A few summary points about the Act:

All home improvement contractors must register with the State Attorney General’s Office, Bureau of Consumer Protection by July 1, 2009. They must register every two years. They are exempt from registering if they have gross revenues of less than $5000.00 from home improvement contracting during the most recent taxable year.

A contract must be signed between the contractor and homeowners for all home improvements valued at $500 or more. Most emergency repairs are excluded.

Each contract must contain a significant number of specific clauses and protections for the consumer. Those requirements are spelled out in the Home Improvement Contractor Registration Act, recently signed by Governor Rendell. The Pennsylvania Builders Association is developing model contracts for its members that will comply with all of the statutory requirements.

Failure to comply with this Act may subject home improvement contractors to civil and criminal penalties, including, but not limited to, Home Improvement Contractor Fraud. Each county District Attorney will have the authority to take action against home improvement contractors not complying with the Act.

Home improvement contractors will have to advertise their state registration number in all public advertising.

So, who is a home improvement contractor?

Anyone who performs work or services for a homeowner, for compensation, that involve additions, alterations, renovations, remodeling, installations, conversion, modernization, repairs, both interior and exterior.

Besides remodeling contractors or those who call themselves home improvement contractors, the following are some examples of others who will meet the definition of a home improvement contractor:

Ø Electricians
Ø Plumbers
Ø Masonry and cement contractors
Ø Heating, cooling and ventilation contractors
Ø Lighting contractors
Ø Siding contractors
Ø Window, door and awning contractors
Ø Deck builders
Roofing and porch contractors
Ø Painters
Ø Wall paper hangers
Ø Cabinetry and countertop installers countertop
Ø Flooring installers (including carpet, tile, hardwood, etc.)
Ø Builders/installers of sheds, greenhouses, garages, carports, patios, gazebos, cabanas, pool houses and other accessory structures
Ø Driveway repair, replacement, sealing contractors
Ø Pool builders and installers
Ø Waterproofing contractors
Ø Security system installers
Ø Insulation contractors
Ø Solar system and alternative energy system installers
Ø Landscape contractors (certain functions are include/others excluded)

As you can see, the definition of home improvement contractor is far-reaching.

Some points to ponder:

Builders of new homes are not home improvement contractors - unless they also build additions and/or remodel, renovate, etc.

A contractor who subcontracts with a general contractor for 100% of their workload is not a home improvement contractor. But when they contract with homeowners to perform the same work or services, they become a home improvement contractor (with the $5000 threshold)

Sub-contractors employed by companies like Home Depot, Lowes, Sears Contract Sales must also register.


So what about municipal licensing and registration?

The most important point to keep in mind is that the restrictions on municipal licensing and registration apply ONLY TO HOME IMPROVEMENT CONTRACTORS.....AS DEFINED ABOVE. The minute they perform work for compensation that is not defined as "home improvement", you can apply your licensing or registration requirements, assuming they are legally enforceable.

If you have an ordinance in place or are considering one in the future that would require licensing or registration of contractors, you should make sure that your solicitor reviews the Act (final copy attached) and fully understands the definition of....and the nuances therein....of a home improvement contractor

Depending on the exact scope of your contractor licensing or registration requirements, you may continue to require licensing or registration and payment of fees under your municipal ordinance if:

1. They build new houses (solely or in addition to home improvement work)

2. They subcontract with a general contractor or another sub-contractor (solely or in addition to home improvement work)

Check with your solicitor, but this new Act appears to have no impact on your lawful ability to require business or mercantile licenses from home improvement contractors working in your jurisdiction if you require such licenses from all other entities conducting business in your jurisdiction.


Restrictions on municipal licensing and registration when you are dealing with a contractor that is SOLELY A HOME IMPROVEMENT CONTRACTOR:

1. After July 1, 2009, you cannot require them to be licensed or registered with your municipality under any pre-existing ordinance and you cannot create a new ordinance to require their licensing or registration. Any fees that you may have charged in the past for their licensing or registration can no longer be charged.

2. If you have a licensing ordinance in place for specific trades, i.e., plumbers and electricians, and that license is directly tied to passage of a trade-specific exam and/or possession of a training-based certificate, i.e., journeyman's certificate, you may continue to apply those trade specific licensing requirements to those trades, including any applicable fees, as long as your licensing ordinance is adopted prior to July 1, 2009. After that, you will not be able to adopt a trade-specific licensing ordinance that applies solely to home improvement contractors who are plumbers, electricians, etc.

3. You will be allowed to continue requiring proof of workers compensation insurance or an affidavit of exemption prior to issuing building permits because you already have that obligation under state law.

4. This Act requires proof of $50,000 of liability insurance coverage. If you had an ordinance in place before January 1, 2006 that requires proof of liability insurance for a home improvement contractor in excess of $50,000, you will be allowed to continue requiring such proof. If such an ordinance was enacted after January 1, 2006 regarding proof of insurance in excess of $50,000 for home improvement contractors, this Act will repeal those ordinances. No future ordinances requiring proof of insurance for home improvement contractors is allowed under this Act.

5. If a home improvement contractor has not registered with the state, as required by this Act, they would still be subject to any municipal registration or licensing requirements. In this respect, even though the Act is silent on the matter, it would appear to be reasonable to request proof of registration with the state in order to be granted a municipal exemption from registration or licensing as a home improvement contractor.