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BILL AS PASSED HOUSE AND SENATE 2007-2008

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H.783

AN ACT RELATING TO HOME IMPROVEMENT FRAUD

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  13 V.S.A. § 2029 is amended to read:

§ 2029.  HOME IMPROVEMENT FRAUD

(a)  As used in this section, "home improvement" includes the fixing, replacing, remodeling, removing, renovation, alteration, conversion, improvement, demolition, or rehabilitation of or addition to any building or land, or any portion thereof, which is used or designed to be used as a residence or dwelling unit.  Home improvement shall include the construction, replacement, installation, paving, or improvement of driveways, roofs, and sidewalks, and the limbing, pruning, and removal of trees or shrubbery and other improvements to structures or upon land that is adjacent to a dwelling house.

(b)  A person commits the offense of home improvement fraud when he or she knowingly enters into a contract or agreement, written or oral, for $500.00 or more, with an owner for home improvement, or into several contracts or agreements for $2,500.00 or more in the aggregate, with more than one owner for home improvement, and he or she knowingly:

(1)  promises performance that he or she does not intend to perform or knows will not be performed, in whole or in part;

(2)  misrepresents a material fact relating to the terms of the contract or agreement or to the condition of any portion of the property involved;

(3)  uses or employs any unfair or deceptive act or practice in order to induce, encourage, or solicit such person to enter into any contract or agreement or to modify the terms of the original contract or agreement; or

(4)  when there is a declared state of emergency, charges for goods or services related to the emergency a price that exceeds two times the average price for the goods or services and the increase is not attributable to the additional costs incurred in connection with providing those goods or services.

(c)  It shall be a permissive inference that the person acted knowingly under subdivision (b)(1) of this section if the person fails to perform the contract or agreement and, when the owner requests performance of the contract or agreement or a refund of payments made, the person fails to:

(1)  return the payments or deliver the materials or make and comply with a reasonable written repayment plan for the return of the payments; or

(2)  make and comply with a reasonable written plan for completion of the contract or agreement.

(d)  A person convicted of home improvement fraud shall register with the department of labor. The court shall notify the department of labor of a conviction under this section. A person who is sentenced pursuant to subdivisions (e)(2), (3), or (4) of this section shall not engage in home improvement activities for compensation unless he or she has filed a surety bond or an irrevocable letter of credit with the department of labor in an amount of not less than $50,000.00. The department shall release the letter of credit at such time when:

(1)  any claims against the person relating to home improvement fraud have been paid;

(2)  there are no pending actions or claims against the person for home improvement fraud; and

(3) the person has not been engaged in home improvement activities for at least six years and has signed an affidavit attesting to such.  Whenever a person is convicted of home improvement fraud or of fraudulent acts related to home improvement:

(1)  the person shall notify the office of attorney general;

(2)  the court shall notify the office of the attorney general; and

(3)  the office of attorney general shall place the person’s name on the home improvement fraud registry.

(e)(1)  A person who violates subsection (b) of this section shall be imprisoned not more than two years or fined not more than $1,000.00, or both, if the loss to a single consumer is less than $1,000.00.

(2)  A person who is convicted of a second or subsequent violation of subdivision (1) of this subsection shall be imprisoned not more than three years or fined not more than $5,000.00, or both.

(3)  A person who violates subsection (b) of this section shall be imprisoned not more than three years or fined not more than $5,000.00, or both, if:

(A)  the loss to a single consumer is $1,000.00 or more; or

(B)  the loss to more than one consumer is $2,500.00 or more in the aggregate.

(4)  A person who is convicted of a second or subsequent violation of subdivision (3) of this subsection shall be imprisoned not more than five years or fined not more than $10,000.00, or both.

(5)  A person who violates subsection (d) or (f) of this section shall be imprisoned for not more than two years or fined not more than $1,000.00, or both.

(f)  A person who is sentenced pursuant to subdivision (e)(2), (3), or (4) of this section may engage in home improvement activities for compensation only if:

(1)  the work is for a company or individual engaged in home improvement activities, and the person first notifies the company or individual of the conviction and notifies the office of attorney general of the person’s current address and telephone number; the name, address, and telephone number of the company or individual for whom the person is going to work; and the date on which the person will start working for the company or individual; or

(2)  the person notifies the office of attorney general of the intent to engage in home improvement activities, and that the person has filed a surety bond or an irrevocable letter of credit with the office in an amount of not less than $50,000.00, and pays on a regular basis all fees associated with maintaining such bond or letter of credit.

(g)  The office of attorney general shall release the letter of credit at such time when:

(1)  any claims against the person relating to home improvement fraud have been paid;

(2)  there are no pending actions or claims against the person for home improvement fraud; and

(3)  the person has not been engaged in home improvement activities for at least six years and has signed an affidavit so attesting.

(h)  A person who is convicted of fraudulent acts related to home improvement shall be required to comply with subsections (d) and (f) of this section.


Sec. 2.  9 V.S.A. § 4005a is added to read:

§ 4005a.  FUND HELD IN TRUST; COMMINGLING; NO EFFECT ON

                TITLE TO REAL PROPERTY

(a)  For the purposes of this section:

(1)  “Claim” means any valid claim for materials furnished or services rendered in the construction, repair, remodeling, improvement, or renovation of any building or structure for which the claimant has a lien or the right to claim a lien.

(2)  “Express trust” means funds that have been paid by an owner, for or in connection with services, labor, or materials used in an improvement of real property, which are to be held by a contractor or subcontractor, in express trust, for those services, labor, or materials.  Any such contractor or subcontractor who accepts money from any owner or contractor shall become the trustee of the express trust that is created pursuant to this section.  The amounts received by such contractor or subcontractor under or in connection with each building project shall be a separate trust and the contractor or subcontractor, or any successor or assign or both of such contractor or subcontractor that hold such trust funds, shall be a trustee thereof.  These funds are not required to be held in any separate account by a contractor or subcontractor.  Such trust shall be effective against and shall have priority over any unsecured interest of a party seeking payment from such contractor or subcontractor for claims other than those that are due and owing by reason of the specific building project for which the trust was created, whether such creditors are foreign attachment or other judicial lien creditors, a trustee in bankruptcy or similar creditors or representatives or creditors of the contractor or subcontractor.

(b)  Funds held in express trust are not required to be held in any separate account by a contractor or subcontractor.

(c)  No express trust shall be required for a federal, state, or municipal project.

(d)  The amount payable to any contractor or subcontractor under any contract for the construction, repair, remodeling, improvement, or renovation of any building or structure shall, upon receipt by such contractor or subcontractor, be held in express trust by such contractor or subcontractor for the payment of all claims that are due and owing, or to become due and owing, by such contractor or subcontractor by reason of such construction, repair, remodeling, improvement, or renovation.

(e)  Any amount required to be held in express trust under this section shall be applied to the payment of the corresponding claims specified in this section.

(f)  Nothing herein shall be construed to create a lien on real property.  The existence of an express trust under this section shall not prohibit the filing or enforcement of a lien against the affected real property pursuant to chapter 51 of Title 9 by any claimant.  A priority lien of a secured lender shall not be subordinate to an express trust.

(g)  In the case of an express trust which is not held by a corporation, limited liability partnership, or limited liability company, liability for sums due under this section shall only attach to the principal or head of the company which holds the funds under the express trust.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us