Arguments for Licensing All Home Improvement Contractors
"Home Improvement is important for preserving both the safety and value of a homeowner's property. Improvements can increase a home's value, and allow owners to adapt their home to meet their changing needs and age. Home improvement is also big business." The bad news is that every year tens of thousands of homeowners receive unprofessional, inadequate, or fraudulent home repair.
Eagle Construction was a top-rated company in Rochester who promised factory-trained workers, but sent out subcontractors who delivered very appalling work. There was no airflow in the ventilation system, there was no leak-barrier where New York State Building Codes required it to be installed, shingles blew off, and there was daylight showing into the attic, by the chimney. See "Appalling Roof." Now, my $20,000 investment has turned into a nightmare.
Pecorella Contracting and Consulting built one flight of stairs that was condemned as unsafe only 6 weeks after completion. These would have most likely collapsed, with a person on them, in just a few more months. If you haven't already, please review "Perilous Stairs" to get a graphic insight of how desperately a consumer needs safeguards.
So where is a consumer's protection against this kind of conduct, and do consumers have any options after they have been cheated? {See "Corrupt Establishment"}
All contractors are obligated to perform to the standards set forth by NYS building codes. But New York doesn't have an enforcement bureau. Without enforcement, it's just empty words on the paper. A consumer's only chance for having protection is if they have a building permit with specified inspections, but many areas don't require permits for roofing / re-roofing. So a consumer, in these areas, doesn't even have the option of getting the benefits afforded by a permit.
Carmen Santora, Executive Director of the Better Contractor's Bureau, is quoted in an article with RNews as saying "Without an enforcement bureau, contractors are not afraid of anything."
There is no contractor licensing required in most of NYS. The cities of Niagara Falls, Lockport, Tonawanda and the Town of Tonawanda require Home-improvement contracting firms to be licensed. The City of Buffalo requires contractors and salespersons to be licensed. New York City, and neighboring counties of Nassau, Suffolk, Westchester, Rockland, and Putnam; the cities of Long Beach, Yonkers, and Staten Island all require contractors to be licensed. According to what I've been able to find, the rest of NYS is unprotected. I just don't understand why home-improvement isn't regulated statewide, nationwide for that matter. Thirty-five states and Washington, DC realize the importance of such regulation. Why isn't the need recognized in New York and the rest of the states?
Anyone with a hammer and a truck can pose as a home-improvement contractor. Many are unskilled. "With no federal oversight and limited state licensing and insurance requirements, the nearly $120 billion home remodeling industry is a hotbed of unqualified – and often unscrupulous – operators." Contractors who don't take the time to learn the skills necessary for quality building techniques, and all those contractors who just don't care about quality building techniques are, in actuality, TERRORISTS FROM WITHIN.
Consumers who lose money to incompetent or unscrupulous contractors can often lose a second time by having to pay another contractor to repair or finish the job. Another problem – once you've been ripped off, it's next to impossible to get your money back. Only a small fraction of the people who go to small claims court and win, ever collect anything. "In 2003, the City of Rochester small claims court awarded 1,550 judgments. But as of now, only 350 (about 22 percent) have been fully or partially satisfied."
Obviously, my own experience, in itself, verifies the need for contracting licensing! I mean, I hired two different contractors {Eagle and Pecorella} in the month of January 2004. Both jobs were shamefully below the standards set in the NYS Building Codes, and yet I have little or no recourse.
There is a tremendous need for homeowners to secure protections, since this is what is happening all across the state of New York and nationwide. The numbers reflect that it is all too common, and that doesn't include the complaints that are not filed for various reasons, or the defects that go undiscovered. A Better Business Bureau statistic: for every one complaint the BBB receives, there are twenty problems never reported.
Still – home improvement fraud was the most common complaint in the country for 2003-2004, according to the National Association of Consumer Agency Administrators (NACAA) and Consumer Federation of America (CFA) in their 13th annual consumer complaint survey.
