Senate Bill S3928

2021-2022 Legislative Session

Enhances protections for homeowners who have paid contractors, subcontractors, and material suppliers for home improvements

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Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to consumer protection
Feb 01, 2021	referred to consumer protection

2021-S3928 (ACTIVE) - Details

See Assembly Version of this Bill:: A1104
Current Committee:: Senate Consumer Protection
Law Section:: General Business Law
Laws Affected:: Amd §§770, 772, 773 & 774, Gen Bus L
Versions Introduced in Other Legislative Sessions:: 2009-2010: A599
2011-2012: A105
2013-2014: A1081
2015-2016: A1499
2017-2018: S5583, A20
2019-2020: S5171, A253
2023-2024: S6511

2021-S3928 (ACTIVE) - Summary

Enhances protections for homeowners who have paid contractors, subcontractors, and material suppliers for home improvements; enhances penalties, civil and criminal for violations of the consumer protection provisions of the Home Improvement Contracts article of the general business law; authorizes the attorney general to prosecute crimes under that article.

2021-S3928 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S3928

SPONSOR: KENNEDY
 
TITLE OF BILL:

An act to amend the general business law, in relation to home improve-
ment contracts

 
PURPOSE:

This bill addresses the continuing problems that are faced by consumers
that hire unscrupulous contractors that improperly build new homes,
construct home additions, or construct other home improvements to resi-
dential properties.

 
SUMMARY OF PROVISIONS:

Section 1: Amends General Business Law section 770(7) to broaden the
definition of "custom home" to include two family dwellings where the
owner occupies one of the units of such duplex.

Section 2: Amends General Business Law section 772(1) to increase penal
ties from $500 to up to $2,000 rot' contractors who induce a consumer to
enter into a home improvement contact that contains fraudulent represen-
tations. In addition, contractors that commit a substantial violation
would be subject to an additional penalty of up to $5,000.

Section 3: Amends section 773 of the General Business Law to add
progressively severe civil penalties for those unscrupulous contractors
that repeatedly violates this article. It also increases the criminal
penalties for repeated violations.

Section 4: Amends General Business Law section 774(2) to authorize the
Attorney General to prosecute any crime defined in section 773 of this
chapter.

 
EXISTING LAW:

This bill expands protections that are already given to homeowners that
contract with unscrupulous contractors that do home construction
projects.

 
JUSTIFICATION:

Even with the laws that are on the books to protect consumers from the
fraudulent activities perpetrated by illicit home construction contrac-
tors. there is still a significant amount of questionable construction
practices and activities that defraud consumers.  In some situations,
consumers have paid the contractor for work done, however, the contrac-
tor has not paid the subcontractors, consequently, the subcontractors
file liens on the construction site property to recover funds from the
property owner that has already paid for the work.

The purpose of this bill is to encourage subcontractors to only enter
into relationships with bona fide contractors that are able to pay for
the work of a subcontractor or encourage the subcontractor to receive a
formal guaranty in some form from the general contractor that they will
receive money for the work they complete. Otherwise, the consumer is
obligated to pay twice for the work. In certain circumstances, when a
lien had been filed even though the consumer paid the contractor, the
home construction must stop because the consumer does not have the addi-
tional funds needed to complete the home. Should this occur, the consum-
er is obligated to pay off the liens and often does not have sufficient
funds to complete the house so that the consumer may be able to live in
it.

Most contractors are bona fide operations that perform the tasks asked
of them in a way that satisfies the consumer. However, after contacting
the Orange County and Ulster County District Attorney's Offices, it
seems that there are a few unscrupulous contractors or persons who
represent themselves as contractors who seem to perpetrate most of the
fraudulent home construction cases. Many of these fraudulent home
improvement contracts are entered into with senior citizens and the
elderly. Further, several District Attorney's Offices have inquired
about altering the law so that persons that routinely perpetrate fraudu-
lent home construction projects can be made subject to heightened crimi-
nal sanctions for their activities.

 
LEGISLATIVE HISTORY:

2019-2020: 5.5171 Referred to Consumer Protection! A.253 Referred to
Judiciary

2017-2018: S.5583 Referred to Consumer Protection/ A.20 Referred to
Judiciary

2015-2016: A1499 Referred to Judiciary

2013-2014: A.1081 - Referred to Judiciary

2011-2012: A.105 Referred to Judiciary

2009-2010: A.599 - Referred to Judiciary

2007-2008: A.402 Referred to Judiciary

2005-2006: A.3933 - Referred to Judiciary

2003-2004: A.8419 Referred to Judiciary

 
FISCAL IMPLICATIONS:

None

 
LOCAL FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect on the first of November next succeeding the
date on which it shall have become a law.

2021-S3928 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3928
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             February 1, 2021
                                ___________
 
 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.

                                                            LBD01461-01-1

 S. 3928                             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. 3928                             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.

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Senate Bill S3928

Sponsored By

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

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2021-S3928 (ACTIVE) - Details

2021-S3928 (ACTIVE) - Summary

2021-S3928 (ACTIVE) - Sponsor Memo

2021-S3928 (ACTIVE) - Bill Text download pdf

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Sponsored By

Timothy M. Kennedy

Archive: Last Bill Status - In Senate Committee Consumer Protection Committee

Actions

2021-S3928 (ACTIVE) - Details

2021-S3928 (ACTIVE) - Summary

2021-S3928 (ACTIVE) - Sponsor Memo

2021-S3928 (ACTIVE) - Bill Text download pdf

Comments