER'S NO. 1017 PRINTER'S NO. 1813

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THE GENERAL ASSEMBLY OF PENNSYLVANIA

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HOUSE BILL
No. 864 Session of 2003

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INTRODUCED BY McCALL, MARCH 12, 2003

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AS REPORTED FROM COMMITTEE ON CONSUMER AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, MAY 13, 2003

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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 TABLE OF CONTENTS
8 Section 1. Short title.
9 Section 2. Definitions.
10 Section 3. Registration of contractors and salespersons.
11 Section 4. Procedures for registration.
12 Section 5. Application fees.
13 Section 6. Certificate of registration and renewal.
14 Section 7. Certificate holder to exhibit and advertise
15 certificate.
16 Section 8. Prohibited acts.
17 Section 9. Home improvement fraud.
18 Section 10. Unfair Trade Practices and Consumer Protection Law.
19 Section 11. Regulations.

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1 Section 12. Exemptions.
2 Section 13. Home improvement contracts.
3 Section 14. Home Improvement Guaranty Fund.
4 Section 15. Claims against fund.
5 Section 16. Procedure for submitting claims.
6 Section 17. Reimbursement of fund.
7 Section 18. Notice of suspension or revocation.
8 Section 19. Effective date.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Short title.
12 This act shall be known and may be cited as the Home
13 Improvement Consumer Protection Act.
14 Section 2. Definitions.
15 The following words and phrases when used in this act shall
16 have the meanings given to them in this section unless the
17 context clearly indicates otherwise:
18 "Bureau." The Bureau of Consumer Protection within the
19 Office of Attorney General of the Commonwealth.
20 "Certificate." A certificate of registration issued pursuant
21 to this act.
22 "Contractor." Any person, including a subcontractor or
23 employee of another contractor, who owns and operates a home
24 improvement business or who undertakes, offers to undertake or
25 agrees to perform any home improvement. The term does not
26 include a person for whom the total cash value of all of that
27 person's home improvements is less than $5,000 during any period
28 of 12 consecutive months.
29 "Fund." The Home Improvement Guaranty Fund established in
30 section 14.
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1 "Home improvement." The term includes, but is not limited
2 to, the repair, replacement, remodeling, alteration, conversion,
3 modernization, improvement, rehabilitation or sandblasting of or
4 addition to any land or building, or that portion thereof, which
5 is used or designed to be used as a private residence or the
6 construction, replacement, installation or improvement of
7 driveways, swimming pools, porches, garages, roofs, siding,
8 insulation, solar energy systems, security systems, flooring,
9 patios, fences, doors and windows and waterproofing in
10 connection with such land or building or that portion thereof
11 which is used or designed to be used as a private residence in
12 which the total cash price for all work agreed upon between the
13 contractor and owner exceeds $200. The term does not include:
14 (1) The construction of a new home.
15 (2) The sale of goods or materials by a seller who
16 neither arranges to perform nor performs, directly or
17 indirectly, any work or labor in connection with the
18 installation or application of the goods or materials.
19 (3) The sale of services furnished for commercial or
20 business use or for resale, provided commercial or business
21 service takes place somewhere other than at a private
22 residence.
23 (4) The sale of appliances, such as stoves,
24 refrigerators, freezers, room air conditioners and others
25 which are designed for and are easily removable from the
26 premises without material alteration exceeding $200.
27 (5) Any work performed without compensation by the owner
28 on the owner's private residence or residential rental
29 property.
30 (6) Any work performed by a landscaper certified by the
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1 Department of Agriculture under the act of December 16, 1992
2 (P.L.1228, No.162), known as the Plant Pest Act, except to
3 the extent that such work involves the construction,
4 replacement, installation or improvement of buildings,
5 driveways, swimming pools, porches, garages, roofs, siding,
6 insulation, solar energy systems, security systems, flooring,
7 patios, nondecorative fences, doors, lighting systems,
8 concrete walkways and windows.
9 (7) THE PROVISION BY THE CONTRACTOR, OR EMPLOYEE <--
10 THEREOF, OF ONLY ADVICE OR INFORMATIONAL ASSISTANCE TO ANY
11 PERSON SEEKING SUCH ADVICE OR INFORMATIONAL ASSISTANCE IN
12 REGARD TO SUCH PERSON'S SELECTION AND PURCHASE OF MATERIALS
13 THAT WILL BE INSTALLED BY A PERSON OR ENTITY OTHER THAN THE
14 CONTRACTOR EVEN IF SUCH INSTALLATION IS ARRANGED BY THE
15 CONTRACTOR OR EMPLOYEE THEREOF.
16 "Home improvement contract." An agreement between a
17 contractor or salesperson and an owner for the performance of a
18 home improvement.