The New York State Attorney General received nearly 2,250 complaints, in 2003, about home repair and construction fraud. "Such cases make it more difficult for legitimate contractors to develop a confident and effective relationship with their customers."
"One survey conducted in San Antonio, Texas, revealed that 75% of homeowners responding had problems with their builder, and would not recommend their builder to a friend. A similar survey conducted by The Charlotte Observer in Charlotte, North Carolina, produced comparable results."
In the two years previous to 2001, home improvement contractors were named as the type of business most likely to go out of business, and most likely to reopen under another business name.
The financial and psychological effects of home improvement fraud can be severe, painful, and irrevocable. This is grand theft. Things like this can spiral. The betrayal and monetary loss can lead to depression, which could lead to financial ruin, which could lead to homelessness. Our tax-paying citizens, once happily going on with their lives, are now trying to survive on the streets. The contractors have stolen everything.
The value of homes is being sabotaged. Just think, most folks can't afford to repair the shoddy work done. They stretched their budget in order to afford the initial renovation. If they paid the contractor most or all of the total contract price, that leaves no extra money. So they may possibly take a hammer themselves, and put a patch over the defect. Guess what, the value of the home is now below what it was before they hired the contractor, as my home is currently. Some insurance companies won't insure my home until the roof is redone.
Insurance companies and Lending industries also suffer because of shoddy construction practices, and the effects ripple throughout the economy. Insurance companies may have to pay consumers for their policyholder's poor workmanship, and that hikes everyone's premiums. Lenders that must foreclose on the homeowners, who were victims of unscrupulous contractors, end up with inventory of reduced or worthless collateral. "Consider the case of one New Jersey homeowner who in 1995 paid $278,000, including a $150,000 mortgage, on a property recently reassessed at just $90,000 because of serious structural defects." LET THE NEW BUYER BEWARE. The foreclosing bank may not be informed of all or any of the home's defects; and may be selling the home, without proper repairs, to an unsuspecting buyer. Shoppers may want to have the home inspected before purchasing, but how can you do that if the home is being sold at auction?
Poor construction and leaky roofs also facilitate the growth of mold and mildew (a known health risk). The Center for Disease Control has a publication about Mold in Construction. Notable quotes about the cost of Mold: "Florida - Construction defect claim against architect, CM and subs - $11.5 million awarded." "California - $33,000 settlement regarding roof leaks."
Laws have to be changed. The abuses that home improvement contractors are getting away with, are destroying the value of New York's infrastructure, our community, our economics, and our quality of life! I say that if New York State wants to attract and keep people here, it has to do something to protect the consumer, the tax-paying citizens of New York. I will tell you this; the next home I buy will not be in New York State. It will be in one of the 36 states that require contractors to be licensed or registered, and the laws give me the protection of being fairly treated.
Congressmen, the Assembly, and other Legislators need to realize that unlicensed contractors are undermining the very fabric of the American dream. People are losing their homes, or at least their investment in their homes, because of these practices, and because of the current laws that don't protect them.
Some quotes from AARP's Home Improvement Contractors Fact Sheet: "Older homeowners are less likely than other homeowners to take action against fraudulent home improvement contractors. They tend to be less knowledgeable about their rights as consumers, less suspecting of deceptive sales practices, and more susceptible to fears they will be deemed incompetent to remain in their homes and manage their own affairs should they complain. Older persons may pay out their life savings for shoddy home repairs or work that is never finished, sometimes leaving them with no money and no legal recourse. Additional losses may occur when homeowners "sign paperwork" unwittingly authorizing fraudulent contractors to obtain mortgages or assign liens against their property. In these cases, the dollar value of the loss is typically higher than losses due to actual home improvement fraud."
Contractor licensing needs to be enacted in all 50 states in the interest of public health, safety, and welfare; to safeguard property owners and the general public against faulty, inadequate, and unsafe residential and general contractors.
New York State Attorney General, Eliot Spitzer realized that there is a "need for aggressive oversight of the home improvement industry to protect consumers' rights and investments, and to preserve the reputation of the industry against unscrupulous firms."
