HB1421 HD2.DOC

SECTION 1. The legislature finds that consumer protection is extremely important to the State, and there are individuals known as "hail chasers" or "storm chasers" in the roofing industry who pose as insurance adjuster experts to take advantage of individuals pursuing insurance claims to repair their roofs. These purported insurance adjusters engage in unscrupulous practices when hiring contractors to repair the damaged roofs of unsuspecting consumers. The purpose of this Act is to protect Hawaii consumers from the unscrupulous practices of unlicensed insurance adjusters by regulating roofing contractors.

SECTION 2. Chapter 444, Hawaii Revised Statutes, is amended by adding eight new sections to be appropriately designated and to read as follows:

"§444-A Roofing contractor; written contract required. (a) Any agreement with a roofing contractor in an amount

in excess of $1,000 shall be in writing and shall include the following documentation and information:

(1) The complete agreement between the consumer and the roofing contractor, with a clear description of any other documents that are or shall be incorporated into the agreement;

(2) The roofing contractor's full legal name, business names, principal address, phone number, email, and license number;

(3) The name of the roofing contractor's insurer, the type of insurance coverage, and the insurance policy limits obtained by the roofing contractor;

(4) An itemized description of the work to be done, any emergency services to be completed, and the materials to be used in the performance of the contract;

(5) The total itemized amount agreed to be paid for the work to be performed under the contract, including all change orders and work orders;

(6) A description of any person performing the work, including subcontractors;

(7) The approximate cost to be borne by the consumer;

(8) A provision allowing payment to be made by cash, check, or credit card, at the consumer's discretion; and

(9) The signatures of all persons who are party to the contract.

(b) Every written contract shall, in immediate proximity to the space reserved for the signature of the consumer in bold-face type of a minimum size of ten point font, contain a statement in substantially the following form:

"You may cancel this contract at any time within three business days of entering into this contract with your contractor. You may also cancel the contract with your contractor within three business days of being notified that your insurer has denied all or any part of your claim or loss under the insurance policy. See attached notice of cancellation form for an explanation of this right."

(c) Every written contract shall contain a fully completed form in duplicate, captioned "NOTICE OF CANCELLATION," which shall be attached to the contract but easily detachable, and that shall contain, in boldface type of a minimum size of ten point font, the following statement:

"NOTICE OF CANCELLATION

You may cancel this contract at any time within three business days of entering into the contract with your contractor. You may also cancel the contract with your contractor within three business days of being notified that your insurer has denied all or any part of your claim or loss under the insurance policy. You may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice to (name of contractor) at (address of contractor's place of business) at any time within three business days of receiving such notice from your insurer. You may also send a cancellation notice through email. If you cancel, any payments made by you under the contract will be returned to you within ten business days following receipt by the contractor of your cancellation notice, and any security interest arising out of the transaction will be canceled. You shall retain a copy of the notice of cancellation that is transmitted to the contractor.

I HEREBY CANCEL THIS TRANSACTION

______________________________________

(Date)

______________________________________

(Consumer's Signature)

(d) At the time of signing the contract, the consumer shall be furnished with a copy of the contract signed by both the roofing contractor and the consumer.

(e) No work shall be initiated or performed by a roofing contractor prior to the signing of the contract and the furnishing of the contract to the consumer.

§444-B Roofing contractor; consumer right to cancel. (a) A consumer shall have the right to cancel a roofing contract within three business days after the consumer signs the contract.

(b) A consumer who has entered into a written contract with a roofing contractor to provide goods or services to be paid from the proceeds of a property or casualty insurance policy may also cancel the contract at any time prior to midnight of the third business day after the consumer has received written notification from the insurer, including electronic notification, that all or any part of the claim is not covered under the insurance policy.

(c) Cancellation of a roofing contract shall be evidenced by the consumer giving written notice of cancellation to the roofing contractor at the physical address or email stated in the contract.

(d) Notice of cancellation, if given by mail, shall be effective upon deposit into the United States mail, postage prepaid, and properly addressed to the roofing contractor.

(e) Notice of cancellation need not take a particular form and shall be sufficient if the notice indicates, by any form of written expression, the intention of the consumer not to be bound by the contract. The consumer shall retain a copy of the cancellation notice.

§444-C Right to return of deposit after cancellation. (a) Within ten days after a roofing contract has been cancelled, the roofing contractor shall tender to the consumer or possessor of the residential real estate any payments, partial payments, or deposits made by the consumer and any note or other evidence of indebtedness.

(b) If the roofing contractor has performed any services that were both acknowledged by the consumer in writing and reflected in the original itemized estimate, the roofing contractor shall be entitled to the reasonable value of those services.

§444-D Roofing contractor; license required. (a) No person shall undertake, offer to undertake, or agree to perform roofing contractor services unless the person has a license in good standing with the board.

(b) Any roofing contractor who does not possess a license in good standing from the board as of July 1, 2099, shall be entitled to complete any preexisting contracts the roofing contractor has entered. However, a roofing contractor shall be licensed prior to bidding or entering into any contracts within thirty days following July 1, 2099.

(c) In addition to any other information required by the board, a roofing contractor shall submit the following information to the board for the purposes of licensing:

(1) The roofing contractor's name, home address, business address, phone number, email address, and website address;

(2) The names and addresses of all affiliates, subsidiaries, partners, or trustees of the roofing contractor including, in the case of corporate entities, the names and addresses of all officers, directors, and principal shareholders;

(3) A statement as to whether the roofing contractor has ever been previously licensed in the State as a contractor, names under which they were previously licensed, whether there have been previous judgments or arbitration awards against the contractor, and whether licensure has ever been suspended or revoked; and

(4) Proof of insurance.