19 "Owner." A person who owns or resides in a private residence
20 and includes any agent of that person. An owner of a private
21 residence shall not be required to reside in such residence to
22 be deemed an owner under this act. A person who owns three or
23 more private residences shall not be deemed an owner except with
24 respect to the person's primary residence or the part of the
25 building which houses the primary residence of the owner.
26 "Person." An individual, partnership, limited partnership,
27 limited liability company, joint venture or corporation.
28 "Private residence." A single family dwelling, a multifamily
29 dwelling consisting of not more than three units or a single
30 unit located within any multifamily dwelling, including, but not
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1 limited to, condominiums and co-op units.
2 "Salesperson." Any person who negotiates or offers to
3 negotiate a home improvement contract with an owner or solicits
4 or otherwise endeavors to procure by any means whatsoever,
5 directly or indirectly, a home improvement contract from an
6 owner. THE TERM DOES NOT INCLUDE A PERSON WHO LACKS THE <--
7 AUTHORIZATION OF HIS EMPLOYER TO NEGOTIATE THE MATERIAL
8 ALTERATION OF STANDARD TERMS, CONDITIONS OR PRICING OF THE
9 EMPLOYER'S HOME IMPROVEMENT CONTRACT OR WHO PROVIDES ONLY ADVICE
10 OR INFORMATIONAL ASSISTANCE IN SUPPORT OF THE SALE OR ATTEMPTED
11 SALE OF A HOME IMPROVEMENT PRODUCT OR SERVICE.
12 "Special order material." Any material purchased by a
13 contractor exclusively for the performance of a specific home
14 improvement contract and that has no value in the performance of
15 another home improvement contract.
16 Section 3. Registration of contractors and salespersons.
17 (a) General rule.--No person shall hold himself out as a
18 contractor or salesperson, nor shall that person perform any
19 home improvement, without first obtaining a certificate from the
20 bureau as provided in this act, except that a person registered
21 as a contractor shall not be required to obtain a salesperson's
22 certificate. An individual who has provided personal information
23 to the bureau when registering on behalf of a business is not
24 required to register as an individual so long as the person
25 performs home improvements solely on behalf of the registered
26 business.
27 (b) Salespersons.--
28 (1) No contractor shall employ or use the services of
29 any salesperson to procure business from an owner unless the
30 salesperson is registered under this act.
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1 (2) No person shall act as a home improvement
2 salesperson on behalf of an unregistered contractor.
3 (c) Liability.--No business entity registered pursuant to
4 this act shall be relieved of responsibility under this act for
5 the conduct and acts of its agents, employees, officers or
6 directors, nor shall any person be relieved of responsibility
7 under this act by reason of his employment or relationship with
8 such business entity.
9 (d) Effects of unregistered status.--No unregistered
10 contractor or salesperson shall have standing to sue, countersue
11 or raise a defense of nonpayment in any dispute arising from a
12 home improvement. No unregistered contractor or salesperson may
13 file a mechanic's lien with respect to a home improvement.
14 (e) Public access to registration information.--The bureau
15 shall maintain a toll-free telephone number from which a caller
16 can obtain information as to whether a contractor or salesperson
17 is registered with the bureau pursuant to this act.
18 Section 4. Procedures for registration.
19 (a) Application.--A person desiring a certificate as a
20 contractor or salesperson shall apply to the bureau in writing
21 on a form provided by the bureau. The application shall include
22 the following information:
23 (1) For an individual applicant, the name, home address,
24 home telephone number and driver's license identification
25 number of the applicant, as well as the individual's business
26 name, address and telephone number if different.
27 (2) For a partnership applicant, the name, home address,
28 home telephone number and driver's license identification
29 number of each partner as well as the partnership name,
30 address and telephone number.
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1 (3) For a corporation, limited liability company or
2 limited partnership applicant, the name, home address, home
3 telephone number and driver's license identification number
4 of each officer, each director or each individual holding
5 greater than a 5% stake in the business, as well as the
6 entity's business name, address and telephone number.
7 (4) For an out-of-State corporation, limited liability
8 or limited partnership, the name and address of the entity's
9 resident agent or registered office provider within this
10 Commonwealth and any registration number or license number
11 issued to the entity by its home state or political
12 subdivision of such other state, if applicable.
13 (5) For a joint venture applicant, the name, address and
14 telephone number of the joint venture, as well as the name,
15 address and telephone number of each party to the joint
16 venture. When the parties to a joint venture include business
17 entities, the information required from such entities
18 pursuant to paragraphs (2) and (3) shall also be provided.
19 (6) If the applicant is applying for a contractor
20 registration, a complete description of the nature of the
21 contracting business of the applicant.
22 (7) A statement whether:
23 (i) The individual making application, even if doing
24 so as part of a business entity application, has ever
25 been convicted of a criminal offense related to a home
26 improvement transaction, fraud, theft, a crime of
27 deception or a crime involving fraudulent business
28 practices, as well as a statement whether the applicant
29 has ever had a civil judgment entered against the
30 applicant or a business in which the applicant held an
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1 interest that was related to a home improvement
2 transaction.