Requiring a bond and insurance provides some, though not complete, relief from losses resulting from contractor abuse. Most people don't understand what bonding is, and how it can protect them. I know that I don't understand. Eagle's website says that their employees are bonded. The salesman said their roofers were employees of Eagle Construction. Eagle hired sub-contractors to install my roof. Where does this leave me on the bonding issue? Do I have any protection? I don't know!
Some kind of recovery fund needs to be created and maintained. There is little chance for a consumer to recover damages, as the laws are now. There are disappearing contractors, and those who just don't pay their judgments. A fund would help citizens of NYS, and therefore the economy, get back on track faster.
The County of Westchester in the state of New York has declared that it has become desirable to safeguard and protect residential dwellers by regulating the home improvement, remodeling and repair business; and by licensing persons engaged in such business.
Such licensing fosters a marketplace that consumers can trust, and in which honest businesses can thrive.
AARP is working with New York State lawmakers to introduce a bill so homeowners have a level of protection when contracting for home improvements. The bill would require contractors to be registered and bonded, double the fines for breach of contract, and create a recovery fund for those suffering financial losses from home contractor fraud. AARP believes a recovery fund would enhance a consumer's chances for recovery of actual loss when a contractor fails to perform or does shoddy work. – Join AARP New York in their fight to protect consumers using home improvement contractors. Visit www.aarp.org/getinvolved or call toll-free 1-866-227-7442.
These quotes below are from AARP's Home Improvement Contractors Fact Sheet. They all substantiate the need for most, if not all, states to strengthen their regulation of contractors.
"Current state laws are generally inadequate to provide sufficient protection to vulnerable consumers." "Only seven states do not regulate contractors at all. Only fifteen states require prior experience of contractors, and 18 states require examinations. Other contractor requirements include proof of financial responsibility and disclosure of convictions related to home improvement fraud. Thirty-six states prohibit certain kinds of acts. These may include, but are not limited to: 1) abandoning a project; 2) failing to perform as promised; 3) misrepresenting material facts; and 4) demanding or receiving payment before the contract is signed. Many states apply Unfair and Deceptive Acts and Practices (UDAP) statutes to protect consumers. Thirty states have criminal penalties ranging from fines to jail time that can be pursued in cases of home contractor fraud."
Roofing should be one of the most supervised. What we have here is the 'Worst of the Worst' – If it is not done right the first time, and the contractor is permitted to fix it, the roof now becomes 'repaired job'. – Probably not up to the standards of a new job, especially with a roof, which will have empty nail holes in the decking. Also, the defective work was probably discovered when a leak occurred, allowing for wood rot and mold growth. Of course, the contractor won't point out those problems. Illinois recognizes roofing as problematic; the only contractors required to be licensed in Illinois are roofing contractors. In 1996, the roofing industry of Texas hoped licensing would allow their industry to gain credibility and become more legitimized. Many roofers embraced the idea simply because they believed it was needed. Doesn't that send a clear message about the need for licensing?
Roofing manufacturers also have a stake in this. A roof may leak or prematurely deteriorate if a consumer has an unskilled contractor, or someone with misplaced motives, install the roof. The customer may blame the manufacturer, and the manufacturer may have additional costs through guarantee or warranty coverages.
On March 17, 2006, Governor Edward G. Rendell vetoed a builder-sponsored "Right to Cure" bill. Included in his veto message, Pennsylvania's Governor Rendell saw fit to divulge his ideal legislation for the augmentation of his state.
| "In fact, in this review, I became convinced that a law to register contractors and homebuilders, accompanied by appropriate public reporting requirements, is critical to boosting the protection our citizens expect and deserve their government to provide. I also believe we need to legislatively establish a fund to compensate victims for damages caused by unscrupulous builders who do not have insurance and cannot, or will not, pay for the full value of the problems they create. |
Statutes that address abuses committed against consumers by dishonest home improvement contractors are crucial in protecting all consumers – and older homeowners in particular. This "model statute written by Attorney Elizabeth Renuart and Rich DuBois of the National Consumer Law Center, was developed for regulating home improvement contractors. It addresses three areas that are especially important to protecting consumers: regulating contractor conduct and coverage (including licensure, required and prohibited contract provisions, monetary prohibited acts and exemptions); creating resources for consumer recovery; and providing civil remedies and criminal penalties for violations of the law."
