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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| HOUSE BILL |
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| INTRODUCED BY PRESTON, CALTAGIRONE, D. COSTA, DeLUCA, JOSEPHS, KORTZ, PAYTON, READSHAW, K. SMITH AND YOUNGBLOOD, FEBRUARY 10, 2011 |
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| REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, FEBRUARY 10, 2011 |
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| AN ACT |
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1 | Amending the act of October 17, 2008 (P.L.1645, No.132), |
2 | entitled "An act providing for the regulation of home |
3 | improvement contracts and for the registration of certain |
4 | contractors; prohibiting certain acts; and providing for |
5 | penalties," further providing for definitions; establishing |
6 | the Home Improvement Guaranty Fund; and providing for claims |
7 | against the fund, for procedure for submitting claims and for |
8 | reimbursement of fund. |
9 | The General Assembly of the Commonwealth of Pennsylvania |
10 | hereby enacts as follows: |
11 | Section 1. Section 2 of the act of October 17, 2008 |
12 | (P.L.1645, No.132), known as the Home Improvement Consumer |
13 | Protection Act, is amended by adding a definition to read: |
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 | * * * |
19 | "Fund." The Home Improvement Guaranty Fund established in |
20 | section 10.1. |
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1 | * * * |
2 | Section 2. The act is amended by adding sections to read: |
3 | Section 10.1 Home Improvement Guaranty Fund. |
4 | (a) Establishment.--The Home Improvement Guaranty Fund is |
5 | established in the State Treasury and shall be administered by |
6 | the bureau in accordance with this act. All moneys deposited |
7 | into the fund shall not be considered general revenue of the |
8 | Commonwealth but shall be used only to effectuate the purposes |
9 | of this act. |
10 | (b) Biennial fund fee.--Each contractor who applies for a |
11 | certificate, or renewal of a certificate, pursuant to this act |
12 | shall pay a fee of $100 biennially to the fund. The fee shall be |
13 | payable with the fee for an application for a certificate or |
14 | renewal of a certificate and shall be refunded in full in the |
15 | event the applicant is denied a certificate. |
16 | (c) Minimum balance.--Payments received under subsection (b) |
17 | shall be credited to the fund which shall maintain a balance of |
18 | at least $2,000,000. If the bureau finds that, because of |
19 | pending claims, the amount of the fund may fall below |
20 | $1,000,000, the bureau shall assess each contractor $25. The |
21 | bureau may not make more than one assessment under this |
22 | subsection in any calendar year. |
23 | (d) Failure to make payments.--Failure to make payments to |
24 | the fund as required by this act shall result in suspension of |
25 | registration. Barring the existence of other grounds for |
26 | suspension or revocation of registration, the contractor's |
27 | certificate of registration shall be reinstated upon full |
28 | payment of all the required fees. |
29 | (e) Investment.--The moneys of the fund shall be invested |
30 | and the interest arising from the investments shall be credited |
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1 | to the fund. |
2 | (f) Waiver of biennial fund fee.--In the event that the |
3 | bureau finds that the fund is adequately funded, the bureau |
4 | shall, during the first month of each fiscal year, adjust or |
5 | waive any biennial fund fee for the fiscal year. |
6 | Section 10.2 Claims against fund. |
7 | (a) Eligibility.-- |
8 | (1) An owner may be compensated from the fund if: |
9 | (i) there is an actual loss that results from an act |
10 | or omission by a contractor in the performance of |
11 | services under a home improvement contract or a violation |
12 | of this act by a contractor as found by a court of |
13 | competent jurisdiction, upon the final determination of |
14 | or expiration of time for appeal in connection with any |
15 | such judgment; or |
16 | (ii) the owner is prevented from collecting the |
17 | entirety of a final judgment as a result of the |
18 | contractor's filing for bankruptcy protection under |
19 | Federal law. |
20 | (2) In the event the bureau and a contractor enter into |
21 | an assurance of voluntary compliance which requires payment |
22 | of restitution to an owner and the contractor fails to pay as |
23 | required by the terms of the assurance of voluntary |
24 | compliance, the bureau shall issue an order of payment from |
25 | the fund to the owner. |
26 | (3) A payment made pursuant to an assurance of voluntary |
27 | compliance shall be considered a claim for purposes of |
28 | reimbursement of the fund and subsection (f) shall not be |
29 | applicable. |
30 | (b) Acts of subcontractors and employees.--For purposes of |
