Bill Text: PA HB195 | 2009-2010 | Regular Session | Introduced

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Bill Title: Providing for the regulation of home construction contracts and for the registration of certain home builders; prohibiting certain acts; providing for penalties; establishing the Home Builder Guaranty Fund; and providing for claims against the fund.

Spectrum: Strong Partisan Bill (Democrat 16-1)

Status: (Introduced - Dead) 2009-02-02 - Referred to CONSUMER AFFAIRS [HB195 Detail]

Download: Pennsylvania-2009-HB195-Introduced.html

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PRINTER'S NO. 194
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 195 Session of2009
INTRODUCED BY PRESTON, BRENNAN, CALTAGIRONE, COHEN, CARROLL, EACHUS, KIRKLAND, KORTZ, KOTIK, MELIO, SIPTROTH, SOLOBAY AND WALKO, FEBRUARY 2, 2009
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, FEBRUARY 2, 2009
AN ACT
Providing for the regulation of home construction contracts and
for the registration of certain home builders; prohibiting
certain acts; providing for penalties; establishing the Home
Builder Guaranty Fund; and providing for claims against the
fund.
TABLE OF CONTENTS
Section 1. Short title.
Section 2. Definitions.
Section 3. Registration of home builders.
Section 4. Procedures for registration as home builder.
Section 5. Application fees.
Section 6. Renewal of certificate.
Section 7. Proof of registration.
Section 8. Home construction contracts.
Section 9. Home construction fraud.
Section 10. Prohibited acts.
Section 11. Unfair Trade Practices and Consumer Protection Law.
Section 12. Consumer information pamphlet.
Section 13. Regulations.
Section 14. Preemption of local registration.
Section 15. Home Building Guaranty Fund.
Section 16. Claims against fund.
Section 17. Procedure for submitting claims.
Section 18. Reimbursement of fund.
Section 19. Notice of suspension or revocation.
Section 20. Exemptions.
Section 21. Building standards.
Section 22. Repeal.
Section 23. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the New Home
Construction Consumer Protection Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Arbitration clause." A process in which a neutral
arbitrator or panel of neutral arbitrators is engaged by the
parties to settle a dispute between a home builder and a
consumer.
"Assurance of Voluntary Compliance." As defined in section 5
of the act of December 17, 1968 (P.L.1224, No.387), known as the
Unfair Trade Practices and Consumer Protection Law.
"Bureau." The Bureau of Consumer Protection in the Office of
Attorney General.
"Certificate." A certificate of registration as a home
builder, issued by the Bureau of Consumer Protection, which
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contains a registration number assigned by the Bureau of
Consumer Protection.
"Consumer." A person who enters into a home construction
contract with a home builder. The term also includes a person
who has entered into a contract with a home builder to purchase
a new home but who has not yet settled on the purchase of the
new home.
"Fund." The Home Builder Guaranty Fund established in
section 15.
"Home builder."
(1) A person who enters into a home construction
contract with a consumer. The term includes an installer or
retailer of a mobile home or industrialized housing.
(2) The term does not include the following:
(i) A real estate developer who does not construct
homes.
(ii) A financial institution that lends funds for
the construction or purchase of residential dwellings in
this Commonwealth.
(iii) The manufacturer of industrialized housing or
mobile homes, unless the manufacturer also installs
mobile homes or industrialized housing.
"Home construction contract." An agreement between a home
builder and a consumer for the construction of a new home which
includes all agreements for labor, services and materials to be
furnished and performed under the contract.
"New home." A newly constructed residential dwelling unit
and the fixtures and structures that are made a part of the unit
at the time of construction. The term includes the following:
(1) A residential building as defined by the act of
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November 10, 1999 (P.L.491, No.45), known as the Pennsylvania
Construction Code Act.
(2) Industrialized housing as defined by the act of May
11, 1972 (P.L.286, No.70), known as the Industrialized
Housing Act.
(3) A mobile home as defined by the act of November 24,
1976 (P.L.1176, No.261), known as the Mobile Home Park Rights
Act.
"Person." An individual, partnership, limited partnership,
limited liability company, joint venture or corporation.
"Special order material." Any material, product or equipment
that is not a stock item and must be specially ordered from the
factory or distributor and which is produced or processed for a
specific home construction contract. Special order materials are
not returnable by the home builder for a refund or credit and
have no usefulness for other home construction contracts because
they are specially ordered for a specific home construction
contract.
