H.F. 2316 Section 1. NEW SECTION . 714.29 Home improvement fraud —— 1 penalties. 2 1. As used in this section, unless the context otherwise 3 requires: 4 a. “Consumer” means an individual who owns, leases, or 5 rents the residential property that is subject to the home 6 improvement contract. 7 b. “Contract price” means the total price agreed upon in a 8 home improvement contract. 9 c. “Contractor” means a person who engages in or solicits 10 home improvement contracts whether or not the person deals 11 directly with the consumer. 12 d. “Fair market value” means the amount for the home 13 improvement which in commercial judgment or under usage of 14 trade would be reasonable for services, materials, and work of 15 similar quality and workmanship. 16 e. “Home improvement” means any alteration, repair, 17 addition, modification, or improvement to a dwelling or the 18 property on which it is situated, including but not limited 19 to the construction, painting or coating, installation, 20 replacement or repair of driveways, sidewalks, swimming pools, 21 unattached structures, porches, kitchens, bathrooms, chimneys, 22 fireplaces, stoves, air conditioning or heating systems, hot 23 water heaters, water treatment systems, electrical wiring or 24 systems, plumbing fixtures or systems, doors, windows, roofs, 25 gutters, downspouts, and siding. 26 f. “Home improvement contract” means a written or oral 27 agreement whereby a contractor offers or agrees to provide home 28 improvements in exchange for payment of moneys, regardless of 29 whether any such payments are made. 30 g. “Material fact” means a fact that a reasonable person 31 would consider important when purchasing a home improvement. 32 h. “Unconscionable home improvement contract” means a home 33 improvement contract in which an unreasonable difference exists 34 between the fair market value of services, materials, and work 35 -1- LSB 5608YH (2) 87 asf/rj 1/ 5

H.F. 2316 performed or to be performed and the home improvement contract 1 price. 2 2. A person, who is acting as a contractor, is guilty of 3 home improvement fraud if the person enters, or offers to 4 enter, into a home improvement contract, and intentionally does 5 any of the following: 6 a. Uses or employs a false pretense or false promise to 7 convey that a need exists to enter into a home improvement 8 contract. 9 b. Knowingly creates or reinforces a consumer’s false 10 impression or belief concerning the condition of a consumer’s 11 dwelling or property that is the subject of the home 12 improvement contract. 13 c. Makes a false statement or omits a material fact as to 14 the terms of the home improvement contract or the condition of 15 a person's dwelling or property that is the subject of the home 16 improvement contract. 17 d. Receives moneys for the purpose of paying for services, 18 labor, materials, or equipment and fails to apply such moneys 19 for such purpose by doing any of the following: 20 (1) Failing to substantially complete the home improvement 21 for which the moneys were provided within the following time 22 periods: 23 (a) Within thirty days of the date specified in the contract 24 for substantially completed work, if such a date is specified. 25 (b) Within ninety days of the date of the signed written 26 home improvement contract, if no completion date is specified 27 in the contract. 28 (c) Within ninety days of receipt of moneys paid by the 29 consumer to the contractor, if the contract is oral. 30 This section does not preclude the contactor and consumer 31 from agreeing to change the original, substantial completion 32 date to accommodate situations unknown to either the contractor 33 or consumer at the time of entering into the original contract. 34 (2) Failing to pay for the services, labor, materials, or 35 -2- LSB 5608YH (2) 87 asf/rj 2/ 5

