Senate Bill S5171

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5171
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              April 12, 2019
                                ___________
 
 Introduced  by  Sen. KENNEDY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Consumer Protection
 
 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].
   § 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
 was  without  arguable  legal  merit, it may award reasonable attorney's
 fees to the contractor.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00069-01-9

 S. 5171                             2
 
   § 3. Section 773 of the general business law, as  amended  by  chapter
 587 of the laws of 1990, is amended to read as follows:
   § 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.
   §  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
 attorney,  city corporation counsel, or other lawful designee of a muni-

 S. 5171                             3
 
 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.
   § 5. This act shall take effect on the first of November next succeed-
 ing the date on which it shall have become a law.