"Specifications." The plans, detailed drawings, lists of
materials, stated allowances or other methods customarily used
in the home building industry as a whole to describe with
particularity the work, workmanship, materials and quality of
materials for each new home.
Section 3. Registration of home builders.
(a) General rule.--No person shall hold himself out as a
home builder nor shall a person build a new home without first
registering with the bureau as provided for in this act.
(b) Public access to registration information.--The bureau
shall maintain a toll-free telephone number from which a
consumer can obtain information as to whether a home builder is
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registered with the bureau pursuant to this act, as well as
information that may be obtained on the bureau's website.
(c) Confidentiality of personal information.--The bureau
shall create a policy for the disclosure of personal information
to the public. The bureau may not disclose to the public a home
builder's Social Security number, driver's license number or any
confidential information prohibited by law from being disclosed.
(d) No dual licenses.--A person registered or required to be
registered as a home builder under this act shall not be
eligible to obtain or renew a license under any of the
following:
(1) 7 Pa.C.S. Ch. 61 (relating to mortgage loan industry
licensing and consumer protection).
(2) The act of December 22, 1989 (P.L.687, No.90), known
as the Mortgage Bankers and Brokers and Consumer Equity
Protection Act.
(e) Liability.--No business entity registered pursuant to
this act shall be relieved of responsibility under this act for
the conduct and acts of its agents, employees, officers or
directors, nor shall any person be relieved of responsibility
under this act by reason of his employment or relationship with
such business entity.
(f) Effects of unregistered status.--No unregistered home
builder shall have standing to sue, countersue or raise a
defense of nonpayment in any dispute arising from a home
construction contract. No unregistered home builder may file a
mechanic's lien with respect to the construction of a new home.
Section 4. Procedures for registration as home builder.
(a) Application.--
(1) A person shall apply to the bureau in writing, or
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electronically via a secure Internet connection if permitted
by the bureau, on a form provided by the bureau. The
application shall include the following information:
(i) For an individual applicant, all of the
following:
(A) Name.
(B) Date of birth.
(C) Home address and home telephone number.
(D) Driver's license number or an identification
card issued by the state in which the individual
resides.
(E) Business name, address and telephone number.
(F) Federal employer identification number, if
available.
(G) Social Security number.
(H) All prior business names and addresses of
home construction businesses operated by the
individual.
(ii) For a general partnership applicant, all of the
following:
(A) Name of each partner.
(B) Date of birth of each partner.
(C) Home address and home telephone number of
each partner.
(D) Driver's license number or an identification
card issued by the state in which the partner
resides, of each partner.
(E) Partnership name, address and telephone
number.
(F) Federal employer identification number, if
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available.
(G) Social Security number of each partner.
(H) All prior business names and addresses of
home construction businesses operated by each
partner.
(iii) For a corporation, limited liability company
or limited partnership, all of the following:
(A) Name of each officer, manager and general
partner.
(B) Date of birth of each officer, manager and
general partner.
(C) Home address and home telephone number of
each officer, manager and general partner.
(D) Driver's license number or an identification
card issued by the state in which the individual
resides, of each officer, manager and general
partner.
(E) Entity's name, address and telephone number.
(F) Federal employer identification number, if
available.
(G) Social Security number of each officer,
manager and general partner.
(H) The name of each director or each individual
holding greater than a 5% interest in the entity.
(iv) For an out-of-State corporation, limited
liability or limited partnership, the name and address of
the entity's resident agent or registered office provider
within this Commonwealth and any registration number or
license number issued to the entity by its home state or
political subdivision of such other state, if applicable.
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(v) For a joint venture applicant, the name, address
and telephone number of the joint venture, as well as the
name, address and telephone number of each party to the
joint venture. When the parties to a joint venture
include business entities, the information required from
such entities pursuant to subsection (b) shall also be
provided.
(vi) A complete description of the nature of the
contracting business of the applicant.
(vii) A statement whether:
(A) The individual or individuals making
application, even if doing so as part of a business
entity application, has ever been convicted of a
criminal offense related to a home building
transaction, fraud, theft, a crime of deception or a
crime involving fraudulent business practices, as
well as a statement whether the applicant has ever
filed a petition in bankruptcy or within the last ten
years received a final civil judgment entered against
the applicant or businesses in which the applicant
held an interest that was related to a home building
transaction.