3 (ii) Whether the applicant's certificate or the
4 certificate of a business with which the person making
5 application held an interest, has ever been revoked or
6 suspended pursuant to an order issued by a court of
7 competent jurisdiction in this Commonwealth or any other
8 state or political subdivision thereof.
9 (8) Whether within the last ten years the applicant has
10 ever been suspended or debarred from participating in any
11 Federal, State or local program through which funding or
12 other assistance is provided to consumers for home
13 improvements.
14 (9) If the bureau determines that additional information
15 is necessary to effectuate the purpose of this act, the
16 bureau shall promulgate regulations to require the submission
17 of the additional information.
18 (b) Grounds for refusal of certificate.--The bureau may not
19 provide a certificate of registration to any applicant:
20 (1) who has had a certificate of registration revoked
21 within five years preceding the application;
22 (2) whose officer or principal has had his registration
23 revoked within five years preceding the application; or
24 (3) who has been suspended or debarred within the last
25 ten years from participating in any Federal, State or local
26 program which provides funding to consumers for home
27 improvements.
28 (c) Contractual relationships.--In addition to the
29 information required in subsection (a), a contractor shall be
30 required to notify the bureau of any employment or other
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1 contractual relationship between the contractor and any
2 salesperson. A contractor shall be required to submit such
3 information within 20 days of entering into an employment or
4 other contractual relationship with a salesperson. Information
5 under this subsection shall be updated by the contractor, on a
6 form provided by the bureau, on an as-needed basis throughout
7 the period of registration.
8 (d) Reporting of multiple registration or licensure.--Any
9 registered contractor or salesperson in this Commonwealth who is
10 registered or licensed as a home improvement contractor or
11 salesperson in any other state, or political subdivision
12 thereof, shall report this information to the bureau on the
13 initial registration and biennial registration application. Any
14 disciplinary action taken in such other jurisdiction shall be
15 reported to the bureau on the initial registration application
16 or, if such action occurred subsequent to submission of an
17 initial application, on the biennial registration application or
18 within 90 days of final disposition, whichever is sooner.
19 Multiple registration or licensure shall be noted by the bureau
20 on the contractor's or salesperson's record, and such state, or
21 political subdivision thereof, shall be notified by the bureau
22 of any disciplinary actions taken against such contractor or
23 salesperson in this Commonwealth.
24 Section 5. Application fees.
25 (a) General rule.--Each application for a certificate for:
26 (1) A home improvement contractor or renewal of that
27 certificate shall be accompanied by a fee of $50.
28 (2) A salesperson or renewal of that certificate shall
29 be accompanied by a fee of $25.
30 (b) Credit for municipal fees.--
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1 (1) The fee to be paid under subsection (a)(1) shall be
2 reduced by an amount equal to any fee required to be paid by
3 the home improvement contractor for the privilege of
4 conducting business within the municipality. In order for the
5 fee to be reduced, the home improvement contractor shall
6 provide the department with written proof of the amount paid
7 to the municipality at the time of the registration.
8 (2) The credit provided for in this subsection shall not
9 apply to fees paid by the home improvement contractor which
10 are specific to a particular home improvement.
11 (c) Dedicated use of fees.--The application fees collected
12 shall be used by the bureau for the purposes of fulfilling its
13 obligations under this act relating to registration. The balance
14 of the application fees collected shall be used by the bureau
15 for the purposes of carrying out and enforcing the provisions of
16 this act. The bureau shall establish rules or regulations
17 regarding payment, collection and distribution of money payable
18 to and received by the bureau pursuant to this section.
19 (d) Multiple registrations.--Home improvement contractors or
20 home improvement salespersons applying as a business must pay
21 the application fee in this section and the fund fee set forth
22 in section 14 only as a business entity, regardless of the
23 number of persons who provide registration information pursuant
24 to this act.
25 Section 6. Certificate of registration and renewal.
26 (a) Duty of bureau.--Upon receipt of a completed application
27 and fee, the bureau shall issue and deliver to the applicant a
28 certificate to engage in the business for which the application
29 was made or refuse to issue the certificate pursuant to this act
30 or an order of a court of competent jurisdiction within seven
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1 days.
2 (b) Nontransferability.--Certificates issued to home
3 improvement contractors or salespersons shall not be
4 transferable or assignable.
5 (c) Duration of certificate.--All certificates issued under
6 this act shall expire biennially. The expiration date shall be
7 placed upon the certificate. The fee for renewal of a
8 certificate shall be the same as the fee charged for an original
9 application under section 5. The information required pursuant
10 to section 4 shall also be required for renewal of
11 certification. The bureau shall provide a form for renewal of
12 registration.