(d) The board may deny, restrict, suspend, or revoke the licensing of a roofing contractor, or refuse to license a roofing contractor if the roofing contractor:

(1) Employs the use of fraud, deceit, or misrepresentation in obtaining or attempting to obtain a license or the renewal of a license;

(2) Practices or attempts to practice roofing services by fraudulent misrepresentation;

(3) Commits an act of gross malpractice or incompetence, as determined by the board;

(4) Has been convicted of or pled guilty or no contest to a crime that indicates that the person is unfit or incompetent to practice as a roofing contractor, or that indicates that the person has deceived or defrauded the public;

(5) Has been declared incompetent by a court of competent jurisdiction; or

(6) Has wilfully violated any provision of this chapter or any rules adopted by the board.

(e) The board may accelerate the license of any roofing contractor that is registered or licensed and in good standing in another state with similar licensing standards.

(f) The board may establish fees necessary to cover administrative costs for the licensing of a roofing contractor under this section. Fees shall be established through rules adopted pursuant to chapter 91.

§444-E Roofing contractor; insurance required. A roofing contractor shall obtain and maintain for the duration of operations as a roofing contractor the following types of insurance:

(1) Workers' compensation insurance in the amount of $ ;

(2) Public liability insurance in the amount of $ ;

(3) Bodily injury in the amount of $ ;

(4) Property damage in the amount of $ ; and

(5) A surety and performance bond in the amount of $ .

§444-F Roofing contractor; prohibited acts. A roofing contractor shall not:

(1) Operate without a license issued by the board;

(2) Advertise, promise to pay, or rebate any portion of any insurance deductible as an inducement to the sale of goods or services. As used in this paragraph, a promise to pay or rebate includes granting any allowance or offering any discount against the fees to be charged or paying the consumer any form of compensation;

(3) Require a deposit of more than one half of the contract price;

(4) Mandate that a particular form of payment be made to start roofing services;

(5) Induce the sale of any goods or services by:

(A) Offering or providing any upgraded work, material, or product;

(B) Granting any allowance or offering any discount against the fees to be charged; or

(C) Paying the consumer associated with the property, any form of compensation, gift, prize, bonus, coupon, credit, referral fee, advertising, or other fee or payment;

(6) Abandon or fail to perform, without justification, any ongoing contract or project, or deviate from or disregard plans or specifications in any material respect without the consent of the consumer;

(7) Fail to credit the consumer for any payment the consumer has made to the contractor in connection with the contract;

(8) Make any material misrepresentation in the procurement of a contract or make any false promise likely to influence, persuade, or induce the procurement of a contract;

(9) Violate the state building code;

(10) Fail to notify the board within thirty business days of any change of trade name or address, or conducting a business in any name other than the one in which the contractor is licensed;

(11) Fail to pay for materials or services rendered in connection with operations as a roofing contractor where sufficient funds were received as payment for the particular construction work, project, or operation for which the services or materials were rendered or purchased;

(12) Perform the reporting, adjusting, or negotiating of a claim on behalf of the consumer;

(13) Receive compensation for a referral to any entity that reports, adjusts or negotiates a claim on behalf of a consumer; and

(14) Fail to possess required insurance as set forth in section 444-E.

§444-G Roofing contractor requirements; exemptions. Roofing contractor license, contract, and contractor requirements shall not apply to:

(1) Residential owners who, without the assistance of a roofing contractor, physically perform roofing, siding, gutter, or downspout services on a dwelling located on a residential property;

(2) Agricultural property owners who, without the assistance of a roofing contractor, physically perform or have employees perform roofing, siding, gutter, or downspout services on a dwelling or on any other structure located on the agricultural property;

(3) Any authorized employee or representative of the federal government, state, or county, performing roofing services on government property; and

(4) Any person who furnishes and installs onto the real property any fabricated or finished product, material, or other article of merchandise that is not incorporated into or attached to real property.

§444-H Roofing contractors; penalties for violations. (a) In addition to any other penalties provided for by law, any roofing contractor found in violation of any requirement applicable to roofing contractors may, as determined by the board, be subject to:

(1) Revocation or suspension of the roofing contractor's license for a period of time as determined by the board; and

(2) An assessment of an administrative penalty as determined by the board pursuant to rules adopted in accordance with chapter 91; provided that the administrative penalty shall not exceed per cent of the total contract price."

SECTION 3. Section 444-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Roofing contractor" means a person, including, but not limited to, a person that is a nonresident roofing contractor, independent contractor, or subcontractor engaged in the business of roofing, gutter, downspout, or siding services for a fee or who offers to engage in or solicits roofing-related services, including construction, installation, renovation, repair, maintenance, alteration, or waterproofing. The term "roofing contractor" does not include a person engaged in the demolition of a structure or the cleanup of construction waste and debris that contains roofing material, nor a person providing roofing services to a residential building of more than four units, nor a person engaged in building a new home or housing development."

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the invalidity does not affect other provisions or applications of the Act that can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. New statutory material is underscored.

SECTION 8. This Act shall take effect on July 1, 2099.

HOUSE OF REPRESENTATIVES	H.B. NO.	1421
TWENTY-NINTH LEGISLATURE, 2017		H.D. 2
STATE OF HAWAII