(B) The applicant's certificate or a similar
certificate or license issued by any other state or
political subdivision thereof has ever been revoked
or suspended pursuant to an order issued by a court
of competent jurisdiction and, if so, the current
status of the certificate or similar certificate or
license. The statement required by this clause shall
include the same information with respect to any
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other business in which the person making application
has or has ever had an interest.
(viii) Whether within the last ten years the
applicant has ever been suspended or debarred from
participating in any Federal, State or local program
through which public hearing or other assistance is
provided to consumers for home building.
(ix) Proof of general liability insurance covering
personal injury and property damage caused by the work of
a home builder.
(2) Information requested in paragraph (1)(i), (ii),
(iii), (iv) and (v) shall be for a ten-year period, prior to
the time of registration. The applicant shall provide
information prior to the last ten years or as further
clarification of the information provided, if the bureau
requests such information.
(b) Reporting of multiple registrations or licensures.--Any
registered home builder in this Commonwealth who is registered
or licensed as a home builder in any other state or political
subdivision thereof shall report this information to the bureau
on the initial and each biennial renewal application. Any
disciplinary action taken in such other jurisdiction shall be
reported to the bureau on the initial registration application
or, if such action occurred subsequent to submission of an
initial application, on the biennial registration application or
within 90 days of final disposition of the action, whichever is
sooner. Multiple registrations or licensures shall be noted by
the bureau on the home builder's registration, and such state or
political subdivision thereof shall be notified by the bureau of
any disciplinary actions taken against the home builder in this
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Commonwealth.
(c) Change of information.--A home builder shall provide the
bureau written notice of any change in the information submitted
under this section within ten business days after the change is
effective.
Section 5. Application fees.
Each application for a home builder certificate shall be
accompanied by a fee of $300. After completion of the
application and payment of the fee, the bureau shall issue the
home builder a certificate identifying the name of the
individual builder, name and address of the business and a
registration number.
Section 6. Renewal of certificate.
(a) General rule.--A home builder that meets the
requirements of subsection (c) may obtain renewal of a
registration before the registration expires for an additional
two-year term. Once expired, a registration may not be renewed.
(b) Renewal application.--At least 60 days before a home
builder's registration expires, the bureau shall mail to the
home builder the following:
(1) a renewal application form; and
(2) a notice that states the date on which the current
registration expires and the date by which the bureau must
receive the renewal application for a renewal to be issued
and mailed before the registration expires.
(c) Renewal procedure.--The bureau shall renew the
registration of each home builder that:
(1) Would qualify for an initial registration.
(2) Submits to the bureau a renewal application on the
form provided by the bureau.
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(3) Pays to the bureau a nonrefundable renewal fee based
on the number of building permits for the construction of new
homes issued to the registrant in the preceding calendar year
as follows:
(i) Ten or fewer homes, $150.
(ii) Eleven or more new homes, $300.
Section 7. Proof of registration.
A home builder shall include its registration number in all
advertisements, including business cards, distributed within
this Commonwealth and on all contracts, estimates and proposals
with consumers of home construction services in this
Commonwealth. A home builder shall display its registration
number on all properties at which he is performing services
pursuant to a home construction contract.
Section 8. Home construction contracts.
(a) Requirements.--No home construction contract shall be
valid or enforceable against a consumer unless it:
(1) is in writing and legible and contains the
registration number of the home builder;
(2) is signed by all of the following:
(i) the consumer or his agent; and
(ii) the home builder or his agent;
(3) contains the entire agreement between the consumer
and the home builder, including attached copies of all
required notices;
(4) contains the date the contract was signed;
(5) contains the name, address and telephone number of
the home builder. For purposes of this paragraph, a post
office box number alone shall not be considered an address;
(6) contains the approximate starting date and
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completion date for the work described in the contract;
(7) includes a description of the work to be performed,
the materials to be used and a set of specifications that
cannot be changed without a written change order signed by
the consumer and the home builder;
(8) includes the total sale price due under the
contract;
(9) includes the amount of any down payment plus any
amount advanced for the purchase of special order materials.