13 (d) Grounds for denial and revocation of registration.--The
14 bureau shall deny registration to any contractor or salesperson
15 against whom a civil judgment has been entered in favor of an
16 owner that was related to a home improvement transaction if the
17 transaction occurred after the effective date of this act and
18 the judgment remains unsatisfied. The bureau may permit a
19 contractor or salesperson to receive a new or renewed
20 certificate after the contractor has entered into a written
21 agreement whereby the contractor agrees to pay the judgment in
22 full in the form of periodic payments over a specific period of
23 time. If the contractor or salesperson does not pay in
24 accordance with the terms of the agreement, the bureau shall
25 immediately revoke the contractor's or salesperson's certificate
26 of registration.
27 Section 7. Certificate holder to exhibit and advertise
28 certificate.
29 Contractors and salespersons shall exhibit their certificates
30 upon request by any interested party. All PRINT advertisements <--
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1 of a home improvement contractor or salesperson shall include
2 the registration number issued by the bureau. Any home
3 improvement contract shall include a registration number of the
4 home improvement contractor who is party to the contract.
5 Section 8. Prohibited acts.
6 No person shall:
7 (1) Present or attempt to present, as his own, the
8 certificate of another person.
9 (2) Knowingly give false information when applying for a
10 certificate or a renewal of a certificate.
11 (3) Present himself falsely as or impersonate a
12 registered home improvement contractor or salesperson.
13 (4) Use or attempt to use a certificate which has
14 expired or which has been revoked.
15 (5) Offer to make or make any home improvement without
16 having a current certificate under this act.
17 (6) Represent in any manner that his registration
18 constitutes an endorsement of the quality of his workmanship
19 or of his competency by the bureau.
20 (7) Fail to refund the approximate amount paid for a
21 home improvement within ten days of either the acceptance and
22 execution of a return receipt for certified mail containing a
23 written request for a refund or the refusal to accept such
24 certified mail sent to the contractor's last known address,
25 if:
26 (i) No substantial portion of the contracted work
27 has been performed at the time of the request.
28 (ii) More than 30 days has elapsed since the
29 starting date specified in the written contract.
30 (8) Accept a municipal certificate of occupancy or other
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1 proof that performance of a home improvement contract is
2 complete or satisfactorily concluded with knowledge that the
3 document or proof is false and the performance is incomplete.
4 (9) Utter, offer or use a completion certificate or
5 other proof that a home improvement contract is complete or
6 satisfactorily concluded:
7 (i) to make or accept an assignment or negotiation
8 of the right to receive payment under a home improvement
9 contract; or
10 (ii) to get or grant credit or a loan on security of
11 the right to receive payment under a home improvement
12 contract;
13 when the person knows or has reason to know that such
14 document or proof is false.
15 (10) Abandon or fail to perform, without justification,
16 a home improvement contract. The term "without justification"
17 shall include, but not be limited to, nonpayment by the owner
18 as required under the contract or any other violation of the
19 contract by the owner.
20 (11) Deviate materially from the plans or specifications
21 without the express, verifiable consent of the owner.
22 (12) Prepare, arrange, accept or participate in
23 arranging a mortgage, promissory note or other evidence of
24 debt for performing or selling a home improvement with
25 knowledge that the evidence of debt states a greater monetary
26 obligation than the consideration, including a time sale
27 price, for a home improvement.
28 (13) Advertise or offer, by any means, to perform a home
29 improvement if the person does not intend:
30 (i) to accept a home improvement contract;
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1 (ii) to perform the home improvement; or
2 (iii) to charge for the home improvement at the
3 price advertised or offered.
4 (14) Perform or sell a home improvement with or through
5 another person who is required to hold a certificate pursuant
6 to this act but who does not hold the certificate.
7 (15) Act as a contractor or sell a home improvement
8 under a name other than that which is stated on the person's
9 certificate.
10 (16) Demand or receive any payment for a home
11 improvement before the home improvement contract is signed.
12 (17) Receive a deposit of more than one-third of the <--
13 home improvement contract price unless the total price of the
14 contract is less than $500. For the purpose of calculating a
15 deposit, the total contract price shall not include the cost
16 of any special order material purchased or to be purchased by
17 the contractor for the home improvement contract.
18 (17) FOR A HOME IMPROVEMENT CONTRACT IN WHICH THE TOTAL <--
19 PRICE EXCEEDS $1,000, RECEIVE A DEPOSIT IN EXCESS OF:
20 (I) ONE-HALF OF THE HOME IMPROVEMENT CONTRACT PRICE;
21 OR
22 (II) THE COST OF ANY SPECIAL ORDER MATERIALS OR
23 MERCHANDISE PURCHASED OR TO BE PURCHASED UNDER THE HOME
24 IMPROVEMENT CONTRACT;
25 WHICHEVER AMOUNT IS GREATER.
26 (18) While acting as a salesperson, fail to account for
27 or remit to the contractor whom the salesperson represents a
28 payment received in connection with a home improvement.
