Substitute House Bill No. 6620

Public Act No. 99-246

An Act Concerning Consumer Protection for New Home Construction.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) As used in this act:

(1) "Certificate" means a certificate of registration issued under section 3 of this act;

(2) "Commissioner" means the Commissioner of Consumer Protection or any person designated by the commissioner to administer and enforce this act;

(3) "Contract" means any agreement between a new home construction contractor and a consumer for the construction of a new home;

(4) "New home construction contractor" means any person who contracts with a consumer to construct a new home or any portion of a new home prior to occupancy;

(5) "New home" means any newly constructed single family dwelling unit, any dwelling consisting of not more than two units, or a unit, common element or limited common element in a condominium, as defined in section 47-68a of the general statutes, or in a common interest community, as defined in section 47-202 of the general statutes;

(6) "Person" means one or more individuals, partnerships, associations, corporations, limited liability companies, business trusts, legal representatives or any organized group of persons; and

(7) "Consumer" means the original or prospective buyer, or the original or prospective buyer's heirs or designated representatives, of any new home.

Sec. 2. (NEW) (a) No person shall engage in the business of new home construction or hold oneself out as a new home construction contractor unless such person has been issued a certificate of registration by the commissioner in accordance with the provisions of this act. No new home construction contractor shall be relieved of responsibility for the conduct and acts of its agents, employees or officers by reason of such new home construction contractor's compliance with the provisions of this act.

(b) Any person seeking a certificate of registration shall apply to the commissioner, in writing, on a form provided by the commissioner. The application shall include the applicant's name, residence or business address, business telephone number and the identity of the insurer that provides the applicant with insurance coverage for liability based upon the errors and omissions of the new home construction contractor. Each such application shall be accompanied by a fee of one hundred twenty dollars, except that no such application fee shall be required if such person has paid the registration fee required under section 20-421 of the general statutes, as amended by this act, during any year in which such person's registration as a new home construction contractor would be valid.

(c) Certificates issued to new home construction contractors shall not be transferable or assignable.

(d) All certificates issued under the provisions of this act shall expire biennially. The fee for renewal of a certificate shall be the same as the fee charged for an original application, except as provided in subsection (c) of section 9 of this act.

(e) A certificate shall not be restored unless it is renewed not later than one year after its expiration.

(f) Failure to receive a notice of expiration or a renewal application shall not exempt a contractor from the obligation to renew.

Sec. 3. (NEW) The commissioner may revoke, suspend, or refuse to issue or renew any certificate issued pursuant to this act or place a registrant on probation or issue a letter of reprimand after notice and hearing in accordance with the provisions of chapter 54 of the general statutes concerning contested cases if it is shown that the holder of such certificate has: (1) Failed to comply with any provision of this act or any regulation adopted pursuant to this act; (2) obtained the certificate through fraud or misrepresentation; (3) engaged in conduct of a character likely to mislead, deceive or defraud the public or the commissioner; (4) engaged in any untruthful or misleading advertising; (5) failed to reimburse the New Home Construction Guaranty Fund established pursuant to section 9 of this act for any moneys paid to a consumer pursuant to section 9 of this act; (6) engaged in an unfair or deceptive business practice under subsection (a) of section 42-110b of the general statutes; (7) failed to timely complete any task, as specified in a written contract of sale; (8) failed to remedy any violation of any provision of sections 47-116 to 47-121, inclusive, of the general statutes or any regulation adopted pursuant to said sections 47-116 to 47-121, inclusive; (9) failed to remedy any violation of any provision of the State Building Code; or (10) if applicable, failed to maintain its certificate of good standing issued by the office of the Secretary of the State.

Sec. 4. (NEW) (a) A new home construction contractor shall (1) prior to entering into a contract with a consumer for new home construction, provide to the consumer a copy of the new home construction contractor's certificate of registration and a written notice that (A) discloses that the certificate of registration does not represent in any manner that such contractor's registration constitutes an endorsement of the quality of such person's work or of such contractor's competency by the commissioner, (B) advises the consumer to contact the Department of Consumer Protection to determine (i) if such contractor is registered in this state as a new home construction contractor, (ii) if any complaints have been filed against such contractor, and (iii) the disposition of any such complaints, and (C) advises the consumer to request from such contractor a list of each individual or the fifteen most recent individuals, whichever is less for whom such contractor has engaged in new home construction during the current and preceding calendar year and to contact several individuals on the list to discuss the quality of such contractor's new home construction work, (2) state in any advertisement, including any advertisement in a telephone directory, the fact that such contractor is registered, and (3) include such contractor's registration number in any such advertisement.