In New York City, licensing agencies may investigate complaints against licensed contractors, mediate disputes, and hold arbitration hearings to resolve complaints. The dispute may also be addressed at an administrative hearing, where both the consumer and contractor will have the opportunity to give their side of the story. If the hearing results in an administrative order compelling the contractor to make restitution, the contractor will have to comply with the judgment. If the contractor refuses to comply, the home improvement contractor's license can be revoked, and restitution obtained either from the contractor's licensee bond or through the Trust Fund for up to perhaps, $20,000. If a consumer has a problem with an unlicensed contractor, the appropriate agency can issue a padlock order to close the business, require the contractor to obtain a license, issue a fine, and possibly seize the company's equipment or automobiles. A contractor must pay restitution to consumers before he or she can apply for a license.
All states should have a Guaranty, Trust, or Recovery Fund, based on compulsory contributions from license-holders. "A Recovery Fund makes resources available to consumers for the costs of completing a job or repairing work performed by an incompetent or fraudulent contractor. The fund may reimburse for certain actions of both licensed and unlicensed contractors."
Contractor Licensing should ensure that a contractor / tradesman has the minimum requisite skills, character and knowledge of the laws and codes to perform the work for which he or she is contracting.
Applicants should undergo a criminal history check, pass a written examination, pay a license fee, and post a bond or contribute to the trust fund. Additionally, every contractor should be required to disclose experience and financial solvency, and divulge any previous fraud convictions.
A licensing agency should have the authority to impose severe civil penalties, criminal liability, or possible suspension / revocation if a licensee commits specified prohibited acts, such as misrepresentation and deception, or fails to fully and satisfactorily perform or furnish any labor, services, or materials included under a home improvement contract.
Any licensing department should be set up as self-supporting. Carmen Santora, Executive Director of the Better Contractor's Bureau, proved a few years back that this can be done.
Lastly, one's home is typically their largest lifetime investment; the roof is the primary protection of that investment. Yet, I know that shoddy roofing is running rampant. A great multitude of sins can be covered up by shingles, never to be seen again. Contractors use this fact to make a huge profit. A roof is on top of a house, and is all covered up by shingles. If it looks good, no one is the wiser. Because defects are so easy to hide, I believe that any licensing bill or law should require statewide Building Permits (with mandatory inspections) for all Roofing and Re-roofing.
It is vital to the safety of the buildings, which we inhabit, that a permit and inspection process be utilized to ensure compliance to building codes; and there needs to be more active enforcement of all building codes.
Beyond all that has already been touched on above, licensing would regulate contractors, keeping them reputable, skillful; and eliminate the Fly-by-Nights.
Each state would have a record of who's doing business in the state; and therefore, could have a procedure, such as revoking the license, or to penalize fraudulent practices. Consumers would have assurance they won't be swindled; and would have an address for the (licensed) out-of-state contractors, who are often needed in storm-stricken areas.
In the case of roofing, tests would make sure a roofer knows what materials and applications are right for the climate, when to use flashing, how to repair leaks, etc.
There are advantages for contractors too. "By paying into the Trust Fund, contractors are saved the expense of obtaining a bond. By making sure that they are properly licensed, contractors have greater recourse to defend themselves from false claims, or when a client refuses to pay up when the job is done."
Licensing would also put contractors on a level playing field. Basic operating costs would be more uniform for all contractors. A licensing agency could also act as a referral service for licensed contractors, reporting any complaints or recommendations on record.
In the event of a big storm, local companies would have an advantage over firms from other states. The outside contractors would have to wait for their licenses. The local firms profit, and in turn support the local economy.