29 (19) Fail to pay fees or assessments required by this
30 act.
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1 (20) Be suspended or debarred from a Federal, State or
2 local program as described in section 4(a)(8).
3 Section 9. Home improvement fraud.
4 (a) Offense defined.--A person commits the offense of home
5 improvement fraud if, with intent to defraud or injure anyone or
6 with knowledge that he is facilitating a fraud or injury to be
7 perpetrated by anyone, the actor:
8 (1) makes a false or misleading statement to induce,
9 encourage or solicit a person to enter into any written or
10 oral agreement for home improvement services or provision of
11 home improvement materials or to justify an increase in the
12 previously agreed upon price;
13 (2) receives any advance payment for performing home
14 improvement services or providing home improvement materials,
15 fails to perform or provide such services or materials within
16 the date specified in the agreement TAKING INTO ACCOUNT ANY <--
17 FORCE MAJEURE OR UNFORESEEN LABOR STRIKE THAT WOULD EXTEND
18 THE TIME FRAME OR unless extended by agreement with the
19 consumer and fails to return the payment received for such
20 services or materials which were not provided by that date;
21 (3) while soliciting a person to enter into an agreement
22 for home improvement services or materials, misrepresents or
23 conceals the contractor's or salesperson's real name, the
24 name of the contractor's business, the contractor's business
25 address or any other identifying information;
26 (4) damages a person's property with the intent to
27 induce, encourage or solicit that person to enter into a
28 written or oral agreement for performing home improvement
29 services or providing home improvement materials;
30 (5) misrepresents himself or another as an employee or
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1 agent of the Federal, Commonwealth or municipal government,
2 any other governmental unit or any public utility, with the
3 intent to cause a person to enter into any agreement for
4 performing home improvement services or providing home
5 improvement materials;
6 (6) alters a home improvement agreement, mortgage,
7 promissory note or other document incident to performing or
8 selling a home improvement without the consent of the
9 consumer; or
10 (7) directly or indirectly publishes a false or
11 deceptive advertisement IN VIOLATION OF STATE LAW GOVERNING <--
12 ADVERTISING about home improvement.
13 (b) Grading.--
14 (1) A violation of subsection (a)(1), (3), (4), (5), (6)
15 or (7) constitutes:
16 (i) a felony of the third degree if the amount
17 involved exceeds $2,000; or
18 (ii) a misdemeanor of the first degree if the amount
19 involved is $2,000 or less or if the amount involved
20 cannot be satisfactorily ascertained.
21 (2) A violation of subsection (a)(2) constitutes:
22 (i) a felony of the third degree if the amount of
23 the payment retained exceeds $2,000; or
24 (ii) a misdemeanor of the first degree if the amount
25 of the payment retained is $2,000 or less or if the
26 amount of the payment cannot be satisfactorily
27 ascertained.
28 (3) Amounts involved pursuant to one scheme or course of
29 conduct, whether involving one or more victims, may be
30 aggregated in determining the grade of the offense pursuant
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1 to subsection (a).
2 (4) Where a person commits an offense under subsection
3 (a) and the victim is 60 years of age or older, the grading
4 of the offense shall be one grade higher than specified in
5 paragraphs (1), (2) and (3). This paragraph shall not be
6 applicable to persons whose sentence would be enhanced
7 pursuant to paragraph (5).
8 (5) Notwithstanding any other provisions of this
9 section, where a person commits a second or subsequent
10 offense described in subsection (a), the offense will
11 constitute a felony of the second degree regardless of the
12 amount of money involved. For this paragraph to be
13 applicable, the second or subsequent offense must have
14 occurred after the first conviction. Paragraph (4) shall not
15 be applicable to persons whose sentences would be enhanced
16 pursuant to this paragraph.
17 (6) In addition to any other penalty imposed by this
18 act, the court may revoke or suspend the certificate of
19 registration issued under section 6. At the time of
20 sentencing, the court shall state the reasons for such
21 revocation or suspension.
22 (c) Jurisdiction.--
23 (1) The district attorneys of the several counties shall
24 have the authority to investigate and to institute criminal
25 proceedings for any violation of this section.
26 (2) In addition to the authority conferred upon the
27 Attorney General by the act of October 15, 1980 (P.L.950,
28 No.164), known as the Commonwealth Attorneys Act, the
29 Attorney General shall have the authority to investigate and
30 institute criminal proceedings for any violation of this
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1 section or any series of such violations involving more than
2 one county of this Commonwealth or involving any county of
3 this Commonwealth and another state. No person charged with a
4 violation of this section by the Attorney General shall have
5 standing to challenge the authority of the Attorney General
6 to investigate or prosecute the case, and, if any such
7 challenge is made, the challenge shall be dismissed and no
8 relief shall be available in the courts of this Commonwealth
9 to the person making the challenge.
