What's happening
This bill, called the "home improvement fraud prevention act," establishes statewide registration, education, and oversight requirements for home improvement contractors in New York.
Why it matters
Creates a centralized, statewide registry for home improvement contractors. , making it easier for consumers and municipalities to verify whether a contractor is properly registered, licensed, or has a history of disciplinary action, which could help prevent hiring unqualified or fraudulent contractors.
Requires home improvement contractors to meet specific eligibility criteria—including background checks, proof of insurance, and continuing education—to obtain and maintain state registration. , raising the standard of professionalism and potentially reducing the number of bad actors in the industry.
Establishes a State Home Improvement Contractor Board with oversight powers. , including setting education and insurance requirements, approving training providers, and advising on enforcement. This professionalizes the industry and provides a consistent set of rules across all of New York.
Strengthens penalties for contractor fraud and expands consumer protections. , including increasing the penalty for fraudulent inducement, making it easier to prosecute contractor fraud against disaster victims, and ensuring that only properly registered and insured contractors can obtain building permits—directly addressing common sources of financial loss and harm for homeowners.
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Who cares
Headline styles
Crack Down on Contractor Fraud
Plain English, a few words. Used as the page title.
Sponsors
2 Co-sponsors
History
- Referred to consumer protection
- Print number 6780a
- Amend (t) and recommit to rules
- Referred to rules
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.
Stop Home Improvement Fraud
In Assembly Committee · Consumer Affairs And Protection · Sponsor Michael Cusick
Full text
6 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6780--A
2019-2020 Regular Sessions
IN SENATE
October 16, 2019
Introduced by Sens. KAMINSKY, AKSHAR, BOYLE -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the general business law, the penal law, the general municipal law and the executive law, in relation to the registration of home improvement contractors
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
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 course of business or pay or receive any fee, payment, money, or other
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13467-07-9
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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;
(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;
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(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 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
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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 requirements approved by the home improvement contractor board pursuant to this article.
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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:
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, the penal law, the general municipal law and the executive law, in relation to the registration of home improvement contractors
Purpose or gent idea of bill
This bill is intended to reduce fraudulent acts by home improvement contractors by requiring contractors to register with the state.
Summary of provisions
Section 1 establishes the "Home Improvement Fraud Prevention Act".
Read the full memo (864 words)
Section 2 amends General Business Law (GBL) section 770 to expand the definition of a "custom home" to include two-family dwellings in addi- tion to single-family residences.
Section 3 amends the GBL Section 771 to require home improvement contractors to include their registration number in their written contracts.
Section 4 amends GBL Section 771-a to require home improvement contrac- tors to obtain a certificate of registration before doing business in New York.
Section 5 adds a multiple new sections to the GBL requiring home improvement contractors to obtain a certificate of registration in New York and lines out the necessary requirements to obtain the registra- tion, which includes being of good moral character. Applicants must also provide information to the secretary of state such as their busi- ness address, the contact information of the business and proof of insurance. Under the GBL, and state home improvement contractor board is formed to oversee multiple registration requirements created under this law. It also allows for the suspension, revocation, or refusal to renew registration.
Section 6 increases the civil penalties under the General Business Law from $500 to $1000 for home improvement contractors who fraudulently represent themselves to induce the signing of a contract.
Section 7 bill amends paragraph (d) of subdivision 2 of section 155.05 of the penal law by adding language that would clarify that partial performance of a promise, by itself, does not defeat a larceny charge for disaster relief victim.
Section 8 amends the GM to require proof of a valid registration for issuance of building permits.
Section 9 amends the executive law to create a central state registry of home improvement contractors.
Section 10 is the effective date.
Justification
Following the devastation of superstorm Sandy, unscrupulous contractors exploited unsuspecting homeowners, promising to repair and mend their homes and requesting hefty down payments. After receiving substantial up-front payment, some contractors took the money and completely failed to commence the work they were paid to perform, or absconded after performing just as small amount of work. As a result, hundreds of home- owners were left with no remedy and had difficulty re-procuring the funds needed to repair their homes ("Sandy Contractor Disputes Bedevil LI Homeowners," Newsday, March 21, 2018).
Prosecutors in New York have seen an increasing amount of home improve- ment fraud complaints, specifically in instances where public funds were involved. Sadly, prosecutors have found that they have tremendous diffi- culty prosecuting these cases, due to the high legal standard demanded by statute in cases of larceny and fraud under a false promise. Specif- ically, prosecutors must exclude to a moral certainty any hypothesis other than the contractor's fraudulent intent, from the start, to fail to perform the work. This standard is too stringent for disaster relief victims, and it has unnecessarily prevented otherwise meritorious fraud cases from going forward. Even the Department of Justice has found that natural disasters increase opportunities for criminals to exploit people during vulnerable times, which has led to forming the National Center for Disaster Fraud.
To address this issue, the bill will create a special carve-out for disaster relief victims from the larceny by false promise statute, since they are a particularly vulnerable population, and will instead require a lower mens rea standard. Meaning, if someone commits fraud against a disaster relief victim, proof of partial performance of that false prom- ise, by itself, will no longer prevent a reasonable jury from making a fraud finding from all the facts and circumstances. This simplified standard will allow prosecutors to successfully bring more contractor fraud cases to court.
Furthermore, requiring home improvement contractors to register to do business in will allow for oversight of contractors in New York by requiring the state to set forth requirements for doing business such as ensuring contractors carry insurance, do not have a history of fraud, and are of good moral character. A registration requirement also means both the State and the homeowner have a record of the contractor in case the contractor does not fulfill his or her contractual obligation to the consumer. In the registration process, the contractor is required to include all of their business contact information in their filing and such information is important in instances where a contractor does not finish a project and the consumer does not have the necessary tools or resources to track them down.
Prior legislative history
This is a new bill.
Fiscal implications
To be determined.
Effective date
This act shall take effect one year after it shall have become a law. Effective immediately, the addition, amendment, and/or repeal of any rule or regulation necessary for the implementation of this act on its effective date are authorized to be made and completed on or before such effective date.
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