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1 | recovery from the fund, the act or omission of a contractor |
2 | includes the act or omission of a subcontractor or employee of |
3 | the contractor whether or not any express agency relationship |
4 | exists so long as the subcontractor or employee acted within the |
5 | scope of the home improvement contract. |
6 | (c) Limitation on recovery.-- |
7 | (1) The bureau may not provide from the fund: |
8 | (i) More than $10,000 to one owner for acts or |
9 | omissions of one contractor. |
10 | (ii) More than $50,000 to all owners for acts or |
11 | omissions of one contractor unless, after the bureau has |
12 | paid out $50,000 on account of acts or omissions of the |
13 | contractor, the contractor reimburses the fund. In no |
14 | case shall any one contractor be indebted, at any one |
15 | time, to the fund for more than $50,000. |
16 | (iii) An amount for any attorney fees, consequential |
17 | damages, court costs, interest, personal injury damages |
18 | or punitive damages, except as may be provided in an |
19 | assurance of voluntary compliance. |
20 | (2) In addition to the limits specified in paragraph |
21 | (1), an owner may not recover from the fund more than the |
22 | owner's actual loss, to a maximum of $10,000, for a claim |
23 | made on one contract. |
24 | (3) Nothing in this section shall be construed to |
25 | preclude an owner from recovering or seeking to recover from |
26 | a contractor: |
27 | (i) the difference between the amount of the |
28 | judgment against the contractor received by the owner and |
29 | the amount actually paid to the owner from the fund; or |
30 | (ii) the difference between the amount a contractor |
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1 | agrees to pay to an owner under an assurance of voluntary |
2 | compliance and the amount actually paid to the owner from |
3 | the fund. |
4 | (4) In the event an owner does not receive payment in |
5 | full of a judgment amount from the fund, the judgment shall |
6 | be deemed to be satisfied only to the extent of the payment |
7 | received, and the judgment shall continue in full force and |
8 | effect with respect to the amount still owed until the owner |
9 | receives payment in full. |
10 | (d) Excluded claimants.--A claim against the fund based on |
11 | the act or omission of a particular contractor may not be made |
12 | by: |
13 | (1) a spouse or other immediate relative of the |
14 | contractor, or of a party which holds a financial stake in |
15 | the business of the contractor; |
16 | (2) an employee, officer, director, partner or other |
17 | party which holds a financial stake in the business of the |
18 | contractor; or |
19 | (3) an immediate relative of an employee, officer, |
20 | director, partner or other party which holds a financial |
21 | stake in the business of the contractor. |
22 | (e) Limitations period.--A claim must be made against the |
23 | fund: |
24 | (1) within two years after the owner obtains an entry of |
25 | final judgment or decree against the contractor and all |
26 | appeal rights have expired or been exhausted; or |
27 | (2) in the case of an assurance of voluntary compliance, |
28 | within the later of two years of entry into such assurance or |
29 | one year after nonpayment according to the terms of the |
30 | assurance. |
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1 | (f) Offer of proof.--In order to recover from the fund an |
2 | owner must offer proof to the bureau that the owner has |
3 | exhausted all reasonable actions available at law and in equity |
4 | to collect the unpaid amount of a final judgment. |
5 | (g) Partial payments for fund integrity.--In order to |
6 | preserve the integrity of the fund, the bureau may order payment |
7 | out of the fund of an amount less than the judgment amount or |
8 | the amount agreed to be paid in an assurance of voluntary |
9 | compliance. The balance remaining due to the claimant shall be |
10 | paid from the fund pursuant to subsection (h). |
11 | (h) Special order of payment.--If the money in the fund is |
12 | insufficient to satisfy any duly authorized claim or portion |
13 | thereof, the bureau shall, when sufficient money exists in the |
14 | fund, satisfy the unpaid claims or portions thereof, in the |
15 | order that those claims or portions thereof were originally |
16 | determined. |
17 | (i) Investigation by bureau.-- |
18 | (1) As provided in section 10.4, if the bureau pays any |
19 | amount from the fund as a result of a claim against a |
20 | contractor, the bureau may conduct an investigation to |
21 | determine if the contractor is possessed of assets liable to |
22 | be sold or applied in satisfaction of the claim on the fund. |
23 | (2) If the bureau discovers any such assets, the bureau |
24 | may take any lawful action necessary for the reimbursement of |
25 | the fund. |
26 | (j) Revocation caused by payment of claim.-- |
