Stop Home Improvement Fraud

Section 1. This act shall be known and may be cited as the "home improvement fraud prevention act".

§ 2. Subdivision 7 of section 770 of the general business law, as added by chapter 32 of the laws of 1989, is amended to read as follows:

7. "Custom home" means a new single family residence or a two family dwelling designed for and occupied exclusively by two families living separately to be constructed on premises owned of record by the purchaser at the time of contract, provided that such residence is intended for residential occupancy by such purchaser [and the contract of sale is entered into on or after the first day of March, nineteen hundred ninety].

§ 3. Paragraph (a) of subdivision 1 of section 771 of the general business law, as added by chapter 421 of the laws of 1987, is amended to read as follows:

(a) The name, address, telephone number, registration number from the department of state, and license number, if applicable, of the contractor.

§ 4. Section 771-a of the general business law, as added by chapter 626 of the laws of 2002, is amended to read as follows:

§ 771-a. Responsibilities of home improvement contractors. No home improvement contractor shall engage in any activity, transaction, or

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD13467-08-9

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course of business or pay or receive any fee, payment, money, or other thing of value in connection with the financing of a home improvement contract without fully disclosing such activity, transaction, or course of business and any fees, payment, or other thing of value paid or to be paid in connection therewith, [and] without having obtained the agreement in writing from all parties to the transaction to such activity and the payment therefor, and without obtaining a certificate of registration from the department of state.

§ 5. The general business law is amended by adding five new sections 771-c, 771-d, 771-e, 771-f and 771-g to read as follows:

§ 771-c. Responsibilities of home improvement contractors to obtain certificates of registration. 1. It shall be unlawful for a person to solicit, canvass, sell, perform, or obtain a home improvement contract as a contractor from an owner without first obtaining a certificate of registration issued by the secretary under the provisions of this article.

2. Any person desiring to be a home improvement contractor in this state shall be registered biennially pursuant to this article. Such person shall file with the secretary of state an application to be registered as a home improvement contractor. The department of state shall examine each application and issue a certificate of registration if the following criteria are satisfied:

(a) the applicant is eighteen years of age or older;

(b) the applicant is of good moral character as determined by the secretary. In consideration of good moral character, the secretary may consider whether the applicant has: (i) been convicted of a crime that, in this state, is considered to be a crime involving moral turpitude or is a felony; (ii) been found guilty of fraud or deceit in the practice of home improvement; (iii) made a materially false, misleading, deceptive or fraudulent representation in the application or as a home improvement contractor in any county or state; (iv) a history of consumer complaints reasonably related to failure to complete their work as a home improvement contractor in any state; and (v) had a registration or licensure as a home improvement contractor, or substantially equivalent registration or licensure, suspended, revoked or denied, or been refused renewal of registration or licensure as a home improvement contractor, in any county or state;

(c) in the case of a person either registered or licensed as a home improvement contractor pursuant to a local law, the applicant shall forward such registration or license to the secretary together with any additional information required by the department of state. After review of the registration or license, the secretary shall issue a registration to such applicant. The fee for such registration shall be fifteen dollars, which may be passed on to the registered or licensed home improvement contractor, and shall be paid to the department of state by the municipality which issued the registration or license to such person; and

(d) the applicant has paid the appropriate fees according to the provisions of this section.

3. An application for a certificate of registration as a home improvement contractor shall be filed with the secretary in such form and detail as the secretary shall prescribe, duly signed, and verified, setting forth:

(a) the address of the business;

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(b) the name and address of the owner or partner and if a corporation, trade group or association, the names and addresses of the directors and principal officers;

(c) the telephone number of the business;

(d) proof of workers' compensation insurance, disability benefit coverage and liability and property damage insurance in an amount to be set by the home improvement contract board; and

(e) any further information deemed necessary and prescribed by rule or regulation by the secretary, except as otherwise provided herein.

4. A certificate of registration shall expire two years from the date issued by the secretary and the fee for a certificate of registration shall be three hundred dollars, except as provided in paragraph (c) of subdivision two of this section.

§ 771-d. Suspension, revocation or refusal to renew registration. 1. The secretary may suspend, revoke or refuse to renew a registration for substantial violations of any of the provisions of this article or for any conduct that would have justified denial of a registration under paragraph (b) of subdivision two of section seven hundred seventy-one-c of this article.

2. The secretary may deny, suspend, revoke or refuse to renew a certificate of registration only after proper notice and an opportunity for a hearing as provided pursuant to the provisions of the state administrative procedure act.

