AMENDED

ARIZONA STATE SENATE

RESEARCH STAFF

JAKE AGRON

LEGISLATIVE RESEARCH ANALYST

JUDICIARY COMMITTEE

Telephone: (602) 926-3171

TO:                  MEMBERS OF THE SENATE

DATE:            March 26, 2021

SUBJECT:      Strike everything amendment to H.B. 2760, relating to contractors; qualifying parties; liability.

Purpose

Specifies that a licensed contractor's qualifying party or a person named on the contractor's license is not personally liable for violations of contracting regulations by a licensee.

Background

A qualifying party is a person who is responsible for a licensee's actions and conduct performed under the license and who either: 1) has an ownership interest in the license; or 2) is regularly employed by the licensee (A.R.S. § 32-1101). While engaged as a qualifying party for a licensee, the qualifying party may not take other employment that would conflict with the duties as a qualifying party or conflict with the ability to adequately supervise the work performed by the licensee. While engaged as the qualifying party for a licensee, the qualifying party is responsible for specified statutory violations by the licensee (A.R.S. § 32-1127).

The Registrar of Contractors (ROC) licenses and regulates residential and commercial contractors. The ROC may: 1) investigate the acts of a contractor on its own motion or upon receiving a written complaint alleging that a licensed contractor has committed a violation of regulations governing licensed contractors; 2) issue a citation directing the licensee to appear by filing a written answer showing cause, if any, why the license should not be suspended or revoked; and 3) temporarily suspend or permanently revoke any contractor license if the license holder is guilty of or commits outlined prohibited acts or omissions (A.R.S. §§ 32-1154; 32-1155; and 32-1166.01).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

1. Specifies that the responsibility of a qualifying party for violations of contractor regulations is limited to licensure regulatory purposes and does not impose personal liability on the qualifying party for the violation.

2. Specifies that the responsibility of a person named on a license for violations of contractor regulations is limited to licensure regulatory purposes and does not impose personal liability on the person named on the license for the violation.

3. Allows a licensee doing business as a sole proprietor to be held personally liable to the ROC for the purposes of enforcing contractor regulations, including in subrogation proceedings.

4. Makes technical changes.

5. Becomes effective on the general effective date.

Amendments Adopted by Committee

1. Adopted the strike-everything amendment.

2. Clarifies that the bill provisions apply to licensure regulatory matters within the chapter of Title 32 on contracting, rather than only the article within that chapter on contract regulation.

Senate Action

JUD                 3/25/21     DPA/SE    8-0-0