SF 461 (LSB 1058SV (2) 88)

SENATE FILE 461

BY  COMMITTEE ON JUDICIARY

(SUCCESSOR TO SF 151)

A BILL FOR

An Act relating to home improvement fraud and providing penalties for contractors who commit home improvement fraud.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  714.29  Home improvement fraud —— penalties.
   1.  As used in this section, unless the context otherwise requires:
   a.  “Consumer” means an individual who owns, leases, or rents the residential property that is subject to the home improvement contract and engages in the home improvement contract with the contractor.
   b.  “Contract price” means the total price agreed upon in a home improvement contract.
   c.  “Contractor” means a person who engages in home improvement work under a home improvement contract or solicits home improvement contracts whether or not the person interacts directly with the consumer.
   d.  “Fair market value” means the amount for the home improvement which in commercial judgment or under usage of trade would be reasonable for services, materials, and work of similar quality and workmanship.
   e.   “Home improvement” means any alteration, repair, addition, modification, or improvement to a dwelling or the property on which it is situated, including but not limited to the construction, painting or coating, installation, replacement or repair of driveways, sidewalks, swimming pools, unattached structures, porches, kitchens, bathrooms, chimneys, fireplaces, stoves, air conditioning or heating systems, hot water heaters, water treatment systems, electrical wiring or systems, plumbing fixtures or systems, doors, windows, roofs, gutters, downspouts, and siding.
   f.  “Home improvement contract” means a written or oral agreement whereby a contractor offers or agrees to provide a home improvement to a consumer in exchange for payment of moneys, regardless of whether any such payment is made.
   g.  “Material fact” means a fact that a reasonable person would consider important when purchasing a home improvement.
   2.  A person, who is acting as a contractor, is guilty of home improvement fraud if the person enters, or offers to enter, into a home improvement contract, and intentionally does any of the following:
   a.  Knowingly uses or employs a false pretense or false promise to convey that a need exists to enter into a home improvement contract.
   b.  Knowingly makes a false statement, or knowingly creates or reinforces a consumer’s false impression or belief concerning the condition of a consumer’s dwelling or property that is the subject of the home improvement contract.
   c.  Knowingly provides a false personal name or false business name, address, or telephone number to a consumer.
   d.  Knowingly represents that repairs or work have been performed when repairs have not been performed.
   e.  Receives moneys from a consumer prior to completion of a home improvement for the purpose of paying for services, labor, materials, or equipment and intentionally fails to substantially complete the home improvement within the time agreed to by the consumer and contractor or fails to pay for the services, labor, materials, and equipment incident to the home improvement. The time for substantial completion of the home improvement may be extended by agreement of the parties, or for reasonable unforeseen circumstances beyond the contractor’s control. It shall be a defense to a violation of this subsection if, upon failure to timely perform under the agreement of the parties, the contractor returns moneys to the consumer that were advanced for services and materials that were not provided by that date.
   f.  Enters into an unconscionable home improvement contract with a consumer.
   (1)  For the purposes of this paragraph, if the contract price is greater than four times the fair market value of the services, material, or work performed or to be performed, it is prima facie evidence that a contract is unconscionable.
   (2)  Fair market value shall be determined as of the date the home improvement contract was entered into. However, if such evidence is not readily available, the fair market value prevailing within any reasonable time before or after the time described, which in commercial judgment or under usage of trade would serve as a reasonable substitute, may be used.
   3.  A person who commits an offense under this section is, upon conviction, guilty of a class “D” felony if any of the following circumstances are present:
   a.  The contract price or the total amount paid to the defendant by or on behalf of the consumer is one thousand five hundred dollars or more.
   b.  At least one of the consumers who entered into the home improvement contract is sixty-two years of age or older at the time the violation occurred.
   c.  The defendant has previously been convicted under this section.
   4.  If none of the circumstances enumerated in subsection 3 are present, a person who commits an offense under this section is, upon conviction, guilty of an aggravated misdemeanor.
   5.  This section shall not impair, limit, or reduce the statutory, common law, or contractual duties, liabilities, or rights of any contractor or consumer.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to home improvement fraud. The bill defines home improvement as any alteration, repair, addition, modification, or improvement to a dwelling or the property on which it is situated, including but not limited to the construction, painting or coating, installation, replacement or repair of driveways, sidewalks, swimming pools, unattached structures, porches, kitchens, bathrooms, chimneys, fireplaces, stoves, air conditioning or heating systems, hot water heaters, water treatment systems, electrical wiring or systems, plumbing fixtures or systems, doors, windows, roofs, gutters, downspouts, and siding.
   The bill provides that a person, who is acting as a contractor, is guilty of home improvement fraud if the person enters, or offers to enter, into a home improvement contract, and intentionally does any of the following: knowingly uses or employs a false pretense or false promise to convey that there is a need to enter into a home improvement contract; knowingly makes a false statement, or knowingly creates or reinforces a consumer’s false impression or belief concerning the condition of a consumer’s dwelling or property that is the subject of the home improvement contract; knowingly provides a false personal name or false business name, address, or telephone to a consumer; knowingly represents that repairs or work have been performed when repairs or work have not been performed; receives moneys from a consumer prior to completion of a home improvement for the purpose of paying for services, labor, materials, or equipment and intentionally fails to substantially complete the home improvement within the time agreed to by the consumer and the contractor or fails to pay for the services, labor, materials, and equipment incident to the home improvement; or enters into an unconscionable home improvement contract with a consumer.
   The bill provides that a person who commits an offense under the bill is, upon conviction, guilty of a class “D” felony if any of the following circumstances are present: the contract price or the total amount paid to the defendant by or on behalf of the consumer is $1,500 or more; at least one of the consumers who entered into the home improvement contract is 62 years of age or older at the time the violation occurred; or the defendant has previously been convicted under the bill. If none of these circumstances are present, a person who commits an offense under the bill is, upon conviction, guilty of an aggravated misdemeanor.
   A class “D” felony is punishable by confinement for no more than five years and a fine of at least $750 but not more than $7,500. An aggravated misdemeanor is punishable by confinement for no more than two years and a fine of at least $625 but not more than $6,250.
   The bill provides that the bill shall not impair, limit, or reduce the statutory, common law, or contractual duties, liabilities, or rights of any contractor or consumer.