HOUSE BILL 733
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Ben Lujan
AN ACT
RELATING TO CONSTRUCTION; ENACTING THE RESIDENTIAL CONSTRUCTION CONSUMER RECOVERY FUND ACT; PROVIDING FOR A FEE ON CONSTRUCTION PERMITS; PROVIDING FOR COMPENSATION TO HOMEOWNERS FOR DAMAGES RESULTING FROM HOME CONSTRUCTION BY LICENSED CONTRACTORS; CREATING A FUND; ESTABLISHING PROCEDURES FOR PAYMENTS OF CLAIMS AGAINST THE FUND; PROVIDING FOR CONTRACTORS TO REPAY THE FUND; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the "Residential Construction Consumer Recovery Fund Act".
Section 2. DEFINITIONS.--As used in the Residential Construction Consumer Recovery Fund Act:
A. "commission" means the construction industries commission;
B. "damages" means actual damage incurred by a homeowner as a result of the acts or omissions of a licensee in the performance or breach of a retail transaction contract for residential construction, including court costs and attorney fees if included in a court order directing payment out of the fund, but "damages" does not include special, exemplary, punitive or consequential damages;
C. "department" means the regulation and licensing department;
D. "division" means the construction industries division of the department;
E. "fund" means the residential construction consumer recovery fund;
F. "homeowner" means the owner of a residence that is or is intended to be the primary place of residence of the owner;
G. "judgment" means a judgment, or an arbitration award that is reduced to a judgment, for damages awarded to a homeowner against a licensee on which the appeal period has been exhausted;
H. "licensee" means a person who is issued a license or certificate pursuant to the Construction Industries Licensing Act;
I. "local building program" means the segment of any municipality or county government responsible for issuing building permits pursuant to a building code ordinance passed by the municipality or county in compliance with Section 3-17-6 NMSA 1978;
J. "residence" means a single-family dwelling;
K. "residential construction" means construction, repair, alteration, remodeling or home improvement of or on a homeowner's primary residence; and
L. "retail transaction contract" means a contract entered into by a homeowner and a licensed contractor for the construction, repair, alteration, remodeling or home improvement of or on the homeowner's primary residence.
Section 3. FUND CREATED--PURPOSE--ADMINISTRATION.--
A. The "residential construction consumer recovery fund" is created in the state treasury. The fund consists of appropriations, gifts, grants and donations to the fund and assessments charged by the division and all local building programs on each residential building permit issued by the division or a local building program pursuant to Subsection C of this section and credited to the fund. Money in the fund at the end of a fiscal year shall not revert to any other fund. The department of finance and administration shall administer the fund, and money in the fund is appropriated to the department of finance and administration to carry out the provisions of the Residential Construction Consumer Recovery Fund Act. The first one dollar ($1.00) of the fee assessed by a local building program is appropriated to and shall be retained by the local building program to defray the cost of administrating the collection and reporting the fee. Disbursements from the fund shall be made by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary of finance and administration or the secretary's authorized representative.
B. The fund is created to compensate a homeowner who enters into a retail transaction contract with a licensee on or after July 1, 2009 for residential construction services and who incurs damages in the course of the performance or breach of that contract, as determined by a court of competent jurisdiction. The homeowner may be compensated for all or a portion of those damages, pursuant to a valid and binding judgment and a court order directing payment out of the fund. C. The division and a local building program shall assess a fee on each residential building permit, including permits for general, electrical, mechanical and plumbing construction, issued by the division or the local building program. The fee shall be submitted to the state treasury for credit to the fund. The initial fee shall take effect on July 1, 2009. Any change in the amount of the fee shall take effect only once a year on July 1. The amount of the fee assessed shall be as follows:
(1) ten dollars ($10.00) per permit until the balance of the fund reaches six hundred fifty thousand dollars ($650,000);
(2) after the balance of the fund reaches six hundred fifty thousand dollars ($650,000) and the balance subsequently falls below six hundred fifty thousand dollars ($650,000), the fee shall increase to an amount determined by the director of the division, but the fee shall not exceed thirty dollars ($30.00) until the balance of the fund exceeds one million five hundred thousand dollars ($1,500,000);
(3) in the event the balance of the fund exceeds two million eight hundred thousand dollars ($2,800,000), the fee shall be suspended for the next fiscal year by the director of the division, provided that the fee shall be assessed when the balance subsequently falls to one million five hundred thousand dollars ($1,500,000); and
(4) each fiscal year, the director of the division shall base the determination of the amount of the fee on maintaining the balance of the fund at one million five hundred thousand dollars ($1,500,000), but the fee shall not be less than five dollars ($5.00) or exceed thirty dollars ($30.00).
Section 4. AUTHORIZED EXPENDITURES.--
A. No payment of claims against the fund shall be made from the fund until the initial balance in the fund reaches six hundred fifty thousand dollars ($650,000).
B. Money in the fund is appropriated to the division for the administrative and operational costs of implementing the fee on residential building permits and administrating and processing claims against the fund. Disbursements for this purpose shall be made to the division at the beginning of each fiscal year and shall not exceed one hundred fifty thousand dollars ($150,000).
