S.F. _____ 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 and engages in the home improvement 7 contract with the contractor. 8 b. “Contract price” means the total price agreed upon in a 9 home improvement contract. 10 c. “Contractor” means a person who engages in home 11 improvement work under a home improvement contract or solicits 12 home improvement contracts whether or not the person interacts 13 directly with the consumer. 14 d. “Fair market value” means the amount for the home 15 improvement which in commercial judgment or under usage of 16 trade would be reasonable for services, materials, and work of 17 similar quality and workmanship. 18 e. “Home improvement” means any alteration, repair, 19 addition, modification, or improvement to a dwelling or the 20 property on which it is situated, including but not limited 21 to the construction, painting or coating, installation, 22 replacement or repair of driveways, sidewalks, swimming pools, 23 unattached structures, porches, kitchens, bathrooms, chimneys, 24 fireplaces, stoves, air conditioning or heating systems, hot 25 water heaters, water treatment systems, electrical wiring or 26 systems, plumbing fixtures or systems, doors, windows, roofs, 27 gutters, downspouts, and siding. 28 f. “Home improvement contract” means a written or oral 29 agreement whereby a contractor offers or agrees to provide 30 a home improvement to a consumer in exchange for payment of 31 moneys, regardless of whether any such payment is made. 32 g. “Material fact” means a fact that a reasonable person 33 would consider important when purchasing a home improvement. 34 h. “Unconscionable home improvement contract” means a home 35 -1- LSB 1351XC (2) 88 asf/jh 1/ 5

S.F. _____ improvement contract in which an unreasonable difference exists 1 between the fair market value of services, materials, and work 2 performed or to be performed and the home improvement contract 3 price. 4 2. A person, who is acting as a contractor, is guilty of 5 home improvement fraud if the person enters, or offers to 6 enter, into a home improvement contract, and intentionally does 7 any of the following: 8 a. Uses or employs a false pretense or false promise to 9 convey that a need exists to enter into a home improvement 10 contract. 11 b. Knowingly creates or reinforces a consumer’s false 12 impression or belief concerning the condition of a consumer’s 13 dwelling or property that is the subject of the home 14 improvement contract. 15 c. Makes a false statement or omits a material fact as to 16 the terms of the home improvement contract or the condition of 17 a person's dwelling or property that is the subject of the home 18 improvement contract. 19 d. Receives moneys for the purpose of paying for services, 20 labor, materials, or equipment and fails to apply such moneys 21 for such purpose by doing any of the following: 22 (1) Failing to substantially complete the home improvement 23 for which the moneys were provided within the following time 24 periods, provided that this subparagraph does not preclude the 25 contractor and consumer from agreeing to change the original, 26 substantial completion date to accommodate situations unknown 27 to either the contractor or consumer at the time of entering 28 into the original contract: 29 (a) Within thirty days of the date specified in the contract 30 for substantially completed work, if such a date is specified. 31 (b) Within ninety days of the date of the signed written 32 home improvement contract, if no completion date is specified 33 in the contract. 34 (c) Within ninety days of receipt of moneys paid by the 35 -2- LSB 1351XC (2) 88 asf/jh 2/ 5

S.F. _____ consumer to the contractor, if the contract is oral. 1 (2) Failing to pay for the services, labor, materials, or 2 equipment provided incident to such home improvement. 3 (3) Diverting the moneys to a use other than for which the 4 moneys were received. 5 e. Provides a false individual name or a false business 6 name, address, or telephone number to a consumer. 7 f. Enters into an unconscionable home improvement contract 8 with a consumer. 9 (1) For the purposes of this paragraph, if the contract 10 price is greater than four times the fair market value of the 11 services, material, or work performed or to be performed, it is 12 prima facie evidence that a contract is unconscionable. 13 (2) Fair market value shall be determined as of the date 14 the home improvement contract was entered into. However, if 15 such evidence is not readily available, the fair market value 16 prevailing within any reasonable time before or after the time 17 described, which in commercial judgment or under usage of trade 18 would serve as a reasonable substitute, may be used. 19 3. It shall be evidence of intent that the person, who is 20 acting as a contractor, has committed home improvement fraud if 21 any of the following are applicable: 22 a. The person has previously been convicted under this 23 section or under a similar statute of the United States or of 24 any state within ten years of the home improvement contract in 25 question. 26 b. The person is currently subject to any administrative 27 orders, judgments, or injunctions that relate to home 28 improvements. 29 4. A person who commits an offense under this section is, 30 upon conviction, guilty of a class “D” felony if any of the 31 following circumstances are present: 32 a. The contract price or the total amount paid to the 33 defendant by or on behalf of the consumer is one thousand five 34 hundred dollars or more. 35 -3- LSB 1351XC (2) 88 asf/jh 3/ 5