§ 771-e. State home improvement contractor board. 1. There is hereby established within the department of state a state home improvement contractor board which shall consist of the secretary of state, superintendent of financial services, and thirteen additional members. At least five members shall be home improvement contractors, at least two of whom shall have more than fifty percent of their business volume requiring the issuance of building permits, each of whom, at the time of appointment, shall be licensed and qualified as a home improvement contractor under the laws of New York state and shall have been engaged in the home improvement business in this state for a period of not less than ten years prior to appointment. The remaining members shall be "public members" who shall not be home improvement contractors.

2. The thirteen members shall be appointed as follows: seven members shall be appointed by the governor, three of whom shall be home improvement contractors and four of whom shall be public members; two members shall be appointed by the temporary president of the senate, one of whom shall be a home improvement contractor and one of whom shall be a public member; two members shall be appointed by the speaker of the assembly, one of whom shall be a home improvement contractor and one of whom shall be a public member; one member shall be appointed by the minority leader of the senate, who shall be either a home improvement contractor or a public member; and one member shall be appointed by the minority leader of the assembly, who shall be either a home improvement contractor or a public member.

3. Each appointed member shall serve for a term of two years; at any point during such term the appointed member may be removed by the person who appointed such member. In the event that any members shall die or resign during the term of office, a successor shall be appointed in the same way and with the same qualifications as set forth above. A member may be reappointed for successive terms but no member shall serve more than ten years in his or her lifetime.

4. A majority of members currently serving on the board shall be required in order to pass any resolution or to approve any matter before

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the board. The secretary of state shall be the chairperson of the board. The vice-chairperson and a secretary shall be elected from among the members. A board member who fails to attend three consecutive meetings shall forfeit his or her seat unless the secretary of state, upon written request from the member, finds that the member should have been excused from a meeting because of illness or death of a family member.

5. Members of the board shall receive no compensation other than reimbursement for actual and necessary expenses.

6. The board shall meet no fewer than three times per year and at the call of the secretary of state or a majority of the board. In addition to regularly scheduled meetings of the board, there shall be at least one public hearing each year in New York City and one public hearing each year in Albany. At least fifteen days prior to the holding of any public hearing pursuant to this subdivision, the board shall give public notice of the hearing in a newspaper of general circulation in each area where the public meeting is to be held. The purpose of these hearings shall be to solicit from members of the public, suggestions, comments, and observations about home improvement contractor regulation in New York state.

§ 771-f. Powers and duties of the state home improvement contractor board. 1. The state home improvement contractor board shall have the authority to prescribe the content for courses of study for the examination and education of persons registered under this article. The board shall advise the secretary of state on policies governing the administration of examinations pursuant to this article.

2. The board shall establish the rules and regulations governing the approval by the secretary of state of providers to offer or conduct courses required either for registration under this article or for the satisfaction of the continuing education requirements. For purposes of this section, a "provider" means a national, state or local trade association of homebuilders and/or remodelers or other relevant training providers as approved by the board.

3. The board shall set the amount of workers' compensation and liability and property insurance to be maintained by each specific type of home improvement contractor based on their specific category of work. Any workers' compensation insurance coverage rate shall be set in compliance with any obligations imposed by the workers' compensation law and the insurance law.

4. The board shall be authorized to develop a public education and outreach campaign via written materials, brochures and the internet to inform the general public of the home improvement fraud prevention act, subject to approval by the secretary of state.

5. The board shall advise and assist the secretary of state in carrying out the provisions and purposes of this article and make recommendations concerning the programs and activities of the department in connection with the enforcement of this article.

6. The department of state shall have the power and duty to administer and enforce the laws and regulations of the state relating to those activities involving home improvement contractors for which registration is required under this article and to instruct and require its agents to refer prosecutions for unauthorized and unlawful practice.

§ 771-g. Continuing education. 1. As a prerequisite to recertification or renewal of a home improvement contractor registration in the case of any contractor who applies for one or more building permits, a home improvement contractor as previously described shall present evidence satisfactory to the department of having met the continuing education

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requirements approved by the home improvement contractor board pursuant to this article.

2. The basic continuing education requirement for recertification or renewal of a license shall be the completion by the applicant, during the immediately preceding term of registration, of not less than ten classroom hours of instruction in courses or seminars which have received the approval of the home improvement contractor board. Computer based courses may be approved by the board so long as providers demonstrate the ability to monitor and verify participation by the home improvement contractor for the specified time periods.

3. A registration as a home improvement contractor who applies for one or more building permits that has been revoked as a result of disciplinary action by the department shall not be reinstated unless the applicant presents evidence of completion of the continuing education required by this article.

§ 6. Section 772 of the general business law, as added by chapter 421 of the laws of 1987, is amended to read as follows: