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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
REVISED
AMENDED
registrar of contractors omnibus
Purpose
Makes various changes to the Registrar of Contractors (ROC).
Background
The ROC issues contractor licenses by classifying qualified applicants, changing license classifications, conducting investigations and establishing examinations. Applicants for ROC 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 ROC may choose to waive the work experience and examination requirements for an applicant previously licensed by the ROC in the preceding five years (A.R.S. § 32-1122).
The Residential Contractors' Recovery Fund (Fund) is administered by the ROC and serves as a statutorily instituted safeguard allowing eligible, damaged homeowners to recover losses or restore their property if harmed by a licensed contractor. Owners of noncommercial historic property or class three residential real property are eligible for Fund relief of up to $30,000 per property (A.R.S § 32-1131 and 32-1132).
The Fund is capitalized from an assessment, not to exceed $600 per biennial license period, paid by residential contractors. The ROC will suspend distributions if the Fund becomes insolvent. Unpaid claims, or a portion of unpaid claims, will be satisfied based on the time of filing a certified copy of the court order with the ROC (A.R.S. § 1134.02).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Eligibility of Fund Relief
1. Determines an individual eligible for an award from the Fund if they:
a) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance; and
b) actually occupy or intend to occupy the residential real property as the individual's primary residence.
2. Determines a limited liability company (LLC) eligible for an award from the Fund if:
a) the LLC owns the residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance;
b) all of the LLC's members actually occupy or intend to occupy the residential real property as their primary residence; and
c) a member of the LLC has not received monies from the Fund in the last two years.
3. Determines a trust eligible for an award from the Fund if:
a) the trust is a revocable living trust;
b) the trust owns the residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance;
c) all of the trust's trustors actually occupy or intend to occupy the residential real property as their primary residence; and
d) a trustor has not received monies from the Fund in the last two years.
4. Determines a planned community or unit owners' association eligible for an award from the Fund if:
a) the builder or developer transferred control to the planned community or unit owners' association; and
b) a licensed residential contractor's failure to adequately build or improve a residential structure or appurtenance caused damage to the common elements within the complex.
5. Determines a lessee of residential real property eligible for an award from the Fund if they:
a) contract directly with a residential contractor or indirectly with a subcontractor of the residential contractor;
b) actually occupy or intend to occupy the residential real property as the individual's primary residence; and
c) are damaged by the licensed residential contractor's failure to adequately build or improve a residential structure or appurtenance.
6. Requires, in order for a claimant to be eligible for an award from the Fund, the contractor whose actions damaged the claimant to have been appropriately licensed on the date that the:
a) underlying contract was signed;
b) first payment was made; or
c) underlying work first commenced.
7. Limits awards from the Fund to residential real properties and prohibits the Fund from issuing an award covering damages to commercial property.
Contractor Licensure
8. Allows, rather than requires, the ROC to suspend a license if:
a) the licensed entity is dissolved;
b) the licensed entity does not have authority to do business in Arizona; or
c) the license is obtained or renewed with an insufficient funds check.
9. Allows a proper showing to regain licensure to be made by a contractor with a revoked license by demonstrating to the ROC that the licensee exhausted all reasonable means to remedy the underlying loss caused by the act or omission.
10. Requires the ROC to issue a contractor license if the applicant meets all requirements, regardless of the 20-day public posting period.
11. Requires an applicant or licensee that is an LLC or corporation, who is obtaining, renewing or maintaining a license, to supply an attestation to the ROC, rather than evidence, that the LLC or corporation is in good standing with the Arizona Corporation Commission.
12. Requires an applicant or licensee who is obtaining, renewing or maintaining a license to supply an attestation, rather than proof, that the applicant has complied with the statutes and rules governing workers' compensation insurance.
13. Specifies that if an applicant is required to secure workers' compensation insurance the attestation must contain the policy number or be accompanied by proof of self-insurance.
14. Requires an applicant or licensee that is a trust, who is obtaining, renewing or maintaining a license, to supply the names and addresses of all trustees.
15. Removes the requirement for a contractor to supply a detailed financial statement when requesting an exception for biennial licensing or renewal requirements.
16. Specifies that a joint venture or other combination of persons, firms, partnerships, corporations, associations or other organizations are not required to obtain separate contractor's licenses if:
a) at least one member of the joint venture or combination holds a contractor's license;
b) each member of the joint venture or combination that acts as a contractor holds a license; and
c) each licensed member of the joint venture or combination only performs work within the scope of that member's license or licenses.
17. Prohibits the ROC from issuing a license for one year after a bid date, if a contractor who is not properly licensed bid on a project of $1,000 or more.
Licensee and Qualifying Party Responsibilities
18. Requires a licensee applying for exemption from a qualifying party to show the ROC that they:
a) held a valid and active license for the past five years; and
b) did not commit a violation that would be considered grounds for suspension or revocation of a contractor's license, rather than five valid unresolved complaints.
19. Makes a licensee's qualifying party responsible for any violation of contractor rules by the licensee.
20. Makes a person named on a license responsible for any violation of contractor rules committed by the licensee during the period of time that person was named on the license.
21. Defines qualifying party as a person who is responsible for a licensee's actions and conduct performed under the license and who either:
a) has an ownership interest in the license; or
b) is regularly employed by the licensee.
Civil and Administrative Recovery
22. Allows, rather than requires, the court to proceed on an application in a summary manner.
23. Removes the requirement for the claimant, at the hearing, to show that they are not aware of any personal or real property or other assets of the debtor that can be applied in satisfaction of the judgement.
24. Allows, rather than requires, the court, if satisfied at the hearing of the truth of all matters required to be shown by the claimant, to make an order directed to the ROC requiring payment from the Fund of whatever sum it finds to be payable on the claim.
25. Prohibits a restitution award recommended by an administrative law judge from including attorney fees.
26. Requires a contractor to respond in writing if the amount of propriety of a payment from the Fund is contested.
27. Allows, rather than requires, a contractor's failure to respond to a notice stating the amount claimed or to be awarded from the Fund be deemed a waiver of the right to contest the amount set forth.
28. Requires a claim for administrative payment from the Fund be submitted within two years after all proceedings, reviews and appeals connected with the ROC's final order terminate.
29. Requires the ROC, if Fund monies are insufficient to satisfy authorized claims, to prioritize payment when sufficient monies have been deposited by either:
a) the time of filing a certified copy of the court order with the ROC; or
b) the date of the administrative order directing payment from the Fund.
30. Requires a claimant to notify the ROC of an action for judgement that may result in collection from the Fund within 30 days after the commencement of the action, instead of at the time of commencement.
31. Allows a court to direct payment from the Fund if a claimant fails to notify the ROC within 30 days after commencement of an action.
ROC Responsibilities
32. Requires the ROC to maintain a list of persons who have been convicted of contracting without a license which includes any known related business names that the persons have used.
33. Allows, rather than requires, the terms and conditions surrounding alternate cash securities to be prescribed by the ROC.
34. Allows, rather than requires, the ROC to impose a civil penalty of not more than $1,000 on a contractor for contracting without a license.
35. Repeals the arbitration process in relation to written complaints with the ROC.
36. Changes, from 90 days to 180 days after actual discovery of an offense, the time period within which the ROC must issue a contractor rule violation citation.
37. Specifies that service of the contractor rule violation citation is fully effected by personal service or by mailing a true copy by certified mail in a sealed envelope with postage prepaid to the person's:
a) last known business address; or
b) residential address.
38. Allows, rather than requires, the ROC to adopt rules relating to a civil penalty that gives due consideration to the gravity of the violation and any history of previous violations.
39. Removes the requirement for the ROC to adopt a single form of application for all licenses issued.
Contractor Rules Complaints
40. Allows a person to file a written complaint with the ROC alleging a licensee has committed a violation of contractor rules.
41. Requires a complaint to be filed:
a) for new home builds or other new building construction, within two years after the earlier of the close of escrow or actual occupancy; and
b) for all other projects, within two years after the completion of the specific project.
42. Allows, rather than requires, a failure of the licensee to answer the service of a citation within 10 days, to be deemed an admission of the licensee's commission of the act or acts charged in the complaint.
43. Permits the ROC to determine that the failure of a licensee to answer the service of a citation within 10 days is attributable to excusable neglect on the part of the licensee.
Progress Payments
44. Removes the stipulation, for the purposes of progress payments, that billings and estimates be for work performed and materials supplied only within the preceding thirty days.
45. Replaces the requirement that a contractor must timely submit a billing or estimate for any work performed during the preceding billing cycle with the requirement that a contractor must timely submit a billing or estimate for any work performed during a billing cycle.
46. Requires the billing or estimate for a progress payment on a construction project to be submitted on a 30-day billing cycle, unless the construction contract specifically identifies a different billing cycle.
Miscellaneous
47. Allows, rather than requires, a trade association that files a written request to receive a proposed rule change from the ROC to do so every two years.
48. Transfers and renumbers statutes.
49. Includes, in the definitions of commercial contractor, dual licensed contractor and residential contractor, any person that responds to a request for qualification or a request for proposal for construction services for compensation.
50. Contains a legislative findings clause.
51. Defines relevant terms.
52. Makes technical and conforming changes.
53. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Removes the requirement for the ROC, in adopting rules and minimum standards, to be guided by a manufacturer's installation specifications.
2. Removes the restriction that a trade association can only request to receive a proposed rule change from the ROC during the month of January.
Amendments Adopted by Committee of the Whole
1. Modifies a planned community or unit owners' association's eligibility for an award from the Fund.
2. Requires a claimant to notify the ROC of an action for judgement that may result in collection from the Fund within 30 days.
3. Specifies that if a contractor contests the amount of administrative recovery from the Fund, they must do so in writing.
4. Permits the ROC to determine that the failure of a licensee to answer a written complaint is attributable to excusable neglect on the part of the licensee.
5. Makes technical and conforming changes.
Amendments Adopted by the House of Representatives
1. Specifies that a claimant must notify the ROC of an action for judgement that may result in collection from the Fund within 30 days after the commencement of the action.
2. Specifies that a court may direct payment from the Fund if a claimant fails to notify the ROC within 30 days after commencement of an action.
3. Provides that an applicant or licensee who is obtaining, renewing or maintaining a license must supply specified attestations.
4. Clarifies the billing cycle for progress payments of construction contracts.
5. Adds a legislative findings clause.
6. Makes technical changes.
Revisions
· Adds provisions relating to progress payment requirements.
Senate Action House Action
COM 2/14/19 DPA 7-0-1 COM 3/12/19 DPA 9-0-0-0
3rd Read 2/25/19 29-0-1 3rd
Read 4/17/19 59-0-1
Prepared by Senate Research
April 17, 2019
MG/gs