SENATE FILE 466

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 1168)

(COMPANION TO LSB 2674HV BY COMMITTEE ON COMMERCE)

(As Amended and Passed by the Senate 2011-03-30)

A BILL FOR

An Act relating to residential contractors and providing a penalty.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  NEW SECTION.  103A.71  Residential contractors.
   1.  As used in this section:
   a.  “Catastrophe” means a natural occurrence including but not limited to fire, flood, drought, earthquake, tornado, windstorm, or hailstorm, which damages or destroys residential real estate.
   b.  “Residential contractor” means a person in the business of contracting to repair or replace roof systems or perform any other exterior repair, exterior replacement, or exterior reconstruction work resulting from a catastrophe on residential real estate or a person offering to contract with an owner or possessor of residential real estate to carry out such work.
   c.  “Residential real estate” means a new or existing building, including a detached garage, constructed for habitation by one to four families.
   d.  “Roof system” includes roof coverings, roof sheathing, roof weatherproofing, and roof insulation.
   2.  A residential contractor shall not advertise or promise to rebate any insurance deductible or any portion thereof as an inducement to the sale of goods or services. A promise to rebate any insurance deductible includes granting any allowance or offering any discount against the fees to be charged or paying an insured or a person directly or indirectly associated with the property any form of compensation, except for items of nominal value. A residential contractor may display a sign or other advertisement on a person’s residential property provided that the person consents to the display and the person receives no compensation from the residential contractor for the placement of the sign or advertising.
   3.  A person who has entered into a written contract with a residential contractor providing goods or services to be paid from the proceeds of a property and casualty insurance policy may cancel the contract prior to midnight on the earlier of the third business day after the person has received written notice from the person’s insurer that all or part of the claim or contract is not a covered loss under the insurance policy or the thirtieth business day after receipt of properly executed proofs of loss by the insurer from the insured. Cancellation shall be evidenced by the person giving written notice of the cancellation to the residential contractor at the address of the residential contractor’s place of business as stated in the contract. Written notice of cancellation may be given by delivering or mailing a signed and dated copy of the written notice of cancellation to the residential contractor at the address of the residential contractor’s place of business as stated in the contract. The notice of cancellation shall include a copy of the written notice from the person’s insurer to the effect that all or part of the claim or contract is not a covered loss under the insurance policy. Notice of cancellation given by mail shall be effective upon deposit into the United States mail with prepaid postage, if properly addressed to the residential contractor. Notice of cancellation need not take a particular form, and is sufficient if the notice indicates, by any form of written expression, the intent of the insured not to be bound by the contract.
   4.  Before entering into a contract to provide goods or services to be paid from the proceeds of a property and casualty insurance policy, a residential contractor shall provide the insured along with the contract all of the following documents in substantially the following form:
   a.  The following statement in at least ten-point bold type:
  RIGHT OF CANCELLATION

  You may cancel this contract at any time prior to midnight on the earlier of the third business day after you have received written notification from your insurer that all or any part of the claim or contract is not a covered loss under your insurance policy or the thirtieth business day after your insurer has received properly executed proofs of loss from you. See the attached notice of cancellation form for an explanation of this right.
   b.  A fully completed duplicate form which shall accompany the contract, shall be easily detachable, and which shall contain the following statement in at least ten-point bold type:
  NOTICE OF CANCELLATION

  You may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice of cancellation to (name of contractor) at (address of contractor’s place of business) at any time prior to midnight on the earlier of the third business day after you have received notice from your insurer that all or any part of the claim or contract is not a covered loss under your insurance policy or the thirtieth business day after your insurer has received properly executed proofs of loss from you. If you cancel the contract, any payments made by you under the contract, other than payments for goods or services related to a catastrophe which you agreed in writing to be necessary to prevent damage to your property, will be returned to you within ten business days following receipt by the contractor of your cancellation notice.

  I hereby cancel this contract.

  ________________________

  Date

  ____________________________________

  Consumer’s signature
   5.  Within ten days after a contract to provide goods or services to be paid from the proceeds of a property and casualty insurance policy has been canceled by notification pursuant to this section, the residential contractor shall tender to the person canceling the contract any payments, partial payments, or deposits made by the person and any note or other evidence of indebtedness. However, if the residential contractor has provided any goods or services related to a catastrophe, agreed by the person in writing to be necessary to prevent damage to the premises, the residential contractor shall be entitled to be paid the reasonable value of such goods or services. Any provision in a contract to provide goods or services to be paid from the proceeds of a property and casualty insurance policy that requires the payment of any fee which is not for goods or services related to a catastrophe shall not be enforceable against any person who has canceled a contract pursuant to this section.
   6.  A residential contractor shall not represent or negotiate on behalf of, or offer or advertise to represent or negotiate on behalf of, an owner or possessor of residential real estate on any insurance claim in connection with the repair or replacement of roof systems, or the performance of any other exterior repair, exterior replacement, or exterior reconstruction work on the residential real estate.
   7.  A residential contractor violating this section is subject to the penalties and remedies prescribed by this chapter.
   Sec. 2.  APPLICABILITY.  This Act applies to contracts entered into on or after the effective date of this Act.