S.F. _____ b. At least one of the consumers who entered into the home 1 improvement contract is sixty-two years of age or older at the 2 time the consumer and the contractor entered into the home 3 improvement contract. 4 c. The defendant has previously been convicted under this 5 section. 6 5. If none of the circumstances enumerated in subsection 4 7 are present, a person who commits an offense under this section 8 is, upon conviction, guilty of an aggravated misdemeanor. 9 EXPLANATION 10 The inclusion of this explanation does not constitute agreement with 11 the explanation’s substance by the members of the general assembly. 12 This bill relates to home improvement fraud. The bill 13 defines home improvement as any alteration, repair, addition, 14 modification, or improvement to a dwelling or the property 15 on which it is situated, including but not limited to the 16 construction, painting or coating, installation, replacement 17 or repair of driveways, sidewalks, swimming pools, unattached 18 structures, porches, kitchens, bathrooms, chimneys, fireplaces, 19 stoves, air conditioning or heating systems, hot water 20 heaters, water treatment systems, electrical wiring or systems, 21 plumbing fixtures or systems, doors, windows, roofs, gutters, 22 downspouts, and siding. 23 The bill provides that a person, who is acting as a 24 contractor, is guilty of home improvement fraud if the person 25 enters, or offers to enter, into a home improvement contract, 26 and intentionally does any of the following: uses or employs a 27 false pretense or false promise to convey that there is a need 28 to enter into a home improvement contract; knowingly creates or 29 reinforces a consumer’s false impression or belief concerning 30 the condition of a consumer’s dwelling or property that is 31 the subject of the home improvement contract; makes a false 32 statement or omits a material fact as to the terms of the home 33 improvement contract or the condition of a person’s dwelling or 34 property that is the subject of the home improvement contract; 35 -4- LSB 1351XC (2) 88 asf/jh 4/ 5

S.F. _____ receives moneys for the purpose of paying for services, labor, 1 materials, or equipment and fails to apply such moneys for 2 such purpose by failing to substantially complete the home 3 improvement for which the moneys were provided within specified 4 time periods, failing to pay for the services, labor, materials 5 or equipment provided incident to such home improvement, or 6 diverting the moneys to a use other than for which the moneys 7 were received; provides a false individual name or a false 8 business name, address, or telephone number to a consumer; or 9 enters into an unconscionable home improvement contract with 10 a consumer. 11 The bill provides that it shall be evidence of intent that 12 the person, who is acting as a contractor, has committed home 13 improvement fraud if the person has previously been convicted 14 under this bill or under a similar statute of the United States 15 or of any state within 10 years of entering into the home 16 improvement contract in question or if the person is currently 17 subject to any administrative orders, judgments, or injunctions 18 that relate to home improvements. 19 The bill provides that a person who commits an offense 20 under the bill is, upon conviction, guilty of a class “D” 21 felony if any of the following circumstances are present: the 22 contract price or the total amount paid to the defendant by or 23 on behalf of the consumer is $1,500 or more; at least one of 24 the consumers who entered into the home improvement contract 25 is 62 years of age or older at the time the home improvement 26 contract is entered into; or the defendant has previously been 27 convicted under the bill. If none of these circumstances are 28 present, a person who commits an offense under the bill is, 29 upon conviction, guilty of an aggravated misdemeanor. 30 A class “D” felony is punishable by confinement for no more 31 than five years and a fine of at least $750 but not more than 32 $7,500. An aggravated misdemeanor is punishable by confinement 33 for no more than two years and a fine of at least $625 but not 34 more than $6,250. 35 -5- LSB 1351XC (2) 88 asf/jh 5/ 5