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PA House Bill 427 Would Impose New Rules On Homebuilders

3/20/2014 | Construction Blog

Although introduced as part of the 2013 legislative session, House Bill 427 now seems to be gaining some momentum in the state legislature. The bill, whose primary sponsor is Representative Readshaw, would impose a number of new rules for residential home builders.

The legislation reads ominously like the Home Improvement Consumer Protection Act that has been in effect for several years. HB 427 proposes that home builders – both in state companies and out of state companies building in Pennsylvania – register with the Attorney General’s Bureau of Consumer Protection. It similarly imposes contractual requirements that mirror the mandates in HICPA, including but not limited to listing the a company’s registration number on the contract, approximate start and finish dates, identification of subcontractors, and a right of rescission. The bill is also tied to the state’s Consumer Protection Act and includes criminal penalties at the felony level. Perhaps the biggest difference is the creation of a Home Builder Guaranty Fund to cover homeowners with claims.residential-construction

The legislation appears to be a “mixed bag”. Its requirements regarding contractual provisions appear onerous given the nature of the transaction. While home builders are often unwilling to change their contract terms, a simple right of rescission clearly stated in the contract may be sufficient to solve the problem of an unwillingness to negotiate terms. Similarly, the creation of a fund to allow a source of recovery for homeowners with claims against single purpose entity builders with no assets is a good idea. Proper controls will need to be put in place to make sure it does not lead to frivolous litigation though. Issues like these will undoubtedly result in revisions to the legislation as it makes its way through the legislature.

The Pennsylvania Builders Association, for its part, opposes the legislation in its current form.