The amount of the down payment and the cost of the special
order materials must be listed separately;
(10) includes the names, addresses and telephone numbers
of all subcontractors on the project known at the date of
signing the contract. For the purposes of this paragraph, a
post office box number alone shall not be considered an
address;
(11) except as provided in section 14, provides that the
home builder agrees to maintain liability insurance covering
personal injury in an amount not less than $300,000 and
insurance covering property damage caused by the work of a
home builder in an amount not less than $300,000 and
identifies the current amount of insurance coverage
maintained at the time of signing the contract;
(12) includes the toll-free telephone number under
section 3(b) and a notice of the right of rescission under
subsection (b); and
(13) is accompanied by a copy of the consumer
information pamphlet established by the bureau and supplied
to the home builder pursuant to section 12.
(b) Right of rescission.--A person signing a home
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construction contract, except as provided in the emergency
provisions of section 7 of the act of December 17, 1968 (P.L.
1224, No.387), known as the Unfair Trade Practices and Consumer
Protection Law, shall be permitted to rescind the contract
without penalty regardless of where the contract was signed,
within three business days following the date of signing. A home
construction contract that does not contain a notice of this
right of rescission is voidable by the consumer.
(c) Copy to be provided.--A home builder shall provide and
deliver to the consumer, without charge, a completed copy of the
home building contract at the time the contract is executed.
(d) Arbitration clause.--Nothing in this act shall preclude
the court from setting aside an arbitration clause on any basis
permitted under Pennsylvania law. If the contract contains an
arbitration clause, it shall meet the following requirements or
be deemed void by the court upon motion of either party, filed
prior to the commencement of arbitration:
(1) the text of the clause must be in capital letters;
(2) the text shall be printed in 12-point boldface type,
and the arbitration clause must appear on a separate page
from the rest of the contract;
(3) the clause shall contain a separate line for each of
the parties to indicate their assent to be bound thereby;
(4) the clause shall not be effective unless both
parties have assented as evidenced by signature and date,
which shall be the date on which the contract was executed;
(5) the clause shall state clearly whether the decision
of the arbitration is binding on the parties or may be
appealed to the court of common pleas; and
(6) the clause shall state whether the facts of the
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dispute, related documents and the decision are confidential.
(e) Voidable clause.--If a home construction contract
contains any of the following clauses, the home construction
contract shall be voidable by the consumer:
(1) A hold harmless clause in favor of the home builder.
(2) A waiver of Federal, State or local health, life,
safety or building code requirements.
(3) A confession of judgment clause against the
consumer.
(4) A waiver by the consumer of any right to a jury
trial in any action brought by or against the consumer.
(5) An assignment by the consumer of or order for
payment of wages or other compensation by the consumer for
services performed by the home builder.
(6) A provision by which the consumer agrees not to
assert any claim or defense arising out of the contract.
(7) A provision that the home builder shall be awarded
attorney fees and costs.
(8) A clause by which the consumer relieves the home
builder from liability for acts committed by the home builder
or the home builder's agents in the collection of any
payments or in repossession of any goods.
(9) A waiver by the consumer of any rights provided
under this act.
(10) A provision providing for the automatic or
recurring renewal of any provisions of the agreement, unless:
(i) the contract establishes a procedure by which
the consumer can choose not to renew the provision or
provisions, thereby avoiding any new fees or charges, by
providing written notice to the home builder via first
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class mail postmarked no later than three business days
prior to any renewal;
(ii) such procedure is clearly and conspicuously
disclosed in the agreement; and
(iii) the contract includes a provision requiring
the home builder to notify the consumer of any automatic
or recurring renewal, and the consumer's option to cancel
such renewal, by mail not earlier than 20 days and not
later than ten days prior to the date of any such
renewal.
(f) Home builder's recovery right.--Nothing in this section
shall preclude a home builder who has complied with subsection
(a) from the recovery of payment for work performed based on the
reasonable value of services which were requested by the
consumer if a court determines that it would be inequitable to
deny such recovery.
Section 9. Home construction fraud.
