Senate Study Bill 1168 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON DANDEKAR) A BILL FOR An Act relating to residential contractors and providing a 1 penalty. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2674SC (2) 84 je/rj

S.F. _____ Section 1. NEW SECTION . 103A.71 Residential contractors. 1 1. As used in this section: 2 a. “Residential contractor” means a person in the business 3 of contracting to repair or replace roof systems or perform 4 any other exterior repair, replacement, construction, or 5 reconstruction work on residential real estate or a person 6 offering to contract with an owner or possessor of residential 7 real estate to carry out such work. 8 b. “Residential real estate” means a new or existing 9 building, including a detached garage, constructed for 10 habitation by one to four families. 11 c. “Roof system” includes roof coverings, roof sheathing, 12 roof weatherproofing, and roof insulation. 13 2. A residential contractor shall not advertise or promise 14 to pay anything of value or rebate any insurance deductible 15 or any portion thereof as an inducement to the sale of goods 16 or services. A promise to pay anything of value or rebate 17 any insurance deductible includes granting any allowance or 18 offering any discount against the fees to be charged or paying 19 an insured or a person directly or indirectly associated with 20 the property any form of compensation, gift, prize, bonus, 21 coupon, credit, referral fee, or other item of monetary value 22 for any reason, including but not limited to permitting the 23 residential contractor to display a sign or any other type of 24 advertisement at the insured’s premises. 25 3. A person who has entered into a written contract with 26 a residential contractor providing goods or services to be 27 paid from the proceeds of a property and casualty insurance 28 policy may cancel the contract prior to midnight on the fifth 29 business day after the person has received written notice from 30 the person’s insurer that all or part of the claim or contract 31 is not a covered loss under the insurance policy. Cancellation 32 shall be evidenced by the person giving written notice of the 33 cancellation to the residential contractor at the address of 34 the residential contractor’s place of business as stated in 35 -1- LSB 2674SC (2) 84 je/rj 1/ 6

S.F. _____ the contract. Notice of cancellation given by mail shall be 1 effective upon deposit into the United States mail with prepaid 2 postage, if properly addressed to the residential contractor. 3 Notice of cancellation need not take a particular form, and 4 is sufficient if the notice indicates, by any form of written 5 expression, the intent of the insured not to be bound by the 6 contract. 7 4. Before entering into a contract to provide goods or 8 services to be paid from the proceeds of a property and 9 casualty insurance policy, a residential contractor shall 10 provide the insured along with the contract all of the 11 following documents in substantially the following form: 12 a. The following statement in at least ten-point bold type: 13 RIGHT OF CANCELLATION 14 You may cancel this contract at any time before midnight 15 on the fifth business day after you have received written 16 notification from your insurer that all or any part of the 17 claim or contract is not a covered loss under your insurance 18 policy. See the attached notice of cancellation form for an 19 explanation of this right. 20 b. A fully completed duplicate form which shall be attached 21 to the contract, but easily detachable, and which shall contain 22 the following statement in at least ten-point bold type: 23 NOTICE OF CANCELLATION 24 If you are notified by your insurer that all or any part 25 of the claim or contract is not a covered loss under your 26 insurance policy, you may cancel the contract by mailing 27 or delivering a signed and dated copy of this cancellation 28 notice or any other written notice of cancellation to (name of 29 contractor) at (address of contractor’s place of business) at 30 any time prior to midnight on the fifth business day after you 31 have received such notice from your insurer. If you cancel the 32 contract, any payments made by you under the contract will be 33 returned to you within ten business days following receipt by 34 the contractor of your cancellation notice. 35 -2- LSB 2674SC (2) 84 je/rj 2/ 6

S.F. _____ I hereby cancel this contract. 1 ________________________ 2 Date 3 ____________________________________ 4 Insured’s signature 5 5. Within ten days after a contract to provide goods 6 or services to be paid from the proceeds of a property and 7 casualty insurance policy has been canceled by notification 8 pursuant to this section, the residential contractor shall 9 tender to the person canceling the contract any payments, 10 partial payments, or deposits made by the person and any note 11 or other evidence of indebtedness. However, if the residential 12 contractor has performed any emergency services, acknowledged 13 by the person in writing to be necessary to prevent damage to 14 the premises, the residential contractor shall be entitled to 15 be paid the reasonable value of such services. Any provision 16 in a contract to provide goods or services to be paid from 17 the proceeds of a property and casualty insurance policy that 18 requires the payment of any fee which is not for emergency 19 services shall not be enforceable against any person who has 20 canceled a contract pursuant to this section. 21 6. A residential contractor shall not represent or 22 negotiate on behalf of, or offer or advertise to represent or 23 negotiate on behalf of, an owner or possessor of residential 24 real estate on any insurance claim in connection with the 25 repair or replacement of roof systems, or the performance 26 of any other exterior repair, replacement, construction, or 27 reconstruction work on the residential real estate. 28 7. A residential contractor violating this section is 29 subject to the penalties and remedies prescribed by this 30 chapter. 31 Sec. 2. APPLICABILITY. This Act applies to contracts 32 entered into on or after the effective date of this Act. 33 EXPLANATION 34 This bill prohibits a residential contractor from 35 -3- LSB 2674SC (2) 84 je/rj 3/ 6

