AN ACT relating to contractors.

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AN ACT relating to contractors. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 3
READ AS FOLLOWS: 4
As used in Sections 1 to 8 of this Act: 5
(1) "Contractor": 6
(a) Means a person in the business of contracting, or offering to contract, to 7
provide goods or services relating to real estate; and 8
(b) Includes any person that directly or indirectly solicits or offers a real estate 9
goods or services contract; 10
(2) "Contractor's license" or "license" means the license issued by the department to 11
a contractor; 12
(3) "Goods or services relating to real estate": 13
(a) Means goods, services, or goods and services relating to real estate; 14
(b) Includes but is not limited to any: 15
1. Repair or remediation of roofing, gutter, downspout, or siding; 16
2. Tree cutting and removal; 17
3. Mold remediation; 18
4. Debris removal; 19
5. Water restoration and waterproofing; 20
6. Smoke and fire restoration; 21
7. Contents packout; and 22
8. General contractor services; and 23
(c) Does not include: 24
1. Services to a residential building of more than four (4) units; 25
2. Services to a commercial building; or 26
3. Building a new home or housing development; 27
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(4) "Person" has the same meaning as in KRS 367.110; 1
(5) "Real estate": 2
(a) Means any parcel of real estate located in this state that is used for any 3
purpose; and 4
(b) Includes: 5
1. Residential real estate; and 6
2. Commercial real estate; and 7
(6) "Real estate goods or services contract" means a contract for the provision of 8
goods or services relating to real estate. 9
SECTION 2. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 10
READ AS FOLLOWS: 11
(1) A person who is not licensed as a contractor shall not represent himself or herself 12
to the public as a contractor or use any terms, titles, or abbreviations that express 13
or imply that the person is a contractor. 14
(2) A person shall not practice as a contractor, unless that person has met the 15
requirements of Sections 1 to 8 of this Act. 16
SECTION 3. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 17
READ AS FOLLOWS: 18
(1) The department shall administer and enforce Sections 1 to 8 of this Act and shall 19
evaluate the qualifications of applicants for licensure. 20
(2) The department may: 21
(a) Refuse to issue or renew a contractor's license; 22
(b) Suspend or revoke a contractor's license; 23
(c) Impose supervisory or probationary conditions upon a licensee; 24
(d) Impose administrative disciplinary fines; 25
(e) Issue written reprimands or admonishments; and 26
(f) Take any combination of the actions permitted in this subsection. 27
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(3) The department may seek injunct ive relief in the Franklin Circuit Court or the 1
Circuit Court of the county in which the violation occurred or the business of the 2
accused is located to stop any unlawful practice prohibited by Sections 1 to 8 of 3
this Act and administrative regulations pro mulgated thereunder. The department 4
may also seek injunctive relief if unlicensed persons inappropriately use the term 5
contractor. 6
(4) The department may enter into reciprocal agreements with other states having 7
licensure, certification, or registration qu alifications and requirements of a 8
similar scope of practice to those of this state. 9
SECTION 4. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 10
READ AS FOLLOWS: 11
(1) The department shall promulgate administrative regulati ons in accordance with 12
KRS Chapter 13A necessary to carry out Sections 1 to 8 of this Act, including: 13
(a) Issuing and renewing contractor's licenses to applicants who meet the 14
requirements of Section 5 of this Act; 15
(b) Denying, suspending, or revoking a contractor's license; 16
(c) Maintaining a current register of license holders as a matter of public 17
record; 18
(d) Establishing procedures for receiving, investigating, and resolving 19
complaints against license holders; 20
(e) Conducting administrative hearings in ac cordance with KRS Chapter 13B 21
for disciplinary actions taken under paragraph (b) of this subsection and 22
Section 3 of this Act; and 23
(f) 1. Assessing fees for the issuance and renewal of licenses to cover 24
administrative and operating expenses of the department; and 25
2. Authorizing all disbursements necessary to administer Sections 1 to 8 26
of this Act. 27
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(2) The department shall establish through administrative regulation the required fee 1
amounts to be paid by licensees and applicants for licensure under Sections 1 to 8 2
of this Act, including but not limited to: 3
(a) For an application for initial licensure as a contractor, a nonrefundable fee 4
not to exceed two hundred dollars ($200); 5
(b) For the renewal of a contractor license, a fee not to exceed two hundred 6
dollars ($200); 7
(c) For a duplicate or replacement license, a fee not to exceed twenty -five 8
dollars ($25); 9
(d) For failure to r enew a license for a contractor, a reinstatement fee not to 10
exceed one hundred dollars ($100); and 11
(e) Other reasonable fees for administrative services. 12
SECTION 5. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 13
READ AS FOLLOWS: 14
An applicant for a contractor's license shall: 15