C. Money in the fund is appropriated to the department of finance and administration to compensate homeowners who have been awarded a judgment for damages based on a retail transaction contract entered into on or after July 1, 2009.
Section 5. CLAIM PROCEDURES--ADMINISTRATION OF CLAIMS.--
A. The division shall administer and process claims against the fund. The division shall adopt and promulgate rules necessary to carry out the provisions of the Residential Construction Consumer Recovery Fund Act subject to approval by the commission. Claims of eligible homeowners shall be filed pursuant to any rules adopted and promulgated by the division pursuant to that act. No payment from the fund on a single claim shall exceed twenty-five thousand dollars ($25,000). The total amount recoverable against any one licensee in a fiscal year shall not exceed three hundred thousand dollars ($300,000). In the event insufficient money exists in the fund to make a payment pursuant to an order directing payment, no payment shall be made until the balance of the fund reaches two hundred fifty thousand dollars ($250,000). Payments of claims shall be paid in the order in which the claims are received.
B. When a civil complaint that may result in liability for the fund is filed, the homeowner shall notify the division in writing when the action is commenced and shall provide the division with a copy of the complaint. Failure to notify the division shall not be grounds to deny an otherwise valid claim against the fund.
C. When notice of a civil action is received, the division may enter a limited appearance, file pleadings and appear at court hearings or take action it deems appropriate to defend the fund.
D. When a homeowner obtains a valid judgment in a court of competent jurisdiction against a licensee and that judgment qualifies for payment from the fund, the homeowner to whom the judgment was awarded may, within two years after the judgment becomes final, file a verified claim in the court where the judgment was issued. The verified claim shall be on a form approved by the division and shall, at a minimum, verify that each requirement for payment from the fund has been met. The homeowner shall provide the division with a copy of the verified claim within ten days of filing the claim with the court. After thirty days from the filing of a verified claim, the homeowner may request an order from the court directing the department of finance and administration to make payment from the fund in the amount remaining unpaid on the judgment. A copy of a signed order directing payment from the fund shall be submitted to the division by the homeowner within thirty days after the order is issued by the court.
E. If the homeowner fails to timely provide the division with notice of a request for an order directing payment, the court shall not issue an order of payment unless it has received a valid and binding consent to payment, executed on behalf of the division. If the division was given timely notice of request for an order directing payment and does not file written objections within fifteen days after receipt of the notice or appear to object to the order, the court may issue the order without a written consent to payment by the division. If the division submits written objections, the court shall give due consideration to the objections, and, if the court issues an order of payment over such objections, the order shall state the reasons for the court's decision.
F. Within thirty days after receipt by the division of a certified copy of an order directing payment out of the fund issued by a court of competent jurisdiction, the division shall either authorize the payment or timely file an appeal of the order. An appeal of any order directing payment out of the fund shall toll the payment until the appeal is resolved.
Section 6. SUBROGATION.--If a court orders the department of finance and administration to pay any sum from the fund, the division shall be subrogated to all the rights of the homeowner, and, upon the issuance of such order, the homeowner shall execute an assignment of rights, by which the division is assigned all right title and interest of the homeowner in the judgment or portion of the judgment sufficient to cover the amount of the payment to the homeowner from the fund. Any amounts recovered by the division pursuant to this section shall be submitted to the state treasury for credit to the fund.
Section 7. EFFECT OF FUND PAYMENT ON LICENSEE.--
A. Payments out of the fund shall be repaid by the licensee against whom the judgment and order of payment were issued within one hundred eighty days after the licensee receives notice of a fund payment; provided, however, that the division may authorize the licensee to repay the fund pursuant to a written and binding payment plan allowing incremental payments over a reasonable time period approved by the commission.
B. Notwithstanding the provisions of the Uniform Licensing Act, failure to repay the fund within one hundred eighty days or failure to comply with all of the terms of a payment plan authorized by the division together with interest of eight and seventy-five hundredths percent per year on the claim amount, accrued monthly, shall result in the cancellation, by operation of law, of the license and any certificates of persons who are named in the judgment.
C. The division shall notify the licensee of the effective date of the cancellation. If the commission receives a timely, written request, the licensee shall have the opportunity to appear and be heard by the commission solely on the issue of repayment to the fund before the cancellation becomes effective. The commission may postpone or suspend the cancellation date for good cause shown.
D. The licensee shall not be eligible to renew or reapply for licensure or certification until the full amount of the fund has been repaid in the amount of the claim plus interest, unless authorized to do so by the commission.
E. Work in progress at the time of cancellation of a license pursuant to this section may be completed unless otherwise directed by order of the commission, but new work undertaken or bid, or application to permit new work after cancellation, shall be deemed unlicensed contracting and shall subject the licensee to prosecution pursuant to Section 60-13-52 NMSA 1978.
F. Nothing contained in the Residential Construction Consumer Recovery Fund Act shall be construed to limit the authority of the division to take administrative action against a licensee or absolve a licensee who makes a repayment to the fund from administrative action taken by the division against the licensee pursuant to the Construction Industries Licensing Act.
Section 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2009.
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