S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   599

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced  by M. of A. CAHILL, PHEFFER -- read once and referred to the
  Committee on Judiciary

AN ACT to amend the general business law, in relation to  home  improve-
  ment contracts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Subdivision 7 of section 770 of the general  business  law,
as  added  by  chapter  32  of  the  laws of 1989, is amended to read as
follows:
  7. "Custom home" means a new single family residence  OR  A  RESIDENCE
DESIGNED SOLELY FOR OCCUPANCY OF NOT MORE THAN TWO FAMILIES LIVING SEPA-
RATELY,  to  be constructed on premises owned of record by the purchaser
at the time of contract[,]; provided that such residence is intended for
residential occupancy by such purchaser [and the  contract  of  sale  is
entered  into on or after the first day of March, nineteen hundred nine-
ty].
  S 2. Subdivision 1 of section 772 of  the  general  business  law,  as
added by chapter 421 of the laws of 1987, is amended to read as follows:
  1.  Any  owner  who  is induced to contract for a home improvement, in
reliance on false or fraudulent written representations or false written
statements, may sue and recover from such contractor a penalty of  [five
hundred]  UP TO TWO THOUSAND dollars plus reasonable attorney's fees, in
addition to any damages sustained by the owner by reason of such  state-
ments  or  representations.  ANY OWNER WHO IS AGGRIEVED BY A SUBSTANTIAL
VIOLATION, AS DEFINED IN SECTION SEVEN  HUNDRED  SEVENTY-THREE  OF  THIS
ARTICLE,  MAY  SUE  AND  RECOVER FROM SUCH CONTRACTOR A PENALTY OF UP TO
FIVE THOUSAND DOLLARS PLUS REASONABLE ATTORNEY'S FEES,  IN  ADDITION  TO
ANY  DAMAGES  SUSTAINED  BY  THE  OWNER  BY  REASON  OF SUCH SUBSTANTIAL
VIOLATION. In addition, if the court finds that the suit  by  the  owner

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00587-01-9
              

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was  without  arguable  legal  merit, it may award reasonable attorney's
fees to the contractor.
  S  3.  Section  773 of the general business law, as amended by chapter
587 of the laws of 1990, is amended to read as follows:
  S 773. Violations. 1. (A) Technical violations. Every home improvement
contractor who violates any of the provisions of this article  shall  be
subject to a civil penalty not to exceed one hundred dollars IN THE CASE
OF A FIRST VIOLATION.
  (B)  FOR  A  SECOND  VIOLATION  WITHIN A PERIOD OF THREE YEARS, A HOME
IMPROVEMENT CONTRACTOR SHALL BE GUILTY OF A VIOLATION AND SHALL BE FINED
TWO HUNDRED FIFTY DOLLARS.
  (C) FOR A THIRD OR SUBSEQUENT  VIOLATION  WITHIN  A  PERIOD  OF  THREE
YEARS, A HOME IMPROVEMENT CONTRACTOR SHALL BE GUILTY OF A CLASS B MISDE-
MEANOR AND SHALL BE SENTENCED TO A MANDATORY, DEFINITE TERM OF IMPRISON-
MENT OF THREE MONTHS AND MAY ALSO BE FINED AS PROVIDED IN THE PENAL LAW.
  2.  Substantial  violations. (A) Every home improvement contractor who
fails to deposit funds in  an  escrow  account  or  provide  a  bond  or
contract of indemnity or irrevocable letter of credit in compliance with
the  requirements  of  section  seventy-one-a  of the lien law, [or] who
fails to provide a written contract substantially in compliance with the
requirements of this article, OR WHO VIOLATES THE PROVISIONS OF  SECTION
SEVEN  HUNDRED  SEVENTY-ONE-A  OF  THIS  ARTICLE shall, IN THE CASE OF A
FIRST VIOLATION, be subject to a civil penalty not to exceed the greater
of two hundred fifty dollars [for each violation] or five percent of the
aggregate contract price specified in the  home  improvement  contract[;
provided, however, that in no event shall the total penalty exceed twen-
ty-five hundred dollars for each contract].
  (B)  FOR  A  SECOND  VIOLATION  WITHIN A PERIOD OF THREE YEARS, A HOME
IMPROVEMENT CONTRACTOR SHALL BE GUILTY OF  A  CLASS  A  MISDEMEANOR  AND
SHALL  BE SENTENCED TO A MANDATORY, DEFINITE TERM OF IMPRISONMENT OF SIX
MONTHS AND MAY ALSO BE FINED AS PROVIDED IN THE PENAL LAW.
  (C) FOR A THIRD OR SUBSEQUENT  VIOLATION  WITHIN  A  PERIOD  OF  THREE
YEARS, A HOME IMPROVEMENT CONTRACTOR SHALL BE GUILTY OF A CLASS E FELONY
AND  SHALL BE SENTENCED TO A MANDATORY, DEFINITE TERM OF IMPRISONMENT OF
ONE YEAR AND MAY ALSO BE FINED AS PROVIDED IN THE PENAL LAW.
  3. Mitigating factors; defenses. In an instance where  the  contractor
has been shown to have committed [multiple violations] A FIRST VIOLATION
of  this  article or the provisions of section seventy-one-a of the lien
law, the court shall consider the following factors in assessing a civil
penalty pursuant to PARAGRAPH (A) OF SUBDIVISION ONE OR PARAGRAPH (A) OF
subdivision two of this section: the volume of business which  the  home
improvement  contractor  performs  on  an  annual  basis, [the number of
contracts in violation,] the actual financial loss or exposure to finan-
cial loss suffered by [any] THE owner as a result  of  the  [violations]
VIOLATION,  and  whether  the  home improvement contractor acted in good
faith or willfully with respect to such violations. No home  improvement
contractor shall be subject to the increased penalties provided by PARA-
GRAPH (A) OF subdivision two of this section if such contractor shows by
a  preponderance  of the evidence that the violation was not intentional
and resulted from a bona fide error made notwithstanding the maintenance
of procedures reasonably adopted to avoid such a violation.
  S 4. Subdivision 2 of section 774 of  the  general  business  law,  as
added  by chapter 421 of the laws of 1987, is amended and a new subdivi-
sion 3 is added to read as follows:
  2. The CIVIL provisions of this article may be  enforced  concurrently
by  the  director of a municipal consumer affairs office, or by the town

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attorney, city corporation counsel, or other lawful designee of a  muni-
cipality  or local government, and all moneys collected thereunder shall
be retained by such municipality or local government.
  3.  THE  ATTORNEY  GENERAL IS HEREBY AUTHORIZED TO PROSECUTE ANY CRIME
DEFINED IN SECTION SEVEN HUNDRED SEVENTY-THREE OF THIS ARTICLE.
  S 5. This act shall take effect on the first of November next succeed-
ing the date on which it shall have become a law.