(b) A new home construction contractor shall include in every contract with a consumer a provision advising the consumer that the consumer may be contacted by such contractor's prospective consumers concerning the quality and timeliness of such contractor's new home construction work, unless the consumer advises such contractor, in writing, at the time the contract is executed, that the consumer prefers not to be contacted.

(c) The written notice required in subsection (a) of this section shall be in capital letters not less than ten-point bold face type, and may include a statement in substantially the following form:

"NEW HOME CONSTRUCTION CONTRACTOR

REGISTRATION NOTICE

A CERTIFICATE OF REGISTRATION AS A NEW HOME CONSTRUCTION CONTRACTOR DOES NOT REPRESENT IN ANY MANNER THAT THE CONNECTICUT DEPARTMENT OF CONSUMER PROTECTION ENDORSES THE QUALITY OF THE CONTRACTOR'S NEW HOME CONSTRUCTION WORK OR THE CONTRACTOR'S COMPETENCY TO ENGAGE IN NEW HOME CONSTRUCTION.

ACCORDINGLY, YOU ARE ADVISED TO:

(1) REQUEST FROM THE CONTRACTOR A LIST OF EACH INDIVIDUAL OR THE FIFTEEN MOST RECENT INDIVIDUALS, WHICHEVER IS LESS, FOR WHOM THE CONTRACTOR HAS ENGAGED IN NEW HOME CONSTRUCTION IN THIS STATE DURING THE CURRENT AND PRECEDING CALENDAR YEAR,

(2) CONTACT SEVERAL INDIVIDUALS ON THE LIST TO DISCUSS THE QUALITY AND THE TIMELINESS OF THE CONTRACTOR'S NEW HOME CONSTRUCTION WORK, AND

(3) CONTACT THE DEPARTMENT OF CONSUMER PROTECTION TO VERIFY THE REGISTRATION INFORMATION PRESENTED BY THE CONTRACTOR AND TO ASCERTAIN THE CONTRACTOR'S COMPLAINT HISTORY WITH THE DEPARTMENT.

IN ADDITION, YOU ARE ADVISED TO DISCUSS WITH THE NEW HOME CONSTRUCTION CONTRACTOR:

(1) WHETHER THE CONTRACTOR HAS A CUSTOMER SERVICE POLICY AND IF SO, THE IDENTITY OF THE PERSON DESIGNATED TO ASSIST YOU IN RESOLVING ANY COMPLAINT ABOUT THE CONTRACTOR'S WORK, AND

(2) WHETHER THE CONTRACTOR WILL HOLD YOU HARMLESS FOR WORK PERFORMED BY ANY SUBCONTRACTOR HIRED BY THE CONTRACTOR.

THIS NOTICE DOES NOT CONTAIN AN EXHAUSTIVE LIST OF THE INQUIRIES YOU SHOULD MAKE BEFORE CONTRACTING WITH A NEW HOME CONSTRUCTION CONTRACTOR. ADDITIONAL INFORMATION TO ASSIST YOU IN YOUR SELECTION OF A NEW HOME CONSTRUCTION CONTRACTOR MAY BE OBTAINED BY CONTACTING THE CONNECTICUT DEPARTMENT OF CONSUMER PROTECTION."