With licensing requirements in place, there would be only skilled people out in the workforce. Unskilled laborers would be forced to learn the necessary skills in order to be licensed, and then WOW, they'd know how to build safe structures. They would then perform correctly in order to be able to keep their hard-earned licenses in good standing.
Isn't it better to have safe structures built throughout New York, instead of unsafe ones that can kill or maim?
All state licensing bureaus should be required to comply with standardized testing and qualification prerequisites for home-improvement contractors seeking licensure. These bureaus shall not be allowed to charge any kind of a fee to file a complaint. Most importantly, states should regulate the contractor, compelling them to perform quality work or lose their license. Deceptive and misleading business practices should be met with severe penalties. Obviously, all states are not doing a good job of protecting their citizens.
"In Texas you can buy your own state agency, then regulate yourself," as Representative Garnet Coleman stated in the AUSTIN AMERICAN-STATESMAN. The Texan Homebuilding Industry runs the new Texas State Agency. Builders can erect homes that "do not comply with minimum building codes, misappropriate money, abandon construction, and can build defective multimillion dollar condominiums with no fear of state action." The Texas Residential Construction Commission (TRCC) selectively accepts complaints against builders, and has not fully investigated more than 80% of complaints against builders. The Executive Director of TRCC, Duane Waddill, admitted, "This agency has fallen short on consumer complaints across the board." Worse yet, the agency has no authority to enforce its decisions; or help victims get their homes repaired.
Additionally, the Texas government is betraying its citizens by allowing contractors to use unfair "Binding Arbitration Clauses" in their contracts. Binding Arbitration is a lawless system, skewed against consumers and held behind close doors, where homebuilders consistently receive favorable decisions. This is a HUGE injustice, and should be outlawed! For more details on this issue, click here.
Another example of mismanagement in a licensing bureau is The Oregon Construction Contractors Board. During the past 10 years, the board awarded some $55 million to homeowners, suppliers and subcontractors; but CCB records show that only about $28 million has been paid. The contractors board does not assist the consumer in collection of the awards, and makes no effort to ensure the money is paid.
The board has repeatedly permitted contractors to remain in business by failing to make full use of its authority to revoke the license of any contractor who ignores the agency's orders, court judgments, or fails to pay subcontractors. Because the board makes no effort to search court files for such actions, and because of the agency's own poor record keeping, contractors who failed to pay multiple court judgments and / or agency orders are allowed to stay in business.
Note: 'Failure to pay judgments' is another testament to the need for some kind of recovery fund. It is intolerable that homeowners (citizens of the Great United States of America) should be victimized by these deadbeat thugs.
Thanks in part to a $50 complaint-filing fee, the contractors board is handling fewer complaints than ever. It is the only such agency in the western United States to charge that type of filing fee. It should be against the law!
On top of everything, Oregon law sets no standards for trade proficiency. Virtually anyone with $500 for fees and a performance bond can get a contractor's license.
I have to ask, "What good is a regulatory agency that doesn't regulate?"
Again National Consumer Law Center's "A Model State Statute" may be a considerable help in developing a fair and effective federal regulation of the state licensing bureaus.
Even where building codes do exist, often there is lax enforcement. Homebuyers can't assume that officials have done the required inspections. Code enforcement officials say they are understaffed and underfunded, and can't keep up with permits and inspections.
The Enquirer newspaper reported in June 2003, that in one county near Cincinnati, at least 750 houses built between 1993 and 2001 lacked certificates of occupancy, which are supposed to prove that a home has been inspected and is safe to live in. Building officials in one New Jersey county may have falsified reports on hundreds of homes that were never inspected.
Consumer's Union advises that we "Improve government oversight. State and municipal governments could better enforce codes by ensuring that building departments are adequately staffed."
Note: Without Federal oversight and tracking of contractors' histories, a contractor can just move to a new state with a brand-new clean slate, or just move to a state with no licensing requirement.