H.F. 2316 equipment provided incident to such home improvement. 1 (3) Diverting the moneys to a use other than for which the 2 moneys were received. 3 e. Provides a false individual name or a false business 4 name, address, or telephone number to a consumer. 5 f. Enters into an unconscionable home improvement contract 6 with a consumer. 7 (1) For the purposes of this paragraph, if the contract 8 price is greater than four times the fair market value of the 9 services, material, or work performed or to be performed, it is 10 prima facie evidence that a contract is unconscionable. 11 (2) Fair market value shall be determined as of the date 12 the home improvement contract was entered into. However, if 13 such evidence is not readily available, the fair market value 14 prevailing within any reasonable time before or after the time 15 described, which in commercial judgment or under usage of trade 16 would serve as a reasonable substitute, may be used. 17 3. It shall be evidence of intent, that the person, who is 18 acting as a contractor, has committed home improvement fraud if 19 any of the following are applicable: 20 a. The person has previously been convicted under this 21 section or under a similar statute of the United States or of 22 any state or of the District of Columbia within ten years of 23 the home improvement contract in question. 24 b. The person is currently subject to any administrative 25 orders, judgments, or injunctions that relate to home 26 improvements. 27 4. A person who commits an offense under this section is, 28 upon conviction, guilty of a class “D” felony if any of the 29 following circumstances are present: 30 a. The contract price or the total amount paid to the 31 defendant by or on behalf of the consumer is one thousand five 32 hundred dollars or more. 33 b. The consumer who entered into the home improvement 34 contract is sixty-two years of age or older. 35 -3- LSB 5608YH (2) 87 asf/rj 3/ 5

H.F. 2316 c. The defendant has previously been convicted under this 1 section. 2 5. If none of the circumstances enumerated in subsection 4 3 are present, a person who commits an offense under this section 4 is, upon conviction, guilty of an aggravated misdemeanor. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill relates to home improvement fraud. The bill 9 defines home improvement as any alteration, repair, addition, 10 modification, or improvement to a dwelling or the property 11 on which it is situated, including but not limited to the 12 construction, painting or coating, installation, replacement 13 or repair of driveways, sidewalks, swimming pools, unattached 14 structures, porches, kitchens, bathrooms, chimneys, fireplaces, 15 stoves, air conditioning or heating systems, hot water 16 heaters, water treatment systems, electrical wiring or systems, 17 plumbing fixtures or systems, doors, windows, roofs, gutters, 18 downspouts, and siding. 19 The bill provides that a person, who is acting as a 20 contractor, is guilty of home improvement fraud if the person 21 enters, or offers to enter, into a home improvement contract, 22 and intentionally does any of the following: uses or employs a 23 false pretense or false promise to convey that there is a need 24 to enter into a home improvement contract; knowingly creates or 25 reinforces a consumer’s false impression or belief concerning 26 the condition of a consumer’s dwelling or property that is 27 the subject of the home improvement contract; makes a false 28 statement or omits a material fact as to the terms of the home 29 improvement contract or the condition of a person’s dwelling or 30 property that is the subject of the home improvement contract; 31 receives moneys for the purpose of paying for services, labor, 32 materials, or equipment and fails to apply such moneys for 33 such purpose by failing to substantially complete the home 34 improvement for which the moneys were provided within specified 35 -4- LSB 5608YH (2) 87 asf/rj 4/ 5

H.F. 2316 time periods, failing to pay for the services, labor, materials 1 or equipment provided incident to such home improvement, or 2 diverting the moneys to a use other than for which the moneys 3 were received; provides a false individual name or a false 4 business name, address, or telephone number to a consumer; or 5 enters into an unconscionable home improvement contract with 6 a consumer. 7 The bill provides that it shall be evidence of intent, 8 that the person, who is acting as a contractor, has committed 9 home improvement fraud if the person has previously been 10 convicted under this bill or under a similar statute of the 11 United States or of any state or of the District of Columbia 12 within 10 years of entering into the home improvement contract 13 in question or if the person is currently subject to any 14 administrative orders, judgments, or injunctions that relate to 15 home improvements. 16 The bill provides that a person who commits an offense under 17 the bill is, upon conviction, guilty of a class “D” felony if 18 any of the following circumstances are present: the contract 19 price or the total amount paid to the defendant by or on behalf 20 of the consumer is $1,500 or more; the consumer who entered 21 into the home improvement contract is 62 years of age or older; 22 or the defendant has previously been convicted under the bill. 23 If none of these circumstances are present, a person who 24 commits an offense under the bill is, upon conviction, guilty 25 of an aggravated misdemeanor. 26 A class “D” felony is punishable by confinement for no more 27 than five years and a fine of at least $750 but not more than 28 $7,500. An aggravated misdemeanor is punishable by confinement 29 for no more than two years and a fine of at least $625 but not 30 more than $6,250. 31 -5- LSB 5608YH (2) 87 asf/rj 5/ 5