(1) Be at least eighteen (18) years of age; 16
(2) Be a citizen of the United States or a resident alien who is authorized to work in 17
the United States; 18
(3) Have paid to the department the application f ee and the appropriate examination 19
fee, which shall not exceed the actual cost of the examination; 20
(4) Have achieved a passing score, as set by the department, on all portions of the 21
examination required by the department; 22
(5) Have met the training and exp erience requirements established in administrative 23
regulations promulgated by the department; and 24
(6) Have submitted proof that he or she has complied with workers' compensation 25
and unemployment insurance laws and administrative regulations and has 26
obtained a general liability insurance policy of not less than five hundred 27
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thousand dollars ($500,000). 1
SECTION 6. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 2
READ AS FOLLOWS: 3
(1) The department shall select and approve ex aminations to be used in determining 4
the competency of persons to be licensed under Sections 1 to 8 of this Act. 5
Examinations selected and approved for licensing shall be nationally recognized 6
examinations that have been determined through proper validatio n techniques to 7
measure successfully an individual's competency to perform the licensed practice. 8
(2) The department shall offer the examinations on a regularly scheduled basis in 9
localities around the state. 10
(3) The department may contract with an outside entity or testing service for the 11
administration of examinations required for licensure. 12
SECTION 7. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 13
READ AS FOLLOWS: 14
(1) The contractors fund is hereby created as a trust and agency account to be 15
administered by the department. All moneys collected by the department under 16
Sections 1 to 8 of this Act shall be deposited into the fund. 17
(2) Moneys deposited into the contractors fund shall be used for the department's 18
expenses related to the regulation and enforcement of Sections 1 to 8 of this Act. 19
(3) Notwithstanding KRS 45.229, fund amounts not expended at the close of a fiscal 20
year shall not lapse but shall be carried forward into the next fiscal year. 21
SECTION 8. A NEW SECTION OF KRS CHAPTER 198B IS CREATED TO 22
READ AS FOLLOWS: 23
(1) The department may, following a hearing pursuant to KRS Chapter 13B, impose 24
sanctions specified in Section 3 of this Act upon proof that the licensee has: 25
(a) Misrepresented or concealed a material fact in obtaining a license or in the 26
reinstatement thereof; 27
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(b) Been incompetent or negligent in the practice of performing contracting 1
work; 2
(c) Failed to comply with an order issued by the department or an assurance of 3
voluntary compliance; or 4
(d) Violated any provision of Sections 1 to 8 of this Act or administrative 5
regulations promulgated thereunder. 6
(2) One (1) year from the date of a revocation, any former licensee whose license has 7
been revoked may petition the de partment for reinstatement. The department 8
shall investigate the petition and may reinstate the license upon a finding that the 9
applicant has complied with any terms prescribed by the department and is again 10
able to competently engage in the practice of performing contracting work. 11
(3) At any time during the investigative or hearing processes, the department may 12
enter into an agreed order or accept an assurance of voluntary compliance with 13
the license holder which effectively deals with the complaint. 14
(4) The department may reconsider, modify, or reverse its probations, suspensions, or 15
other disciplinary actions. 16
Section 9. KRS 367.620 is amended to read as follows: 17
As used in KRS 367.620 to 367.628: 18
(1) "Contractor": 19
(a) Means a person in the business of contracting, or offering to contract, to 20
provide goods or services relating to real estate; and 21
(b) Includes any person that directly or indirectly solicits or offer s a real estate 22
goods or services contract; 23
(2) "Goods or services relating to real estate": 24
(a) Means goods, services, or goods and services relating to real estate; 25
(b) Includes but is not limited to any: 26
1. Repair or remediation of roofing, gutter, downspout, or siding; 27
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2. Tree cutting and removal; 1
3. Mold remediation; 2
4. Debris removal; 3
5. Water restoration and waterproofing; 4
6. Smoke and fire restoration; 5
7. Contents packout; and 6
8. General contractor services; and 7
(c)[(b)] Does not include: 8
1. Services to a residential building of more than four (4) units; 9
2. Services to a commercial building; or 10
3. Building a new home or housing development[Includes any: 11
1. Repair, replacement, construction, reconstruction, or improvement of 12
real estate; and 13
2. Tree or debris removal]; 14
(3) "Insured" means a person that is entitled, or may be entitled, to receive benefits or 15
payments under a property, casualty, or property and casualty insurance policy; 16
(4) "Person" has the same meaning as in KRS 367.110; 17
(5) "Real estate": 18
(a) Means any parcel of real estate located in this state that is used for any 19
purpose; and 20
(b) Includes: 21