10 Section 10. Unfair Trade Practices and Consumer Protection Law.
11 (a) General rule.--A violation of any of the provisions of
12 this act shall be deemed a violation of the act of December 17,
13 1968 (P.L.1224, No.387), known as the Unfair Trade Practices and
14 Consumer Protection Law.
15 (b) Suspension or revocation of registration.--Upon the
16 request of the Attorney General or a district attorney, a court
17 may, for just cause and after notice and hearing, suspend or
18 revoke a certificate of registration for violations of this act.
19 The court may suspend or revoke a certificate of registration as
20 follows:
21 (1) For the first violation, a suspension of up to six
22 months.
23 (2) For the second violation, a suspension of up to one
24 year.
25 (3) For the third and all subsequent violations, the
26 court may impose any term of suspension or revoke a
27 certificate of registration.
28 Section 11. Regulations.
29 The bureau may adopt rules and regulations necessary to carry
30 out the provisions of this act relating to registration, and the
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1 bureau may adopt rules and regulations necessary to carry out
2 and enforce the other provisions of this act.
3 Section 12. Exemptions.
4 Sections 3, 4, 5, 6, 7, 13, 14, 15, 16, 18 and this section
5 shall not apply to any of the following persons or
6 organizations:
7 (1) The Commonwealth, municipalities and political
8 subdivisions within the Commonwealth or any department or
9 agency of the Commonwealth or such municipalities.
10 (2) The government of the United States or any of its
11 departments or agencies.
12 (3) Any school, public or private, offering as part of a
13 vocational education program, courses and training in any
14 aspect of home improvement.
15 Section 13. Home improvement contracts.
16 (a) Requirements.--No home improvement contract shall be
17 valid or enforceable against an owner unless it:
18 (1) Is in writing and legible.
19 (2) Is signed by the owner and the contractor, or a
20 salesperson on behalf of a contractor.
21 (3) Contains the entire agreement between the owner and
22 the contractor.
23 (4) Contains the date of the transaction.
24 (5) Contains the name, address and certificate number of
25 the contractor.
26 (6) Contains the approximate starting date and
27 completion date.
28 (7) Is entered into by a registered contractor or a
29 registered salesperson.
30 (8) Provides a notice that gives the toll-free telephone
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1 number of the bureau and states that:
2 (i) each contractor and salesperson must be
3 registered by the bureau; and
4 (ii) anyone may inquire of the bureau regarding the
5 status of a contractor or salesperson.
6 (b) Rescission right.--All home improvement contracts shall
7 be subject to section 7 of the act of December 17, 1968
8 (P.L.1224, No.387), known as the Unfair Trade Practices and
9 Consumer Protection Law.
10 (c) Copy to be provided.--A contractor or salesperson shall
11 provide and deliver to the owner, without charge, a completed
12 copy of the home improvement contract at the time the contract
13 is executed.
14 Section 14. Home Improvement Guaranty Fund.
15 (a) Establishment.--The Home Improvement Guaranty Fund is
16 hereby established in the State Treasury and shall be
17 administered by the bureau in accordance with this act.
18 (b) Biennial fund fee.--Each salesperson who applies for a
19 certificate or renewal thereof pursuant to this act shall pay a
20 fee of $50 biennially, and each contractor who applies for a
21 certificate, or renewal thereof, pursuant to this act shall pay
22 a fee of $100 biennially to the fund. The fee shall be payable
23 with the fee for an application for a certificate or renewal
24 thereof as provided in section 5 and shall be refunded in full
25 in the event the applicant is denied a certificate.
26 (c) Minimum balance.--
27 (1) Payments received under subsection (b) shall be
28 credited to the fund which shall maintain a balance of at
29 least $2,000,000. If the bureau finds that, because of
30 pending claims, the amount of the fund may fall below
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1 $1,000,000, the bureau shall assess each contractor $25 and
2 each salesperson $10. However, under this subsection the
3 bureau may not make more than one assessment in any calendar
4 year.
5 (2) Failure to make payments to the fund as required by
6 this act shall result in suspension of registration. Barring
7 the existence of other grounds for suspension or revocation
8 of registration, the contractor's or salesperson's
9 certificate of registration shall be reinstated upon full
10 payment of all the required fees.
11 (d) Investment.--The moneys of the fund shall be invested
12 and the interest arising from the investments shall be credited
13 to the fund.
14 (e) Waiver of biennial fund fee.--In the event that the
15 bureau finds that the fund is adequately funded, the bureau
16 shall, during the first month of each fiscal year, adjust or
17 waive any biennial fund fee for the fiscal year.
