House File 2372 - Introduced
HOUSE FILE
BY WHITAKER
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act to require bonding of home improvement contractors
2 including providing for the recovery of bond proceeds, and
3 making penalties applicable.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 91C.1, subsection 1, Code 2005, is
1 2 amended to read as follows:
1 3 1. As used in this chapter, unless the context otherwise
1 4 requires, "contractor":
1 5 a. "Contractor" means a person who engages in the business
1 6 of construction, as the term "construction" is defined in the
1 7 Iowa administrative code for purposes of the Iowa employment
1 8 security law. However, a person who earns less than one
1 9 thousand dollars annually or who performs work or has work
1 10 performed on the person's own property is not a contractor for
1 11 purposes of this chapter. The state, its boards, commissions,
1 12 agencies, departments, and its political subdivisions
1 13 including school districts and other special purpose
1 14 districts, are not contractors for purposes of this chapter.
1 15 b. "Home improvement" includes but is not limited to the
1 16 repair, replacement, remodeling, alteration, conversion,
1 17 modernization, improvement, rehabilitation, or sandblasting
1 18 of, or addition to, any building, or land, if applicable, or
1 19 that portion thereof which is used or designed to be used as a
1 20 private residence, or the construction, replacement,
1 21 installation, or improvement of a driveway, swimming pool,
1 22 porch, garage, roof, siding, insulation, solar energy system,
1 23 heating system, central air conditioning, flooring, patio,
1 24 landscaping, fence, door, or window, and waterproofing in
1 25 connection with such building, or land, if applicable, or that
1 26 portion thereof which is used or designed to be used as a
1 27 private residence. "Home improvement" does not include any of
1 28 the following:
1 29 (1) The construction of a new home.
1 30 (2) The sale of goods or materials by a seller who neither
1 31 arranges to perform nor performs, directly or indirectly, any
1 32 work or labor in connection with the installation or
1 33 application of the goods or materials.
1 34 (3) The sale of goods or services furnished for commercial
1 35 or business use or for resale.
2 1 (4) The sale of appliances, including but not limited to
2 2 stoves, refrigerators, freezers, and room air conditioners,
2 3 which are designed for and are easily removable from the
2 4 premises without material alteration of the premises.
2 5 c. "Home improvement contract" means an agreement between
2 6 a contractor and a property owner for the performance of a
2 7 home improvement in which the total price for all work agreed
2 8 upon between the contractor and owner is three thousand
2 9 dollars or greater.
2 10 Sec. 2. Section 91C.8, subsection 2, Code 2005, is amended
2 11 by adding the following new paragraph:
2 12 NEW PARAGRAPH. d. The requirement that a contractor
2 13 offering or accepting a home improvement contract file a
2 14 surety bond with the division of labor services pursuant to
2 15 section 91C.9.
2 16 Sec. 3. NEW SECTION. 91C.9 HOME IMPROVEMENT CONTRACTOR
2 17 BONDING REQUIREMENT.
2 18 1. In addition to any other requirement of this chapter, a
2 19 contractor doing business in this state, before offering or
2 20 accepting a home improvement contract, shall file a surety
2 21 bond with the division of labor services of the department of
2 22 workforce development, executed by the contractor as principal
2 23 and executed by a corporate surety company licensed and
2 24 qualified to do business within this state. The bond shall
2 25 not be construed to require any surety to perform a home
2 26 improvement contract entered into by the principal on the
2 27 bond.
2 28 2. The bond shall be in a form approved by the labor
2 29 commissioner and shall be in the amount of forty thousand
2 30 dollars and for the indemnification of any owner who enters
2 31 into a home improvement contract with the contractor from any
2 32 loss or damage caused by the failure of the contractor to
2 33 comply with the provisions of this chapter, chapter 537, or
2 34 section 714.16, or any rules adopted thereunder. The
2 35 aggregate liability of the surety shall not exceed the amount
3 1 of the bond.
3 2 3. The attorney general may file an action in district
3 3 court to recover bond proceeds on behalf of owners who have
3 4 incurred loss or damage caused by the failure of a contractor,
3 5 required to furnish a bond pursuant to this section, to comply
3 6 with chapter 537 or section 714.16, or any rules adopted
3 7 thereunder.
3 8 4. An owner who has incurred loss or damage caused by the
3 9 failure of a contractor, required to furnish a bond pursuant
3 10 to this section, to comply with this chapter, chapter 537, or
3 11 section 714.16, or any rules adopted thereunder, may file an
3 12 action in district court to recover against the bond an amount
3 13 sufficient to recover such loss or damage.
3 14 5. The labor commissioner and the attorney general shall
3 15 adopt rules to administer and enforce this section.
3 16 EXPLANATION
3 17 This bill requires home improvement contractors to file a
3 18 bond with the division of labor services of the department of
3 19 workforce development. Prior to offering or accepting a home
3 20 improvement contract, as defined by the bill, a contractor
3 21 doing business in this state shall furnish a surety bond to
3 22 the division of labor services in the amount of $40,000 for
3 23 the indemnification of an owner who enters into a home
3 24 improvement contract with the contractor from any loss or
3 25 damage caused by the failure of the contractor to comply with
3 26 Code chapter 91C, Code chapter 537, or Code section 714.16.
3 27 The attorney general may file a civil action to recover bond
3 28 proceeds for damages incurred by an owner for the contractor's
3 29 noncompliance with Code chapter 537 or Code section 714.16.
3 30 An owner who entered into a home improvement contract may file
3 31 a civil action against the contractor to recover bond proceeds
3 32 for the damages caused by the contractor.
3 33 The bill provides that the labor commissioner may issue a
3 34 citation to a contractor who fails to file a bond as required
3 35 by the bill. The citation penalty may be in an amount up to
4 1 $500 for the first violation of Code chapter 91C and up to
4 2 $5,000 for any second or subsequent violation of Code chapter
4 3 91C.
4 4 The labor commissioner and the attorney general may adopt
4 5 rules to administer and enforce the requirements of the bill.
4 6 The bill provides definitions for "home improvement" and
4 7 "home improvement contract".
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