What's happening
This bill increases penalties and enforcement measures for home improvement contractor violations, expanding owner protections and authorizing the attorney general to prosecute related crimes.
Why it matters
Significantly increases financial penalties contractors face for false statements or substantial violations. , making it more costly for contractors to engage in deceptive or non-compliant practices and providing homeowners with stronger financial remedies, including up to $5,000 plus attorney’s fees.
Escalates criminal consequences for repeat or serious offenders. , introducing mandatory jail time and the possibility of felony charges for contractors who violate the law multiple times within three years, which may act as a stronger deterrent against contractor misconduct.
Broadens enforcement powers by authorizing the Attorney General to prosecute home improvement contractor crimes. , ensuring that violations can be pursued at the state level and not just by local authorities, potentially leading to more consistent and rigorous enforcement.
Clarifies and slightly expands the definition of “custom home” and what constitutes a violation. , which could bring more types of residential projects and contractor behaviors under the law’s protections, making it harder for contractors to exploit legal loopholes.
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Who cares
Headline styles
Protect Homeowners from Contractor Fraud
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.876
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Homeowners From Contractor Fraud
In Assembly Committee · Judiciary · Sponsor Kevin Cahill
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5171
2019-2020 Regular Sessions
IN SENATE
April 12, 2019
Introduced by Sen. KENNEDY -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the general business law, in relation to home improvement contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. 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 residence designed solely for occupancy of not more than 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].
§ 2. Subdivision 1 of section 772 of the general business law, as added by chapter 421 of the laws of 1987, is amended to read as follows:
1. Any owner who is induced to contract for a home improvement, in reliance on false or fraudulent written representations or false written statements, may sue and recover from such contractor a penalty of [five hundred] up to two thousand dollars plus reasonable attorney's fees, in addition to any damages sustained by the owner by reason of such statements or representations. Any owner who is aggrieved by a substantial violation, as defined in section seven hundred seventy-three of this article, may sue and recover from such contractor a penalty of up to five thousand dollars plus reasonable attorney's fees, in addition to any damages sustained by the owner by reason of such substantial violation. In addition, if the court finds that the suit by the owner was without arguable legal merit, it may award reasonable attorney's fees to the contractor.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00069-01-9
S. 5171 2
§ 3. Section 773 of the general business law, as amended by chapter 587 of the laws of 1990, is amended to read as follows:
§ 773. Violations. 1. (a) Technical violations. Every home improvement contractor who violates any of the provisions of this article shall be subject to a civil penalty not to exceed one hundred dollars in the case of a first violation.
(b) For a second violation within a period of three years, a home improvement contractor shall be guilty of a violation and shall be fined two hundred fifty dollars.
(c) For a third or subsequent violation within a period of three years, a home improvement contractor shall be guilty of a class B misdemeanor and shall be sentenced to a mandatory, definite term of imprisonment of three months and may also be fined as provided in the penal law.
2. Substantial violations. (a) Every home improvement contractor who fails to deposit funds in an escrow account or provide a bond or contract of indemnity or irrevocable letter of credit in compliance with the requirements of section seventy-one-a of the lien law, [or] who fails to provide a written contract substantially in compliance with the requirements of this article, or who violates the provisions of section seven hundred seventy-one-a of this article shall, in the case of a first violation, be subject to a civil penalty not to exceed the greater of two hundred fifty dollars [for each violation] or five percent of the aggregate contract price specified in the home improvement contract[; provided, however, that in no event shall the total penalty exceed twenty-five hundred dollars for each contract].
(b) For a second violation within a period of three years, a home improvement contractor shall be guilty of a class A misdemeanor and shall be sentenced to a mandatory, definite term of imprisonment of six months and may also be fined as provided in the penal law.
(c) For a third or subsequent violation within a period of three years, a home improvement contractor shall be guilty of a class E felony and shall be sentenced to a mandatory, definite term of imprisonment of one year and may also be fined as provided in the penal law.