18 Section 15. Claims against fund.
19 (a) General rule.--An owner may be compensated from the fund
20 for an actual loss that results from an act or omission or a
21 violation of this act by a registered contractor or salesperson
22 as found by a court of competent jurisdiction, upon the final
23 determination of or expiration of time for appeal in connection
24 with any such judgment. In the event the bureau and a contractor
25 or salesperson enter into an assurance of voluntary compliance,
26 as described in section 5 of the act of December 17, 1968
27 (P.L.1224, No.387), known as the Unfair Trade Practices and
28 Consumer Protection Law, which requires payment of restitution
29 to an owner and the contractor or salesperson fails to pay as
30 required by the terms of the assurance of voluntary compliance,
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1 the bureau shall issue an order of payment from the fund to the
2 owner. The payment made pursuant to an assurance of voluntary
3 compliance shall be considered a claim for purposes of
4 reimbursement of the fund, however, subsection (g) shall not be
5 applicable.
6 (b) Acts of subcontractors, salespersons and employees.--For
7 purposes of recovery from the fund, the act or omission of a
8 registered contractor or registered salesperson includes the act
9 or omission of a subcontractor, salesperson or employee of the
10 registered contractor or registered salesperson whether or not
11 any express agency relationship exists so long as the
12 subcontractor, salesperson or employee acted within the scope of
13 the home improvement contract.
14 (c) Denial of claim.--The bureau may deny a claim if the
15 bureau finds that the claimant:
16 (1) unreasonably rejected good faith efforts by the
17 contractor or salesperson to resolve the claim; or
18 (2) failed to make good faith efforts to collect the
19 amount due from the contractor or salesperson.
20 (d) Limitation on recovery.--
21 (1) The bureau may not provide from the fund:
22 (i) More than $10,000 to one claimant for acts or
23 omissions of one contractor or salesperson.
24 (ii) More than $50,000 to all claimants for acts or
25 omissions of one contractor or salesperson unless, after
26 the bureau has paid out $50,000 on account of acts or
27 omissions of the contractor or salesperson, the
28 contractor or salesperson reimburses the fund. However,
29 in no case shall any one contractor or salesperson be
30 indebted, at any one time, to the fund for more than
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1 $50,000.
2 (iii) An amount for any attorney fees, consequential
3 damages, court costs, interest, personal injury damages
4 or punitive damages.
5 (2) In addition to the limits set forth in paragraph
6 (1), a claimant may not recover from the fund more than that
7 claimant's actual loss, to a maximum of $10,000, for a claim
8 made on one contract. A court may, however, allocate
9 responsibility on one contract between contractors and
10 salespersons to a maximum combined responsibility of $10,000.
11 (e) Excluded claimants.--
12 (1) A claim against the fund based on the act or
13 omission of a particular contractor or salesperson shall not
14 be made by:
15 (i) a spouse or other immediate relative of the
16 contractor or salesperson, or of a party which holds a
17 financial stake in the business of the contractor or
18 salesperson;
19 (ii) an employee, officer, director, partner or
20 other party which holds a financial stake in the business
21 of the contractor or salesperson; or
22 (iii) an immediate relative of an employee, officer,
23 director, partner or other party which holds a financial
24 stake in the business of the contractor or salesperson.
25 (2) An owner may make a claim against the fund only if
26 the owner:
27 (i) resides in the residence as to which the claim
28 is made; or
29 (ii) does not own more than two dwelling places,
30 unless the dwelling place as to which the claim is made
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1 is the primary residence of the owner or the part of the
2 building which houses the primary residence of the owner.
3 (f) Limitations period.--A claim must be made against the
4 fund within two years after the claimant obtains an entry of
5 final judgment or decree against the contractor or salesperson
6 and all appeal rights have expired or been exhausted, or, in the
7 case of an assurance of voluntary compliance, within the later
8 of two years of entry into such assurance or one year after
9 nonpayment according to the terms of the assurance.
10 (g) Offer of proof.--In order to recover from the fund the
11 claimant must offer proof to the bureau that the claimant has
12 caused to be issued a writ of execution upon a judgment obtained
13 against the contractor or salesperson, and the officer executing
14 the same has made a return showing that no bank accounts or real
15 property of the contractor liable to be levied upon in
16 satisfaction of the judgment could be found, or that the amount
17 realized on the sale of them or of such of them as were found,
18 under the execution, was insufficient to satisfy the judgment or
19 stating the amount realized and the balance remaining due on the
20 judgment after application thereon of the amount realized. A
21 true and attested copy of the executing officer's return must be
22 attached to an application for fund reimbursement.
23 (h) Partial payments for fund integrity.--In order to
24 preserve the integrity of the fund, the bureau may order payment
25 out of the fund of an amount less than the order issued by the
26 court. The balance remaining due to the claimant shall be paid
27 from the fund pursuant to subsection (i).
