Substitute Senate Bill No. 496
Public Act No. 03-167
AN ACT CONCERNING RETAINAGE, THE NEW HOME CONSTRUCTION ACT, THE HOME IMPROVEMENT CONTRACTOR ACT AND THE HOME SOLICITATION SALES ACT.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Section 20-417a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):
As used in this section, sections 20-417b to 20-417i, inclusive, and subsection (b) of section 20-421:
(1) "Certificate" means a certificate of registration issued under section 20-417b;
(2) "Commissioner" means the Commissioner of Consumer Protection or any person designated by the commissioner to administer and enforce this section, sections 20-417b to 20-417i, inclusive, and subsection (b) of section 20-421;
(3) "Contract" means any agreement between a new home construction contractor and a consumer for the construction or sale of a new home or portion of a new home prior to occupancy;
(4) "Engage in the business" means that the person engages in the business for the purpose of compensation or profit;
(5) "New home construction contractor" means any person who contracts with a consumer to construct or sell a new home or any portion of a new home prior to occupancy;
(6) "New home" means any newly constructed (A) single family dwelling unit, (B) dwelling consisting of not more than two units, or (C) unit, common element or limited common element in a condominium, as defined in section 47-68a, or in a common interest community, as defined in section 47-202;
(7) "Person" means one or more individuals, partnerships, associations, corporations, limited liability companies, business trusts, legal representatives or any organized group of persons;
(8) "Consumer" means the buyer or prospective buyer, or the buyer's or prospective buyer's heirs or designated representatives, of any new home or the owner of property on which a new home is being or will be constructed regardless of whether such owner obtains a building permit as the owner of the premises affected pursuant to section 29-263; and
(9) "Completion" means the stage of construction of a new home in which the new home construction contractor is in receipt of such new home's certificate of occupancy issued by the municipality in which such new home is constructed.
Sec. 2. Section 20-417e of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):
In addition to any other remedy provided for in sections 20-417a to 20-417i, inclusive, and subsection (b) of section 20-421, any person who violates any provision of subsection (d) of section 20-417d [, except subdivision (7) of said subsection (d)] shall be guilty of a class A misdemeanor. Notwithstanding subsection (d) of section 53a-29 or section 54-56e, if the court determines that a contractor cannot fully repay any victim of the violations committed by the contractor within the period of probation established in subsection (d) of section 53a-29 or section 54-56e, the court may impose probation for a period of not more than five years. Any person who violates the provisions of subdivision (7) of subsection (d) of section 20-417d shall be liable for treble damages.
Sec. 3. Subsection (b) of section 20-427 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):
(b) No person shall: (1) Present or attempt to present, as [his] such person's own, the certificate of another, (2) knowingly give false evidence of a material nature to the commissioner for the purpose of procuring a certificate, (3) represent himself or herself falsely as, or impersonate, a registered home improvement contractor or salesman, (4) use or attempt to use a certificate which has expired or which has been suspended or revoked, (5) offer to make or make any home improvement without having a current certificate of registration under this chapter, (6) represent in any manner that [his] such person's registration constitutes an endorsement of the quality of [his] such person's workmanship or of [his] such person's competency by the commissioner, (7) employ or allow any person to act as a salesman on [his] such person's behalf unless such person is registered as a home improvement salesman, or (8) fail to refund the amount paid for a home improvement within ten days of a written request mailed or delivered to the contractor's last known address, if no substantial portion of the contracted work has been performed at the time of the request and more than thirty days has elapsed since the starting date specified in the written contract, or more than thirty days has elapsed since the date of the contract if such contract does not specify a starting date.
Sec. 4. Section 42-135a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):
No agreement [of the buyer] in a home solicitation sale shall be effective against the buyer if it is not signed and dated by the buyer or if the seller shall:
(1) Fail to furnish the buyer with a fully completed receipt or copy of all contracts and documents pertaining to such sale at the time of its execution, which contract shall be in the same language as that principally used in the oral sales presentation and which shall show the date of the transaction and shall contain the name and address of the seller, and in immediate proximity to the space reserved in the contract for the signature of the buyer, or on the front page of the receipt if a contract is not used, and in boldface type of a minimum size of ten points, a statement in substantially the following form:
YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT.
(2) Fail to furnish each buyer, at the time [he] such buyer signs the home solicitation sales contract or otherwise agrees to buy consumer goods or services from the seller, a completed form in duplicate, captioned "NOTICE OF CANCELLATION", which shall be attached to the contract or receipt and easily detachable, and which shall contain in ten-point boldface type the following information and statements in the same language as that used in the contract:
NOTICE OF CANCELLATION
. . . . (Date of Transaction)
YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.
IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU UNDER THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL BE RETURNED WITHIN TEN BUSINESS DAYS FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE CANCELLED.
IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR RESIDENCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU MAY, IF YOU WISH, COMPLY WITH THE INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE SELLER'S EXPENSE AND RISK.
IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES NOT PICK THEM UP WITHIN TWENTY DAYS OF THE DATE OF CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THE SELLER, OR IF YOU AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE CONTRACT.
TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A TELEGRAM TO . . . . (Name of Seller) AT . . . . (Address of Seller's Place of Business) NOT LATER THAN MIDNIGHT OF . . . . (Date)
I HEREBY CANCEL THIS TRANSACTION.
. . . . (Date)
. . . . (Buyer's Signature)
(3) Fail, before furnishing copies of the "Notice of Cancellation" to the buyer, to complete both copies by entering the name of the seller, the address of the seller's place of business, the date of the transaction, and the date, not earlier than the third business day following the date of the transaction, by which the buyer may give notice of cancellation.
(4) Include in any home solicitation sale contract or receipt any confession of judgment or any waiver of any of the rights to which the buyer is entitled under this chapter, including specifically [his] such buyer's right to cancel the sale in accordance with the provisions of this section.
(5) Fail to inform each buyer, orally, at the time [he] such buyer signs the contract or purchases the goods or services, of [his] such buyer's right to cancel.
(6) Misrepresent in any manner the buyer's right to cancel.
(7) Fail or refuse to honor any valid notice of cancellation by a buyer and within ten business days after the receipt of such notice, to (A) refund all payments made under the contract or sale; (B) return any goods or property traded in, in substantially as good condition as when received by the seller; (C) cancel and return any negotiable instrument executed by the buyer in connection with the contract or sale and take any action necessary or appropriate to terminate promptly any security interest created in the transaction; and (D) cancel and return any contract executed by the buyer in connection with the transaction.
(8) Negotiate, transfer, sell, or assign any note or other evidence of indebtedness to a finance company or other third party prior to midnight of the fifth business day following the date the contract was signed or the goods or services purchased.
(9) Fail, within ten business days of receipt of the buyer's notice of cancellation, to notify [him] such buyer whether the seller intends to repossess or to abandon any shipped or delivered goods.
Sec. 5. Subdivision (3) of section 42-158i of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2004):
(3) "Retainage" means a sum withheld from progress payments to the contractor or subcontractor, otherwise payable to a contractor or subcontractor by an owner conditioned on substantial or final completion of all work in accordance with the terms of a written or verbal construction contract, but does not include any sum withheld due to the contractor's or subcontractor's failure to comply with construction plans and specifications.
Sec. 6. (NEW) (Effective January 1, 2004) An escrow account shall be established for all retainage, subject to the following:
(a) An escrow account shall be established in state or national banks domiciled in this state or in savings and loan associations domiciled in this state.
(b) The owner shall provide a monthly report to the contractor as to the value of the retainage being held in the escrow account and any additions to or payments from the escrow account. Upon request by a subcontractor, the contractor shall make such monthly report available for review by the subcontractor. Withdrawals from the escrow account shall be made only subject to approval of the owner.
(c) If the owner has entered into more than one construction contract with the same contractor requiring the maintenance of escrow accounts, the owner may elect to combine the amounts held as retainage under each contract into one or more escrow accounts or may establish a separate escrow account for each contract.
(d) The escrow account shall be terminated upon substantial or final completion of all work in accordance with the terms of the construction contract and full payment to the contractor.
(e) All fees and expenses related to maintaining the escrow account shall be paid by the owner.
(f) The form and provisions of the escrow account shall be included in all solicitations for construction services and shall be provided to the contractor and subcontractor prior to entering into a contract with the owner. Upon request by a subcontractor, the contractor shall make such form and provisions available for review by the subcontractor. Failure to comply with the provisions of this subsection shall not give rise to a defense to the enforcement of a contract.
(g) If an owner fails to deposit retainage that is withheld or to release retainage as required by this act, the owner shall pay to the contractor an additional one and one-half per cent of the amount not deposited or released for each month or fraction of a month, until the retainage amount is paid in full.
(h) An owner may accept securities in lieu of retainage from a contractor and a contractor may accept securities in lieu of retainage from a subcontractor.
(i) For the purposes of this section, "owner" means "owner", as defined in subdivision (1) of section 42-158i of the general statutes.
Sec. 7. (NEW) (Effective January 1, 2004) The provisions of section 6 of this act do not apply to construction contracts for residential property containing four or fewer dwelling units or to construction contracts of less than twenty-five thousand dollars total value or to construction contracts relating to any public building or public work of the state or a municipality or other political subdivision of the state.
Sec. 8. Section 42-158k of the general statutes is repealed and the following is substituted in lieu thereof (Effective January 1, 2004):
No construction contract may provide for any retainage in an amount that exceeds seven and one-half per cent of the estimated amount of a progress payment for the life of the construction project. [This section shall not be construed to require that a construction contract contain a retainage provision. ]
Sec. 9. (NEW) (Effective January 1, 2004) In an action to enforce the provisions of section 6 of this act or section 42-158m or 42-158k of the general statutes, a court may award court costs and reasonable attorney's fees to the prevailing party.
Approved June 26, 2003