3. Mitigating factors; defenses. In an instance where the contractor has been shown to have committed [multiple violations] a first violation of this article or the provisions of section seventy-one-a of the lien law, the court shall consider the following factors in assessing a civil penalty pursuant to paragraph (a) of subdivision one or paragraph (a) of subdivision two of this section: the volume of business which the home improvement contractor performs on an annual basis, [the number of contracts in violation,] the actual financial loss or exposure to financial loss suffered by [any] the owner as a result of the [violations] violation, and whether the home improvement contractor acted in good faith or willfully with respect to such violations. No home improvement contractor shall be subject to the increased penalties provided by paragraph (a) of subdivision two of this section if such contractor shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error made notwithstanding the maintenance of procedures reasonably adopted to avoid such a violation.
§ 4. Subdivision 2 of section 774 of the general business law, as added by chapter 421 of the laws of 1987, is amended and a new subdivision 3 is added to read as follows:
2. The civil provisions of this article may be enforced concurrently by the director of a municipal consumer affairs office, or by the town attorney, city corporation counsel, or other lawful designee of a muni-
S. 5171 3
cipality or local government, and all moneys collected thereunder shall be retained by such municipality or local government.
3. The attorney general is hereby authorized to prosecute any crime defined in section seven hundred seventy-three of this article.
§ 5. This act shall take effect on the first of November next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to home improvement contracts
Purpose
This bill addresses the continuing problems that are faced by consumers that hire unscrupulous contractors that improperly build new homes, construct home additions, or construct other home improvements to resi- dential properties.
Summary of provisions
Section 1: Amends General Business Law section 770(7) to broaden the definition of "custom home" to include two family dwellings where the owner occupies one of the units of such duplex.
Read the full memo (623 words)
Section 2: Amends General Business Law section 772(1) to increase penal ties from $500 to up to $2,000 rot' contractors who induce a consumer to enter into a home improvement contact that contains fraudulent represen- tations. In addition, contractors that commit a substantial violation would be subject to an additional penalty of up to $5,000.
Section 3: Amends section 773 of the General Business Law to add progressively severe civil penalties for those unscrupulous contractors that repeatedly violates this article. It also increases the criminal penalties for repeated violations.
Section 4: Amends General Business Law section 774(2) to authorize the Attorney General to prosecute any crime defined in section 773 of this chapter.
Existing law
This bill expands protections that are already given to homeowners that contract with unscrupulous contractors that do home construction projects.
Justification
Even with the laws that are on the books to protect consumers from the fraudulent activities perpetrated by illicit home construction contrac- tors. there is still a significant amount of questionable construction practices and activities that defraud consumers.
In some situations, consumers have paid the contractor for work done, however, the contractor has not paid the subcontractors, consequently, the subcontractors file liens on the construction site property to recover funds from the property owner that has already paid for the work.
The purpose of this bill is to encourage subcontractors to only enter into relationships with bona fide contractors that are able to pay for the work of a subcontractor or encourage the subcontractor to receive a formal guaranty in some form from the general contractor that they will receive money for the work they complete. Otherwise, the consumer is obligated to pay twice for the work. In certain circumstances, when a lien had been filed even though the consumer paid the contractor, the home construction must stop because the consumer does not have the addi- tional funds needed to complete the home. Should this occur, the consum- er is obligated to pay off the liens and often does not have sufficient funds to complete the house so that the consumer may be able to live in it.
Most contractors are bona fide operations that perform the tasks asked of them in a way that satisfies the consumer. However, after contacting the Orange County and Ulster County District Attorney's Offices, it seems that there are a few unscrupulous contractors or persons who represent themselves as contractors who seem to perpetrate most of the fraudulent home construction cases. Many of these fraudulent home improvement contracts are entered into with senior citizens and the elderly. Further, several District Attorney's Offices have inquired about altering the law so that persons that routinely perpetrate fraudu- lent home construction projects can be made subject to heightened crimi- nal sanctions for their activities.
Legislative history
2015-2016: A1499 Referred to Judiciary 2013-2014: A.1081 - Referred to Judiciary 2011-2012: A.105 Referred to Judiciary 2009-2010: A.599 - Referred to Judiciary 2007-2008: A.402 Referred to Judiciary 2005-2006: A.3933 - Referred to Judiciary 2003-2004: A.8419 Referred to Judiciary
Fiscal implications
None
Local fiscal implications
None
Effective date
This act shall take effect on the first of November next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.