SB 899 - This act provides for various consumer protections regarding homes.

This act outlaws certain unfair or deceptive practices relating to home improvement loans. Prohibited are home solicitations where a home improvement loan is made encumbering the person's home to pay the loan and where the practice violates the federal Truth in Lending Act by:

(1) Extending credit under a mortgage for home improvements secured by the dwelling without regard for repayment ability;

(2) Paying a contractor from the proceeds of a mortgage in a way other than the prescribed way; or

(3) Selling or assigning certain mortgages without furnishing notice that the mortgage is subject to special rules under the federal Truth in Lending Act.

The act exempts third parties from liability, except where there was an agency relationship between the solicitor and the third party or where the third party had actual knowledge of or participated in the unfair or deceptive transaction. Third party holders in due course under a home solicitation transaction will not be liable.

Any person violating the provisions of the bill is guilty of a Class A misdemeanor and will be required to make restitution.

This portion of the act is similar to HB 1144 (2000).

This act also mandates warranties to protect the home purchaser from losses caused by faulty installation, major construction defects, and noncompliance with building standards. The act mandates similar warranties to protect homeowner from losses caused by defects caused by home improvement contractors.

The first warranty covers new homes. There are three distinct warranties for new homes. The first covers the home against faulty workmanship and defective materials for a three year period. The second warranty covers new homes against faulty installation of plumbing, electrical, heating and cooling systems for a five-year period. The third warranty covers the home against major construction defects (foundation) for a ten-year period. These warranties are extended to subsequent purchasers of the home.

The second warranty protects consumers against home improvement defects. Under this warranty, the home improvement contract warrants that the home improvements made will be free from defects caused by faulty workmanship and defective materials for a two-year period. The home improvement warranty also guarantees that the home improvement will be free from major construction defects for a ten-year period. Improvements involving plumbing, electrical, heating and cooling systems are guaranteed to be free from defects for a period of two-years.

If the seller of the house or the home improvement contractor violates these implied warranties then the homeowner may bring a cause of action against the person for actual damages. The court shall also award the homeowner court costs and reasonable attorney fees. If the breach of the warranties were willful or deceitful, then the court may assess punitive damages.
STEPHEN WITTE