27 | (1) Except as otherwise provided under paragraph (2), if |
28 | the bureau makes a payment of an amount as a result of a |
29 | claim against a contractor, the bureau shall revoke the |
30 | certificate of the contractor and the contractor shall not be |
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1 | eligible to receive a new or renewed certificate until that |
2 | contractor has repaid such amount in full, plus interest, |
3 | from the time the payment is made from the fund. |
4 | (2) (i) The bureau may permit a contractor to receive a |
5 | new or renewed certificate after the contractor has |
6 | entered into an agreement with the bureau in which the |
7 | contractor agrees to repay the fund in full in the form |
8 | of periodic payments over a set period of time. |
9 | (ii) If the contractor fails to pay in accordance |
10 | with the terms of the agreement, the bureau shall |
11 | automatically suspend the contractor's certificate. |
12 | Section 10.3 Procedure for submitting claims. |
13 | (a) Initial claim.-- |
14 | (1) In order to recover from the fund, a claimant must |
15 | submit to the bureau the documentation required under section |
16 | 10.2(f), together with a copy of the judgment and evidence |
17 | that: |
18 | (i) the judgment has not been appealed or a copy of |
19 | the assurance of voluntary compliance and a certification |
20 | that the contractor has failed to pay; or |
21 | (ii) the owner has been prevented from collecting |
22 | the entirety of a final judgment as a result of the |
23 | contractor's filing for bankruptcy protection under |
24 | Federal law. |
25 | (2) if paragraph (1)(ii) applies, the owner shall only |
26 | be entitled to collect from the fund the amount the owner was |
27 | prevented from collecting as a result of the filing. |
28 | (b) Copy of claim to contractor.-- |
29 | (1) On receipt of a claim pursuant to this section, the |
30 | bureau shall send a copy of the claim to the contractor |
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1 | alleged to be responsible for the actual loss. |
2 | (2) The contractor shall file a response or objection to |
3 | the claim within 30 days of receipt of the notice of such |
4 | claim. |
5 | (3) Failure to respond to the claim shall constitute a |
6 | waiver of any defense or objection to the claim. |
7 | (4) The only defense a contractor may raise in his |
8 | response is a defense of payment in full of the claim. |
9 | (c) General order of payment.--Except as otherwise provided |
10 | in this act, the bureau shall pay from the fund approved claims |
11 | in the order that they are submitted. |
12 | Section 10.4 Reimbursement of fund. |
13 | (a) General rule.--After the bureau pays a claim from the |
14 | fund: |
15 | (1) The bureau shall be subrogated to all rights of the |
16 | owner in the claim up to the amount paid. |
17 | (2) The owner shall assign to the bureau all rights of |
18 | the owner in the claim up to the amount paid. |
19 | (3) The bureau has a right to reimbursement of the fund |
20 | by the contractor for: |
21 | (i) The amount paid from the fund. |
22 | (ii) Interest on the amount at an annual rate of 5% |
23 | as adjusted by the Consumer Price Index on an annual |
24 | basis. |
25 | (b) Deposit of recovered claims.--All money that the bureau |
26 | recovers on a claim shall be deposited in the fund. |
27 | (c) Suit for nonpayment.--If, within 30 days after the |
28 | bureau gives notice, a contractor on whose account a claim was |
29 | paid shall fail to reimburse the fund in full, the bureau may |
30 | initiate an action against the contractor in a court of |
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1 | competent jurisdiction for the unreimbursed amount. |
2 | (d) Judgment.--The bureau is entitled to a judgment for the |
3 | unreimbursed amount if the bureau proves that: |
4 | (1) A claim was paid from the fund on account of the |
5 | contractor. |
6 | (2) The contractor has not reimbursed the fund in full. |
7 | (3) The bureau directed payment based on a final |
8 | judgment of a court of competent jurisdiction or an assurance |
9 | of voluntary compliance. |
10 | (e) Withholding of tax refund.--If a person is delinquent |
11 | for at least one year in making payments to the bureau for the |
12 | purposes of reimbursing the fund, the Department of Revenue |
13 | shall credit the amount of any refundable overpayment of tax |
14 | imposed by Article III of the act of March 4, 1971 (P.L.6, |
15 | No.2), known as the Tax Reform Code of 1971, against the |
16 | delinquency in respect to this act on the part of the person who |
17 | made the overpayment. |
18 | (f) Bankruptcy proceedings.--For the purpose of excepting to |
19 | a discharge of an individual or business under Federal |
20 | bankruptcy law, the bureau shall be a creditor of the individual |
21 | or business for the amount paid from the fund. |
22 | Section 3. This act shall take effect in 180 days. |
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