By BERNIE HORNICK
The Tribune-Democrat
STOYSTOWN
April 25, 2009 11:23 pm
—
Harrisburg is imposing more paperwork on businessman Roger Harmon.
He says it’s about time.
On the fourth try, in 2008, the Legislature passed a bill protecting consumers from unscrupulous home contractors.
It goes into effect July 1.
Among other provisions, it requires that anyone doing more than $5,000 worth of contracting work per year registers with the state and has liability and property damage insurance.
“It would eliminate a lot of the fly-by-nights,” said Harmon, one of the owners of Harmon Contractors in Stoystown. “I’m the third generation (in the business) and my son’s gonna be the fourth. When steel and coal went down, everybody with a ladder on their back called themselves a contractor.’’
Then, when the repairs were botched, customers would call Harmon to fix the mess. He’d ask where the original contractor was and the customer would say he was called back to his regular job.
Homeowners are getting scammed left and right.
“We get 2,000 to 3,000 complaints a year,” said Nils Frederiksen, deputy press secretary for the Office of the Attorney General. “It’s one of the top, if not the top area of complaints.’’
Most of them are home improvements gone bad or thieves disguised as contractors who take a hefty down payment and run.
“We see those horror stories over and over,’’ Frederiksen said.
Customers who are conned out of thousands – even tens of thousands – of dollars by unscrupulous or incompetent contractors are not hard to find.
Neighboring states have been regulated and that has turned Pennsylvania into a safe haven for the shysters, Fredericksen said.
Until now.
“In terms of dollar value and consumers impacted, it’s probably one of the most sweeping pieces of consumer legislation the state has passed in years,’’ Fredericksen said. “It doesn’t take long to get to a vast amount of money.’’
Unfair competition
Harmon said his company has been working at a disadvantage against less-established builders.
His labor costs are 22 percent higher, he said, just by virtue of the Social Security taxes, workers comp and insurance he pays on his workers.
Harmon – whose business performs a wide range of work, from siding to putting up additions – expects the new law will equalize the playing field.
“You go to Maryland, D.C., Virginia: You have to be a licensed contractor,’’ he said.
“They’ll have to abide by the same laws.’’
Fredericksen agrees that the registrations will make it harder for flimflammers to dodge the taxman.
“The registrations will put those businesses on the radar,’’ he said.
The state already regulates many other professions, everyone from nurses to real estate agents and beauticians.
Fredericksen said contracting is one of the most substantial industries in the state.
“We don’t even know how many contractors there are in Pennsylvania,’’ he said. “We expect between 50,000 and 80,000 registrations.’’
Contracts a must
He enumerated some requirements under the incoming law:
n Consumers must be given a definitive start and end date for their project.
n In general, the maximum down payment that can be required of homeowners is
33 percent. The AG’s Office would like to see homeowners barter that down to 20 percent.
Down payments above 33 per-cent can be required if specialty materials or fixtures must be ordered.
n Any work that will cost more than $500 must have a written contract.
“Unfortunately, the days of doing a deal just on a handshake are over,’’ Fredericksen said.
Such deals can become legal nightmares.
“Most of the points are what would be considered common sense,’’ Fredericksen said. “Most contractors already are following it.’’
Further, criminal penalties are being instituted for home improvement fraud.
Previously, this largely has fallen under the heading of “unfair business practices,’’ which can be in the eye of the beholder.
“Now, we have specific violations for contractors,’’ Fredericksen said. “We do think the possibility of a criminal penalty will persuade people to change their act or go to another state to conduct their business.’’
If not, the attorney general can ask the court to revoke the license of the unscrupulous jobber.
The law also will eliminate the need for contractors to register in individual municipalities.
State registration will suffice.
Harmon said he needed to register in Richland Township, Johnstown and elsewhere. “If I put every sticker on my car, I’d look like a race car,’’ he said.
Frederiksen said localities still will be able to mandate “skills-based licensing’’ of electricians, plumbers and the like.
Richland, for example, will lose $100 annual registration fees on perhaps 300 remodeling contractors who instead will pay the state $50. So the township will be out $30,000 per year.
Devil’s advocate
Ben Grush is the building and codes enforcement officer for Richland Township and he doesn’t see the new law as a cure-all. Far from it.
“There’s the $5,000 loophole, and they’re doing cash work anyway,’’ he said Friday. In other words, all the shady contractors have to do is make sure their books don’t total $5,000 and they’re exempt from the law.
“Those are the very same people who take the money and run. This will certainly keep honest people honest. But that’s not the problem,’’ Grush said.
He also questioned how the law was going to be enforced
– with another large state bureaucracy or not at all.
Grush doesn’t see widespread contractor fraud in Richland.
When it happens, he said, the elderly are usually the victims.
“I think what happens more often is the work is overpriced, like way overpriced,’’ he said.
A contractor might get your confidence with reasonable work and prices on a small job, like replacing a storm door.
After several other encounters, you ask him to do a large project – say, a bedroom addition – and he lowers the boom with a high price. You’ve come to trust him, you don’t get competing bids and you pay triple what you should have.
“That happens a lot more than someone taking half and running. They more often than not get caught, they get their name in the paper and people get wise to them,’’ Grush said.
Protecting consumers
The Home Improvement Consumer Protection Act goes into effect July 1. Contractors performing $5,000 worth of home improvements per year or more must register. Other aspects of the law:
Jobbers must carry liability insurance covering personal injury of at least $50,000 and insurance covering property damage caused by faulty home repair of at least $50,000.
Criminal penalties are instituted if home improvement fraud can be demonstrated. The crime would constitute a third-degree felony if home damages exceed $2,000; a first-degree misdemeanor for lesser amounts. The crime grading increases if the victim is age 60 or older.
The law does not grandfather existing businesses: All companies doing $5,000 of work a year or more must register. Registration requirements also apply to land surveyors, plumbers, electrical contractors, engineers, architects and burglar and fire alarm businesses.
Registration requires a nonrefundable $50 fee. Contractors can register online
– attorneygeneral.gov/hic.aspx – or get forms by calling (717) 772-2425.
Homeowners will be able to check whether a contractor is registered with the Office of Attorney General come July 1 by calling (888) 520-6680.
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