S.F. _____ advertising or promising to pay anything of value or rebate any 1 insurance deductible or any portion thereof as an inducement 2 to the sale of goods or services. The bill specifies that such 3 a promise to pay or rebate includes granting any allowance or 4 offering any discount against the fees to be charged or paying 5 an insured or a person associated with the property any form 6 of compensation, gift, prize, bonus, coupon, credit, referral 7 fee, or other item of monetary value for any reason, including 8 permitting the residential contractor to display a sign or any 9 other type of advertisement at the insured’s premises. 10 The bill provides that a person who has entered into a 11 written contract with a residential contractor to provide 12 goods or services to be paid from the proceeds of a property 13 and casualty insurance policy may cancel the contract prior 14 to midnight on the fifth business day after the person has 15 received written notice from the insurer that all or part of 16 the claim or contract is not a covered loss under the insurance 17 policy. The bill specifies that cancellation is evidenced by 18 the person giving written notice of the cancellation to the 19 residential contractor at the residential contractor’s address 20 as stated in the contract. The bill provides that notice 21 of cancellation given by mail becomes effective upon deposit 22 into the United States mail with prepaid postage, if properly 23 addressed to the residential contractor. The bill specifies 24 that notice of cancellation need not take a particular form, 25 and is sufficient if the notice indicates, by any form of 26 written expression, the intent of the insured not to be bound 27 by the contract. 28 The bill provides that before entering into a contract 29 to provide goods or services to be paid from the proceeds 30 of a property and casualty insurance policy, a residential 31 contractor must provide the insured with two documents, which 32 must be formatted substantially as set out in the bill, along 33 with the contract. The first document notifies the person of 34 the person’s right to cancel the contract at any time before 35 -4- LSB 2674SC (2) 84 je/rj 4/ 6

S.F. _____ midnight on the fifth business day after receiving written 1 notification from the person’s insurer that all or any part of 2 the claim or contract is not a covered loss under the person’s 3 insurance policy. The first document must direct the attention 4 of the person to the second document, which must be attached 5 to the contract. The second document is a cancellation notice 6 which the person may return to the residential contractor to 7 exercise the person’s cancellation rights as provided by the 8 bill. 9 The bill provides that within 10 days after a contract to 10 provide goods or services to be paid from the proceeds of 11 a property and casualty insurance policy has been canceled 12 pursuant to the bill, the residential contractor must tender 13 to the person any payments, partial payments, or deposits made 14 by the person and any note or other evidence of indebtedness. 15 The bill provides that if the residential contractor performed 16 any emergency services which were acknowledged by the insured 17 in writing to be necessary to prevent damage to the premises, 18 the residential contractor shall be entitled to the reasonable 19 value of such services. The bill provides that any provision 20 in a contract to provide goods or services to be paid from 21 the proceeds of a property and casualty insurance policy that 22 requires the payment of a fee which is not for emergency 23 services is unenforceable against any person who has canceled a 24 contract pursuant to the bill. 25 The bill prohibits a residential contractor from 26 representing or negotiating on behalf of, or offering or 27 advertising to represent or negotiate on behalf of, an owner 28 or possessor of residential real estate on any insurance claim 29 in connection with the repair or replacement of roof systems, 30 or the performance of any other exterior repair, replacement, 31 construction, or reconstruction work. 32 A violation of the bill by a residential contractor is a 33 simple misdemeanor pursuant to Code section 103A.21(3). A 34 simple misdemeanor is punishable by confinement for no more 35 -5- LSB 2674SC (2) 84 je/rj 5/ 6

S.F. _____ than 30 days or a fine of at least $65 but not more than $625 1 or by both. The state building code commissioner may file a 2 petition in the district court and obtain injunctive relief for 3 any violation of the bill pursuant to Code section 103A.21(3). 4 The bill applies to contracts entered into on or after the 5 effective date of the bill. 6 -6- LSB 2674SC (2) 84 je/rj 6/ 6