(d) No person shall: (1) Present, or attempt to present as 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 such person falsely as, or impersonate, a registered new home construction contractor; (4) use or attempt to use a certificate which has expired or which has been suspended or revoked; (5) engage in the business of a new home construction contractor or hold oneself out as a new home construction contractor without having a current certificate of registration under this act; (6) represent in any manner that such person's registration constitutes an endorsement of the quality of such person's work or of such person's competency by the commissioner; or (7) fail to refund a deposit paid to a new home construction contractor not later than ten days after a written request mailed or delivered to the new home construction contractor's last known address, if (A) the consumer has complied with the terms of the written contract up to the time of the request, (B) no substantial portion of the contracted work has been performed at the time of the request, (C) 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, and (D) the new home construction contractor has failed to provide a reasonable explanation to the consumer concerning such contractor's failure to perform a substantial portion of the contracted work. For purposes of this subdivision, "substantial portion of the contracted work" includes, but is not limited to, work performed by the new home construction contractor to (i) secure permits and approvals, (ii) redraft plans or obtain engineer, architect, surveyor or other approvals for changes requested by the consumer or made necessary by site conditions discovered after the contract is executed, (iii) scheduling site work or arranging for other contractors to perform services related to the construction of the consumer's new home, and (iv) any other work referred to in the contract as a "substantial portion of the contracted work."

Sec. 5. (NEW) In addition to any other remedy provided for in this act, any person who violates any provision of subsection (d) of section 4 of this act, 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 of the general statutes, 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 of the general statutes, the court may impose probation for a period of not more than five years.

Sec. 6. (NEW) The commissioner may, after notice and hearing in accordance with the provisions of chapter 54 of the general statutes, impose a civil penalty on any person who engages in or practices the work for which a certificate of registration is required by this act without having first obtained such a certificate of registration or who engages in or practices any of the work for which a certificate of registration is required by this act after the expiration of such person's certificate of registration or who violates any of the provisions of this act or the regulations adopted pursuant to this act. Such penalty shall not exceed (1) five hundred dollars for a first violation of this subsection, (2) seven hundred fifty dollars for a second violation of this subsection occurring not more than three years after a prior violation, and (3) one thousand five hundred dollars for a third or subsequent violation of this subsection occurring not more than three years after a prior violation. Any civil penalty collected pursuant to this subsection shall be deposited in the Consumer Protection Enforcement Fund established in section 21a-8a of the general statutes.

Sec. 7. (NEW) A violation of any of the provisions of this act shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b of the general statutes.

Sec. 8. (NEW) No new home construction contractor shall commence work unless each applicable building or construction permit has been obtained under the general statutes or local ordinances. No building official shall issue a contractor a building or construction permit unless the contractor has presented to such building official the certificate of registration and registration number of the new home construction contractor.

Sec. 9. (NEW) (a) The commissioner shall establish and maintain the New Home Construction Guaranty Fund.

(b) Each person who receives a certificate pursuant to this act shall pay a fee of four hundred eighty dollars biennially to the fund. Said fee shall be payable with the fee for an application for a certificate or renewal of a certificate.

(c) Payments received under subsection (b) of this section shall be credited to the fund until the balance in such fund equals seven hundred fifty thousand dollars. Annually, if the balance in such fund exceeds seven hundred fifty thousand dollars, the first two hundred thousand dollars of the excess shall be deposited into the Consumer Protection Enforcement Fund established in section 21a-8a of the general statutes. Any excess thereafter shall be applied by the commissioner to reduce the fees payable by new home construction contractors under the provisions of this act for the subsequent fiscal year, provided the total amount of fees collected from new home construction contractors under the provisions of this act shall not be less than three hundred sixty thousand dollars biennially. Any money in the New Home Construction Guaranty Fund may be invested or reinvested in the same manner as funds of the state employees retirement system and the interest arising from such investments shall be credited to the fund.