(a) Offense defined.--A person commits the offense of home
construction fraud if the person intentionally or knowingly:
(1) makes a materially false statement to induce,
encourage or solicit a person to enter into any written or
oral agreement for home building services or to justify an
increase in the previously agreed-upon price;
(2) receives any advance payment for home building
services and fails to perform or provide such services when
specified in the contract taking into account any force
majeure or unforeseen labor strike that would extend the time
frame or unless extended by agreement with the consumer and
fails to return the payment received for such services which
were not provided by that date;
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(3) while soliciting a person to enter into an agreement
for home building services, misrepresents or conceals the
home builder's real name, the name of the home building
business, liability insurance information or home builder's
business address or any other identifying information;
(4) subsequent to entering into an agreement for home
building services, changes the name of the home building
business, liability insurance information, the home builder's
address or any other identifying information without advising
the consumer in writing within ten days following any such
change;
(5) misrepresents an item as a special order material or
misrepresents the cost of the special order material;
(6) alters a home construction contract, mortgage,
promissory note or other document incident to building a new
home without the consent of the consumer; or
(7) directly or indirectly publishes a false or
deceptive advertisement in violation of State law governing
advertising about home building.
(b) Grading.--
(1) A violation of subsection (a)(1), (2), (3), (4), (5)
or (6) constitutes a felony of the third degree.
(2) Where a person commits an offense under subsection
(a) and the victim is 60 years of age or older, the grading
of the offense shall be one grade higher than specified in
paragraph (1). This paragraph shall not be applicable to a
person whose sentence would be enhanced pursuant to paragraph
(3).
(3) Notwithstanding any other provisions of this
section, where a person commits a second or subsequent
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offense described in subsection (a), the offense will
constitute a felony of the second degree. For this paragraph
to be applicable, the second or subsequent offense must have
occurred after the first conviction. Paragraph (2) shall not
be applicable to a person whose sentence would be enhanced
pursuant to this paragraph.
(4) In addition to any other penalty imposed by this
act, the court may revoke or suspend the certificate of
registration issued under section 5. At the time of
sentencing, the court shall state the reasons for such
revocation or suspension. A person whose registration has
been revoked or suspended may petition the court of original
jurisdiction for reinstatement after a period of five years
from the date of revocation or suspension, or as specified in
the court's order.
(c) Jurisdiction.--
(1) The district attorneys of the several counties shall
have the authority to investigate and to institute criminal
proceedings for any violation of this section.
(2) In addition to the authority conferred upon the
Attorney General by the act of October 15, 1980 (P.L.950, No.
164), known as the Commonwealth Attorneys Act, the Attorney
General shall have the authority to investigate and institute
criminal proceedings for any violation of this section or any
series of such violations involving more than one county of
this Commonwealth or involving any county of this
Commonwealth and another state. No person charged with a
violation of this section by the Attorney General shall have
standing to challenge the authority of the Attorney General
to investigate or prosecute the case, and, if any such
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challenge is made, the challenge shall be dismissed and no
relief shall be available in the courts of this Commonwealth
to the person making the challenge.
Section 10. Prohibited acts.
(a) Specific conduct.--No person shall:
(1) Fail to register as required by this act.
(2) Fail to refund the amount paid under a home
construction contract within ten days of either the
acceptance and execution of a return receipt for certified
mail containing a written request for a refund or the refusal
to accept the certified mail sent to the home builder's last
known address if all of the following apply:
(i) no substantial portion of the contracted work
has been performed at the time of the request; and
(ii) more than 45 days have elapsed since the
starting date specified in the written contract.
(3) Accept a municipal certificate of occupancy or other
proof that performance of a home construction contract is
complete or satisfactorily concluded with knowledge that the
document or proof is false and the performance is incomplete.
(4) Utter, offer or use a completion certificate or
other proof that a home construction contract is complete or
satisfactorily concluded when the person knows or has reason
to know that the document or proof is false and is made to
accomplish any of the following:
(i) Make or accept an assignment or negotiation of
the right to receive payment under a home construction
contract.
(ii) Get or grant credit or a loan on security of
the right to receive payment under a home construction
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contract.
(5) Abandon or fail to perform, without justification,
any home construction contract. For purposes of this
paragraph, the term "justification" shall include nonpayment
by the consumer as required under the contract or any other
violation of the contract by the consumer.
(6) Deviate from or disregard plans or specifications,
in any material respect, without a written change order dated
and signed by both the home builder and consumer, which
contains the accompanying price changes for each deviation.
(7) Prepare, arrange, accept or participate in the
financing of a home construction contract with knowledge that
the home construction contract states a greater monetary
obligation than the actual price.
(8) Advertise or offer, by any means, to build new homes
if the person does not intend to do any of the following:
(i) Accept a home construction contract.
