State SealARIZONA HOUSE OF REPRESENTATIVES

 

SB 1397: registrar of contractors omnibus

PRIME SPONSOR: Senator Mesnard, LD 17

BILL STATUS: House Engrossed

                               

 

Overview

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteMakes various revisions to statute relating to Registrar of Contractors (Registrar).

History

The Registrar issues contractor licenses by classifying qualified applicants, changing license classifications, conducting investigations and establishing examinations. Applicants for Registrar licensure must have a minimum of four years' practical or management trade experience in classification-related construction and pass a written application covering relevant building, safety, health and lien laws. The Registrar may choose to waive the work experience and examination requirements for an applicant previously licensed by the Registrar in the preceding five years (A.R.S. § 32-1122).

Title 32, Chapter 10, Article 2.1, prescribes the duty of the Registrar to administer a Recovery Fund (Fund) for the financial protection of residential homeowners injured by the conduct of licensed residential contractors or dual licensed contractors, who violate statute or rule (A.R.S. § 32-1131). The source of revenue for the Fund is an assessment paid by each residential contractor, not to exceed $600 per biennial license period; however, if the balance remaining in the Fund is ever less than $2 million, the Registrar may reassess a different amount per licensee (A.R.S. § 32-1134). The Registrar must suspend a residential contractor’s license for failure to make the required payment.

An injured homeowner may file a claim through the administrative process (A.R.S. § 32-1154(G)) or the civil process (A.R.S. § 32-1136). Statute limits compensation to any person injured as a direct result of the violation, which cannot exceed an amount necessary to complete or repair a residential structure or appurtenance (A.RS. §§ 32-1132 and 32-1139). The Fund does not pay claims from suppliers, subcontractors, laborers or other commercial entities.

Payment is only available to an individual who owns or occupies or intends to occupy class three residential real property or noncommercial historic property, with some exceptions. The maximum award to each homeowner is $30,000, with $200,000 maximum liability per licensed contractor.

Provisions

1.       Stipulates that notice of a proposed rule change may be made any time of the year, not just during the month of January.  (Sec. 2)

2.       Eliminates the 20-day waiting period for applicants seeking a contractor's license.  (Sec. 2)

3.       Directs the Registrar to post on the agency website for 20 days, the names of those applying for a license.  (Sec. 2)

4.       Requires the Registrar to issue the appropriate license if an applicant meets all statutory requirements, regardless of the 20-day posting period.  (Sec. 2)

5.       Specifies the Fund monies as a 90/10 board.  (Sec. 4)

6.       Strikes the requirement to adopt a single form of application for all licenses issued by the Registrar.  (Sec. 3)

7.       Revises the exemption language that references the electrical connectors.  (Sec. 5)

8.       Exempts from additional licensure, a joint venture or other combination of persons or entities if all of the following apply:

a.       at least one member has a valid contractor's license;

b.       each licensed contractor is in good standing; and

c.        each member only performs work in the scope of the license. (Sec. 5)

9.       Refers to an attestation rather than evidence that a limited liability company is in good standing with the Arizona Corporation Commission.  (Sec. 6)

10.   Instructs an applicant to attest to compliance with laws governing workers' compensation insurance.

a.       Requires the attestation to include the workers' compensation insurance policy number or be accompanied by proof of self-insurance. (Sec. 6)

11.   Stipulates all trustees must provide their names and addresses if the applicant is a trust.  (Sec. 6)

12.   Revises the language that prohibits the Registrar from issuing a license for one year to anyone who bids on a project but was not properly licensed.  (Sec.7)

13.   Directs the Registrar to issue a written warning to an entity for unlicensed activity when the bid is between $1,000 and $20,000.  (Sec. 7)

14.   Removes the requirement for a licensee to submit current financial condition to qualify for annual licensure.  (Sec. 8)

15.   Allows license suspension through operation of law until sufficient funds are deposited to cover the cost of the license fees and assessments. (Sec. 9)

16.   Rewrites the section of law pertaining to the exemption from a qualifying party. (Sec. 10)

17.   Places the language relating to the monetary assessment that goes into the Fund under the section of law pertaining to fees. (Sec. 12)

18.   Revises the language relating to the qualifying party.  (Sec. 13, 14)

19.   Modifies, rewrites and identifies claimants eligible to receive an award from the Fund.  (Sec. 16)

20.   States the contractor whose actions damaged the claimant must be appropriately licensed at one of the specified times for the claimant to receive Fund payments.  (Sec. 16)

21.   Rewrites and further specifies the limitations on Fund payments.  (Sec. 17)

22.   Rewrites the sections of law relating to the statute of limitations for civil judgments and administrative recovery.  (Sec. 17, 20, 25)

23.   Requires the list of persons convicted of contracting without a license to include any known related business names.  (Sec. 22)

24.   Stipulates that the Registrar's ability to prescribe the terms and conditions of alternative payments is optional rather than mandatory. (Sec. 24)

25.   Stipules the failure of a licensee to answer a complaint may be deemed an admission unless the Registrar determines that the failure to answer within the prescribed time frame due is to excusable neglect.  (Sec. 26)

26.   Eliminates the requirement for the licensee to notify the Registrar when there is a 25% or more transfer of a stock or beneficial interest in a company. (Sec. 27)

27.   Rewrites and modifies the laws pertaining to cease and desist orders and makes further clarifications when issuing a citation. (Secs. 33, 34, 35)

28.   Clarifies the billing cycle for progress payments of a construction contract. (Sec. 43)

29.   Transfers and renumbers specified sections of law relating to prompt pay.  (Sec. 39-48)

30.   Contains a legislative findings clause. (Sec. 49)

31.   Modifies the definition of commercial contractor, contractor, residential contractor and dual licensed contractor.  (Sec. 1)

32.   Defines qualifying party as the person responsible for the licensee's work and who either:

a.       holds an ownership interest in the license; or

b.       is regularly hired by the licensee. (Sec. 1)

33.   Defines actual damages regarding payments from the Fund.  (Sec. 17)

34.   Removes archaic language, makes technical and conforming changes. (Secs. 1-48)

 

 

 

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Fifty-fourth Legislature                               SB 1397

First Regular Session                    Version 3: House Engrossed

 

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