28 (i) Special order of payment.--If the money in the fund is
29 insufficient to satisfy any duly authorized claim or portion
30 thereof, the bureau shall, when sufficient money exists in the
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1 fund, satisfy the unpaid claims or portions thereof, in the
2 order that those claims or portions thereof were originally
3 determined.
4 (j) Investigation by bureau.--As provided in section 17, if
5 the bureau pays any amount from the fund as a result of a claim
6 against a contractor or salesperson, the bureau may conduct an
7 investigation to determine if the contractor or salesperson is
8 possessed of assets liable to be sold or applied in satisfaction
9 of the claim on the fund. If the bureau discovers any such
10 assets, the bureau may take any lawful action necessary for the
11 reimbursement of the fund.
12 (k) Revocation caused by payment of claim.--If the bureau
13 makes a payment of an amount as a result of a claim against a
14 contractor or salesperson, the bureau shall revoke the
15 certificate of the contractor or salesperson and the contractor
16 or salesperson shall not be eligible to receive a new or renewed
17 certificate until that contractor or salesperson has repaid such
18 amount in full, plus interest, from the time the payment is made
19 from the fund, except that the bureau may permit a contractor or
20 salesperson to receive a new or renewed certificate after that
21 contractor or salesperson has entered into an agreement with the
22 bureau whereby the contractor or salesperson agrees to repay the
23 fund in full in the form of periodic payments over a set period
24 of time. If the contractor or salesperson fails to pay in
25 accordance with the terms of the agreement, the bureau shall
26 automatically suspend the contractor's or salesperson's
27 certificate.
28 Section 16. Procedure for submitting claims.
29 (a) Initial claim.--In order to recover from the fund, a
30 claimant must submit to the bureau the documentation required
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1 under section 15(g), if applicable, and the following
2 information on a form provided by the bureau:
3 (1) The amount claimed based on the actual loss.
4 (2) The facts giving rise to the claim.
5 (3) Any other evidence that supports the claim.
6 (4) Any other information that the bureau requires.
7 (b) Copy of claim to contractor.--On receipt of a claim
8 pursuant to this section, the bureau shall send a copy of the
9 claim to the contractor alleged to be responsible for the actual
10 loss. The contractor shall file a response or objection to the
11 claim within 30 days of receipt of the notice of such claim.
12 Failure to respond to the claim shall constitute a waiver of any
13 defense or objection to the claim.
14 (c) General order of payment.--Except as otherwise provided
15 in this act, the bureau shall pay from the fund approved claims
16 in the order that they are submitted.
17 Section 17. Reimbursement of fund.
18 (a) General rule.--After the bureau pays a claim from the
19 fund:
20 (1) The bureau shall be subrogated to all rights of the
21 claimant in the claim up to the amount paid.
22 (2) The claimant shall assign to the bureau all rights
23 of the claimant in the claim up to the amount paid.
24 (3) The bureau has a right to reimbursement of the fund
25 by the contractor or salesperson for:
26 (i) The amount paid from the fund.
27 (ii) Interest on the amount at an annual rate of 5%
28 as adjusted by the Consumer Price Index on an annual
29 basis.
30 All money that the bureau recovers on a claim shall be deposited
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1 in the fund.
2 (b) Suit for nonpayment.--If, within 30 days after the
3 bureau gives notice, a contractor or salesperson on whose
4 account a claim was paid shall fail to reimburse the fund in
5 full, the bureau may initiate an action against the contractor
6 or salesperson in a court of competent jurisdiction for the
7 unreimbursed amount.
8 (c) Judgment.--The bureau is entitled to a judgment for the
9 unreimbursed amount if the bureau proves that:
10 (1) A claim was paid from the fund on account of the
11 contractor or salesperson.
12 (2) The contractor or salesperson has not reimbursed the
13 fund in full.
14 (3) The bureau directed payment based on a final
15 judgment of a court of competent jurisdiction or an assurance
16 of voluntary compliance.
17 (d) Withholding of tax refund.--If a person is delinquent
18 for at least one year in making payments to the bureau for the
19 purposes of reimbursing the fund, the Department of Revenue
20 shall credit the amount of any refundable overpayment of tax
21 imposed by Article III of the act of March 4, 1971 (P.L.6,
22 No.2), known as the Tax Reform Code of 1971, against the
23 delinquency in respect to this act on the part of the person who
24 made the overpayment.
25 (e) Bankruptcy proceedings.--For the purpose of excepting to
26 a discharge of an individual or business under Federal
27 bankruptcy law, the bureau shall be a creditor of the individual
28 or business for the amount paid from the fund.
29 Section 18. Notice of suspension or revocation.
30 The Administrative Office of Pennsylvania Courts shall report
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1 to the bureau any suspension or revocation of a certificate of
2 registration ordered by a court.
3 Section 19. Effective date.
4 This act shall take effect in 180 days.


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