(ii) Perform a home construction contract.
(9) Demand or receive any payment for a home
construction contract before the home construction contract
is signed.
(b) Criminal penalty.--In addition to any other penalty
provided by law, a person who knowingly violates any provision
of this act for which a criminal penalty is not otherwise
provided commits a summary offense subject to the fine
established in 18 Pa.C.S. § 1105 (relating to sentence of
imprisonment for summary offenses).
Section 11. Unfair Trade Practices and Consumer Protection Law.
A violation of any of the provisions of this act shall be
deemed a violation of the act of December 17, 1968 (P.L.1224,
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No.387), known as the Unfair Trade Practices and Consumer
Protection Law. Nothing in this act shall preclude a consumer
from exercising any right provided under the Unfair Trade
Practices and Consumer Protection Law.
Section 12. Consumer information pamphlet.
The bureau shall develop, in consultation with the home
building industry, a consumer information pamphlet that sets
forth the rights and remedies for consumers as provided for in
this act, the toll-free number established under section 3 and
any other information that the bureau considers reasonably
necessary to assist consumers. The bureau shall provide each
registered home builder with copies of this pamphlet to
distribute to consumers.
Section 13. Regulations.
The bureau may adopt rules and regulations necessary to carry
out the provisions of this act.
Section 14. Preemption of local registration.
Registration under this act shall preclude any requirement of
payment of a fee or registration or licensing of any home
builder by any political subdivision. Political subdivisions
shall be permitted to require building permits and local
enforcement of the building code for that political subdivision,
for which a reasonable fee may be charged. Except for a building
permit for construction to be performed directly by a landowner
solely for the landowner's own use, the political subdivision
may not issue a permit for home building unless the permit
includes the home builder's registration number. This provision
does not affect a political subdivision's responsibilities or
authority under the act of November 10, 1999 (P.L.491, No.45),
known as the Pennsylvania Construction Code Act, or the
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requirements under section 302(e) of the act of June 2, 1915
(P.L.736, No.338), known as the Workers' Compensation Act,
regarding workers' compensation. This provision does not affect
existing licensing standards in effect on the effective date of
this act with respect to electricians, plumbers, sheet metal
workers, warm air installers and fire suppression workers, where
licensing is conditioned on requirements of testing or
possession of certificates obtained through specific training in
electricity, plumbing, sheet metal work, warm air installation
and fire suppression. This provision does not affect standards
for liability insurance adopted by a political subdivision prior
to January 1, 2008, and which are in effect on the effective
date of this section.
Section 15. Home Builder Guaranty Fund.
(a) Establishment.--The Home Builder Guaranty Fund is hereby
established in the State Treasury and shall be administered by
the bureau in accordance with this act. All moneys deposited in
the fund shall not be considered general revenue of the
Commonwealth but shall be used only to effectuate the purposes
of this act.
(b) Guaranty fund fee.--A home builder must pay a guaranty
fund fee of $50 for each construction or building permit issued
by a political subdivision. The fee shall be collected by the
political subdivision issuing the permit and be in addition to
any other fees imposed for a permit.
(c) Deposit of guaranty fund fees into fund.--On a quarterly
basis, each political subdivision must remit the guaranty fund
fees collected to the bureau for deposit into the fund.
(d) Minimum balance.--
(1) Payments received under subsection (b) shall be
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credited to the fund, which shall maintain a balance of at
least $2,000,000. If the bureau finds that, because of
pending claims, the amount of the fund may fall below
$1,000,000, the bureau shall assess each home builder $25.
However, under this subsection the bureau may not make more
than one assessment in any calendar year.
(2) Failure to make payments to the fund as required by
this act shall result in suspension of registration. Barring
the existence of other grounds for suspension or revocation
of registration, the certificate shall be reinstated upon
full payment of all required fees.
(e) Investment.--The moneys of the fund shall be invested
and the interest arising from the investments shall be credited
to the fund.
(f) Waiver of biennial fund fee.--In the event that the
bureau finds that the fund is adequately funded, the bureau
shall, during the first month of each fiscal year, adjust or
waive any biennial fund fee for the fiscal year.
Section 16. Claims against fund.
