Abstract:

A review of state statutes regulating home improvement contractors demonstrates that state regulation of these contractors varies widely. Some states have no applicable laws or regulations, while others have statutes specific to home improvement contractors. Some states cover new construction and home repair work in a single statute, while others have separate home repair statutes. State statutes differ in a number of areas, including the definition of prohibited acts, requirements for licensing or registration, bonding and insurance requirements, and available remedies for victims of unfair, deceptive or fraudulent acts and practices. In addition, the enforcement of statutes varies across states. Based on this review of existing state statutes, AARP has developed a model statute for regulating home improvement contractors. The model statute 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. Contractor licensure and recovery funds, in particular, are essential to assisting a defrauded homeowner obtain compensation. The AARP Home Improvement Contractor Model Statute requires home improvement contractors to be licensed, post a bond, and carry certain insurance coverage. In addition, it prohibits misrepresentations, deceptive acts, and failure by the contractor to perform as promised. The statute creates a Home Improvement Contractor's Board to promulgate regulations and enforce the act's provisions. It also grants consumers an explicit private right of action against the contractor and allows recovery of damages, fees, and costs. The strong consumer protections included in this model statute can benefit all persons who contract for home improvements. These protections are of great value to the millions of older persons who desire to age in place.