(d) Beginning one year after the effective date of this act, whenever a consumer obtains a court judgment against any new home construction contractor holding a certificate or who has held a certificate under this act within the past two years of the date of entering into the contract with the consumer, for loss or damages sustained by reason of any violation of the provisions of this act by a person holding a certificate under this act, such consumer may, upon the final determination of, or expiration of time for, appeal in connection with any such judgment, apply to the commissioner for an order directing payment out of said New Home Construction Guaranty Fund of the amount not exceeding thirty thousand dollars unpaid upon the judgment for actual damages and costs taxed by the court against the contractor, exclusive of punitive damages. The application shall be made on forms provided by the commissioner and shall be accompanied by a certified copy of the court judgment obtained against the contractor together with a notarized affidavit, signed and sworn to by the consumer, affirming that the consumer has: (1) Complied with all the requirements of this subsection; (2) obtained a judgment, stating the amount of the judgment and the amount owing on the judgment at the date of application; and (3) made a good faith effort to satisfy any such judgment in accordance with the provisions of chapter 906 of the general statutes, which effort may include causing to be issued a writ of execution upon said judgment, but the officer executing the same has made a return showing that no bank accounts or real property of the contractor liable to be levied upon in satisfaction of the judgment could be found, or that the amount realized on the sale of them or of such of them as were found, under the execution, was insufficient to satisfy the actual damage portion of the judgment or stating the amount realized and the balance remaining due on the judgment after application on the judgment of the amount realized, except that the requirements of this subdivision shall not apply to a judgment obtained by the consumer in small claims court. A true and attested copy of said executing officer's return, when required, shall be attached to such application and affidavit. Whenever the consumer satisfies the commissioner or the commissioner's designee that it is not practicable to comply with the requirements of subdivision (3) of this subsection and that the consumer has taken all reasonable steps to collect the amount of the judgment or the unsatisfied part of the judgment and has been unable to collect the same, the commissioner or the commissioner's designee may, in the commissioner's discretion, dispense with the necessity for complying with such requirement. No application for an order directing payment out of the New Home Construction Guaranty Fund shall be made later than two years from the final determination of, or expiration time for, appeal of said court judgment, and no application for an order directing payment out of the New Home Construction Guaranty Fund shall exceed thirty thousand dollars.

(e) Upon receipt of said application together with said certified copy of the court judgment, notarized affidavit and true and, except as otherwise provided in subsection (d) of this section, attested copy of the executing officer's return, the commissioner or the commissioner's designee shall inspect such documents for their veracity and upon a determination that such documents are complete and authentic, and a determination that the consumer has not been paid, the commissioner shall order payment out of the New Home Construction Guaranty Fund of the amount not exceeding thirty thousand dollars unpaid upon the judgment for actual damages and costs taxed by the court against the contractor, exclusive of punitive damages.

(f) Beginning one year after the effective date of this act, whenever a consumer is awarded an order of restitution against any contractor for loss or damages sustained as a result of any violation of the provisions of this act by a person holding a certificate or who has held a certificate under this act within the past two years of the date of entering into the contract with the consumer, in a proceeding brought by the commissioner pursuant to subsection (h) of this section or subsection (d) of section 42-110d of the general statutes, or in a proceeding brought by the Attorney General pursuant to subsection (a) of section 42-110m of the general statutes or subsection (d) of section 42-110d of the general statutes, or a criminal proceeding pursuant to section 4 of this act, such consumer may, upon the final determination of, or expiration of time for, appeal in connection with any such order of restitution, apply to the commissioner for an order directing payment out of said New Home Construction Guaranty Fund of the amount not exceeding thirty thousand dollars unpaid upon the order of restitution. The commissioner may issue said order upon a determination that the consumer has not been paid.

(g) Before the commissioner may issue any order directing payment out of the New Home Construction Guaranty Fund to a consumer pursuant to subsection (e) or (f) of this section, the commissioner shall first notify the new home construction contractor of the consumer's application for an order directing payment out of the New Home Construction Guaranty Fund and of the new home construction contractor's right to a hearing to contest the disbursement in the event that the new home construction contractor has already paid the consumer. Such notice shall be given to the new home construction contractor not later than fifteen days from the receipt by the commissioner of the consumer's application for an order directing payment out of the fund. If the new home construction contractor requests a hearing, in writing, by certified mail not later than fifteen days from receipt of the notice from the commissioner, the commissioner shall grant such request and shall conduct a hearing in accordance with the provisions of chapter 54 of the general statutes. If the commissioner does not receive a written request for a hearing by certified mail from the contractor on or before the fifteenth day from the contractor's receipt of such notice, the commissioner shall conclude that the consumer has not been paid, and the commissioner shall issue an order directing payment out of the fund for the amount not exceeding thirty thousand dollars unpaid upon the judgment for actual damages and costs taxed by the court against the new home construction contractor, exclusive of punitive damages, or for the amount not exceeding thirty thousand dollars unpaid upon the order of restitution.