(a) General rule.--A consumer may be compensated from the
fund for an actual loss that results from an act or omission by
a home builder in the performance of a home construction
contract or a violation of this act by a home builder as found
by a court of competent jurisdiction, upon the final
determination of or expiration of time for appeal in connection
with any such judgment or if a consumer is prevented from
collecting the entirety of a final judgment as a result of the
home builder's filing for bankruptcy protection under Federal
law. In the event the bureau and the home builder enter into an
assurance of voluntary compliance, which requires payment of
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restitution to a consumer and the home builder fails to pay as
required by the terms of the assurance of voluntary compliance,
the bureau shall issue an order of payment from the fund to the
consumer. The payment made pursuant to an assurance of voluntary
compliance shall be considered a claim for the purposes of
reimbursement of the fund; however, subsection (f) shall not be
applicable.
(b) Acts of subcontractors and employees.--For purposes of
recovery from the fund, the act or omission of a home builder
includes the act or omission of a subcontractor or employee of
the home builder whether or not any express agency relationship
exists so long as the subcontractor or employee acted within the
scope of the home construction contract.
(c) Limitation on recovery.--
(1) The bureau may not provide from the fund:
(i) More than $30,000 to one consumer for acts or
omissions of one home builder.
(ii) More than $200,000 to all consumers for acts or
omissions of one home builder unless, after the bureau
has paid out $200,000 on account of acts or omissions of
the home builder, the home builder reimburses the fund.
However, in no case shall any one home builder be
indebted, at any one time, to the fund for more than
$200,000.
(iii) An amount for any attorney fees, consequential
damages, court costs, interest, personal injury damages
or punitive damages, except as may be provided in an
assurance of voluntary compliance.
(2) In addition to the limits set forth in paragraph
(1), a consumer may not recover from the fund more than that
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consumer's actual loss, to a maximum of $30,000, for a claim
made on one contract.
(3) Nothing in this section shall preclude a consumer
from recovering or seeking to recover from a home builder:
(i) the difference between the amount of the
judgment against the home builder received by the
consumer and the amount actually paid to the consumer
from the fund; or
(ii) the difference between the amount a home
builder agrees to pay a consumer under an assurance of
voluntary compliance and the amount actually paid to the
consumer from the fund.
In the event the consumer does not receive payment in
full of a judgment amount from the fund, the judgment shall
be deemed to be satisfied only to the extent of the payment
received, and the judgment shall continue in full force and
effect with respect to the amount still owed until the
consumer receives payment in full.
(d) Excluded claimants.--A claim against the fund based on
the act or omission of a particular builder shall not be made
by:
(1) a spouse or other immediate relative of the home
builder, or of a party which holds a financial stake in the
business of the home builder;
(2) an employee, officer, director, partner or other
party which holds a financial interest in the business of the
home builder; or
(3) an immediate relative of an employee, officer,
director, partner or other party which holds a financial
interest in the business of the home builder.
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(e) Limitation period.--A claim must be made against the
fund within two years after the consumer obtains an entry of
final judgment or decree against the home builder and all appeal
rights have expired or been exhausted, or, in the case of an
assurance of voluntary compliance, within the later of two years
of entry into such assurance or one year after nonpayment
according to the terms of the assurance.
(f) Offer of proof.--In order to recover from the fund a
consumer must offer proof to the bureau that the consumer has
exhausted all reasonable actions available at law and in equity
to collect the unpaid amount of a final judgment.
(g) Partial payments for fund integrity.--In order to
preserve the integrity of the fund, the bureau may order payment
out of the fund of an amount less than the judgment amount or
the amount agreed to be paid in an assurance of voluntary
compliance. The balance remaining due to the consumer shall be
paid from the fund pursuant to subsection (h).
(h) Special order of payment.--If the money in the fund is
insufficient to satisfy any duly authorized claim or portion
thereof, the bureau shall, when sufficient money exists in the
fund, satisfy the unpaid claims or portions thereof, in the
order that those claims or portions thereof were originally
determined.
(i) Investigation by bureau.--As provided in section 17, if
the bureau pays any amount from the fund as a result of a claim
against a home builder, the bureau may conduct an investigation
to determine if the home builder is possessed of assets liable
to be sold or applied in satisfaction of the claim on the fund.
If the bureau discovers any such assets, the bureau may take any
lawful action necessary for the reimbursement of the fund.
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(j) Revocation caused by payment of claim.--If the bureau
makes a payment of an amount as a result of a claim against a
home builder, the bureau shall revoke the certificate of the
home builder, and the home builder shall not be eligible to
receive a new or renewed certificate until the home builder has
repaid such amount in full, plus interest, from the time the
payment is made from the fund, except that the bureau may permit
a home builder to receive a new or renewed certificate after the
home builder has entered into an agreement with the bureau
whereby the home builder agrees to repay the fund in full in the
form of periodic payments over a set period of time. If the home
builder fails to pay in accordance with the terms of the
agreement, the bureau shall automatically suspend the home
builder's certificate.
Section 17. Procedure for submitting claims.
(a) Initial claim.--In order to recover from the fund, a
consumer must submit to the bureau the documentation required
under section 16(f), together with a copy of the judgment and
evidence that the judgment has not been appealed or a copy of
the assurance of voluntary compliance and a certification that
the home builder has failed to pay or evidence that the consumer
has been prevented from collecting the entirety of a final
judgment as a result of the home builder's filing for bankruptcy
protection under Federal law. In the latter event, the consumer
shall only be entitled to collect from the fund the amount he
was prevented from collecting as a result of the filing.
(b) Copy of claim to home builder.--On receipt of a claim
pursuant to this section, the bureau shall send a copy of the
claim to the home builder alleged to be responsible for the
actual loss. The home builder shall file a response or objection
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to the claim within 30 days of the receipt of the notice of such
claim. Failure to respond to the claim shall constitute a waiver
of any defense or objection to the claim. The only defense a
home builder may raise in his response is a defense of payment
in full of the claim.
(c) General order of payment.--Except as otherwise provided
in this act, the bureau shall pay from the fund approved claims
in the order that they are submitted.
Section 18. Reimbursement of fund.
(a) General rule.--After the bureau pays a claim from the
fund:
(1) The bureau shall be subrogated to all rights of the
consumer in the claim up to the amount paid.
(2) The consumer shall assign to the bureau all rights
of the consumer in the claim up to the amount paid.
(3) The bureau has a right to reimbursement of the fund
by the home builder for:
(i) The amount paid from the fund.
(ii) Interest on the amount at an annual rate of 5%
as adjusted by the Consumer Price Index on an annual
basis.
All money that the bureau recovers on a claim shall be deposited
in the fund.
(b) Suit for nonpayment.--If, within 30 days after the
bureau gives notice, a home builder whose account a claim was
paid shall fail to reimburse the fund in full, the bureau may
initiate an action against the home builder in a court of
competent jurisdiction for the unreimbursed amount.
(c) Judgment.--The bureau is entitled to a judgment for the
unreimbursed amount if the bureau proves that:
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(1) a claim was paid from the fund on account of the
home builder;
(2) the home builder has not reimbursed the fund in
full; and
(3) the bureau directed payment based on a final
judgment of a court of competent jurisdiction or an assurance
of voluntary compliance.
(d) Withholding of tax refund.--If a person is delinquent
for at least one year in making payments to the bureau for the
purposes of reimbursing the fund, the Department of Revenue
shall credit the amount of any refundable overpayment of tax
imposed by Article III of the act of March 4, 1971 (P.L.6, No.
2), known as the Tax Reform Code of 1971, against the
delinquency in respect to this act on the part of the person who
made the overpayment.
(e) Bankruptcy proceedings.--For the purpose of excepting to
a discharge of an individual or business under Federal
bankruptcy law, the bureau shall be a creditor of the individual
or business for the amount paid from the fund.
Section 19. Notice of suspension or revocation.
The Office of the Court Administrator of Pennsylvania shall
report to the bureau any suspension or revocation of a
certificate ordered by a court.
Section 20. Exemptions.
This act shall not apply to any of the following persons or
organizations:
(1) The Commonwealth or any of its political
subdivisions.
(2) The Federal Government.
Section 21. Building standards.
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All work performed by a home builder under a home
construction contract shall comply with the requirements of the
International Residential Code and the International Existing
Building Code as currently adopted by the Department of Labor
and Industry under the act of November 10, 1999 (P.L.491, No.
45), known as the Pennsylvania Construction Code Act, regardless
of whether a permit or inspection is required by the
municipality in which the work is being performed.
Section 22. Repeal.
All acts and parts of acts are repealed insofar as they are
inconsistent with this act.
Section 23. Effective date.
This act shall take effect in 180 days.
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