(h) The commissioner or the commissioner's designee may proceed against any new home construction contractor holding a certificate or who has held a certificate under this act within the past two years of the effective date of entering into the contract with the consumer, for an order of restitution arising from loss or damages sustained by any consumer as a result of any violation of the provisions of this act. Any such proceeding shall be held in accordance with the provisions of chapter 54 of the general statutes. In the course of such proceeding, the commissioner or the commissioner's designee shall decide whether to exercise the powers specified in section 2 of this act; whether to order restitution arising from loss or damages sustained by any consumer as a result of any violation of the provisions of this act; and whether to order payment out of the New Home Construction Guaranty Fund. Notwithstanding the provisions of chapter 54 of the general statutes, the decision of the commissioner or the commissioner's designee shall be final with respect to any proceeding to order payment out of the fund and the commissioner and the commissioner's designee are exempted from the requirements of chapter 54 of the general statutes as they relate to appeal from any such decision. The commissioner or the commissioner's designee may hear complaints of all consumers submitting claims against a single contractor in one proceeding.

(i) No application for an order directing payment out of the New Home Construction Guaranty Fund shall be made later than two years from the final determination of, or expiration of time for, appeal in connection with any judgment or order of restitution, and no such application for an order directing payment out of the fund shall exceed thirty thousand dollars.

(j) In order to preserve the integrity of the New Home Construction Guaranty Fund, the commissioner, in the commissioner's sole discretion, may order payment out of said fund of an amount less than the actual loss or damages incurred by the consumer or less than the order of restitution awarded by the commissioner or the Superior Court. In no event shall any payment out of said fund be in excess of thirty thousand dollars for any single claim by a consumer.

(k) If the money deposited in the New Home Construction Guaranty Fund is insufficient to satisfy any duly authorized claim or portion of a claim, the commissioner shall, when sufficient money has been deposited in the fund, satisfy such unpaid claims or portions of claims not exceeding thirty thousand dollars, in the order that such claims or portions of claims were originally determined.

(l) When the commissioner has caused any sum to be paid from the New Home Construction Guaranty Fund to a consumer, the commissioner shall be subrogated to all of the rights of the consumer up to the amount paid plus reasonable interest, and prior to receipt of any payment from the fund, the consumer shall assign all of this right, title and interest in the claim up to such amount to the commissioner, and any amount and interest recovered by the commissioner on the claim shall be deposited to the fund.

(m) If the commissioner orders the payment of any amount as a result of a claim against a new home construction contractor, the commissioner shall determine if the new home construction contractor is possessed of assets liable to be sold or applied in satisfaction of the claim on the New Home Construction Guaranty Fund. If the commissioner discovers any such assets, the commissioner may request that the Attorney General take any action necessary for the reimbursement of the fund.

(n) If the commissioner orders the payment of an amount as a result of a claim against a new home construction contractor, the commissioner may, after notice and hearing in accordance with the provisions of chapter 54 of the general statutes, revoke the certificate of the new home construction contractor and such contractor shall not be eligible to receive a new or renewed certificate until such contractor has repaid such amount in full, plus interest from the time said payment is made from the New Home Construction Guaranty Fund, at a rate to be in accordance with section 37-3b of the general statutes, except that the commissioner may, in the commissioner's sole discretion, permit a new home construction contractor to receive a new or renewed certificate after such new home construction contractor has entered into an agreement with the commissioner whereby the new home construction contractor agrees to repay the fund in full in the form of periodic payments over a set period of time. Any such agreement shall include a provision providing for the summary suspension of any and all certificates held by the new home construction contractor if payment is not made in accordance with the terms of the agreement.

Sec. 10. Subsection (b) of section 20-421 of the general statutes is repealed and the following is substituted in lieu thereof:

(b) Each application for a certificate of registration as a home improvement contractor shall be accompanied by a fee of sixty dollars, except that no such application fee shall be required in any year during which such person has paid the registration fee required under section 3 of this act or in any year in which such person's registration as a new home construction contractor is valid.

Approved June 29, 1999

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