1. Residential real estate; and 22
2. Commercial real estate; and 23
(6) "Real estate goods or services contract" means a contract for the provision of goods 24
or services relating to real estate [, where the goods or services are expected to be 25
paid from property, casualty, or property and casualty insurance proceeds]. 26
Section 10. KRS 367.622 is amended to read as follows: 27
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(1) A person who enters into a real estate goods or services contract with a contractor 1
may cancel the contract prior to midnight of the fifth business day after the person 2
has: 3
(a) Entered into a contract with the contractor; or 4
(b) Received written notice from the insurer that all or part of the claim is not a 5
covered loss under the insurance policy. 6
(2) Cancellation shall be deemed to have occurred when the person does any o f the 7
following: 8
(a) Personally delivers written notice of cancellation to the contractor; 9
(b) Deposits written notice of cancellation in the United States mail, postage 10
prepaid, and addressed to the contractor at the address stated in the contract; 11
or 12
(c) Transmits notice of cancellation to the contractor by facsimile or email. 13
(3) Notice of cancellation need not take a particular form and is sufficient if it indicates 14
by any form of written or recorded expression the intention of the person not to be 15
bound by the contract. 16
Section 11. KRS 367.624 is amended to read as follows: 17
Prior to entering into a real estate goods or services contract with any person, a contractor 18
shall furnish the person with: 19
(1) The complete agre ement between the person and the contractor, with a clear 20
description of any other documents which are or shall be incorporated into the 21
agreement; 22
(2) The contractor's full legal name, business names, principal address, and 23
registration number; 24
(3) The mailing address of the contractor through which written communication may 25
be received; 26
(4)[(2)] The telephone number of the contractor and, if applicable, the contractor's 27
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facsimile number and email address; 1
(5) The name of the contractor's insurer, the type of insurance coverage as required 2
by Section 5 of this Act, and the insurance policy limits obtained by the 3
contractor; 4
(6) An itemized description of the work to be done, any emergency services to be 5
completed, and the materials to be used in the perform ance of the real estate 6
goods or services contract; 7
(7) The total itemized amount agreed to be paid for the work to be performed under 8
the real estate goods or services contract; 9
(8) A description of who will be performing the work, including but not limit ed to a 10
subcontractor, independent contractor, day laborer, and any other person who 11
would be a contractor under subsection (1) of Section 9 of this Act; 12
(9) An approximation of the costs expected to be borne by the person; 13
(10) A provision allowing paymen t to be made by cash, check, or credit card, at the 14
person's discretion; 15
(11) The signatures of all persons party to the contract; 16
(12) An itemized statement identifying any aspect of the real estate goods or services 17
contract that is not expected to be covered under an insurance policy; 18
(13)[(3)] A statement in at least ten (10) point boldface type in immediate proximity to 19
the space reserved for the signature of the person that states: 20
"You may cancel this contract at any time before midnight on the fifth business 21
day after entering into this contract with your contractor. You may also cancel 22
this contract at any time before midnight on the fifth business day after you have 23
received written notification from the insurer that all or any part of the contracted 24
goods, services, or goods and services is not a covered loss under the property, 25
casualty, or property and casualty insurance policy . This right to cancel is in 26
addition to any other rights of cancellation you may have under state or federal law 27
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or regulation. See the attached Notice of Cancellation form for an explanation of 1
this right."; and 2
(14)[(4)] A fully completed form in duplicate, under the conspicuous caption "NOTICE 3
OF CANCELLATION," and attached to but easily detachable from the contract, in 4
at least ten (10) point boldface type that shall read as follows: 5
"NOTICE OF CANCELLATION 6
....................................................... 7
(enter date of transaction) 8
You may cancel this contract without penalty or monetary obligation before 9
midnight of the fifth business day after entering into this contract with your 10
contractor. You may also [If you are notified by the insurer th at all or any part of 11
the contracted goods, services, or goods and services is not a covered loss under the 12
property, casualty, or property and casualty insurance policy, you may] cancel this 13
contract without penalty or monetary obligation before midnight of the fifth 14
business day after you have received [the ]notice from the insurer that all or any 15
part of the contracted goods, services, or goods and services is not a covered loss 16
under the property, casualty, or property and casualty insurance policy . To cancel 17
this transaction, you may use any of the following methods: mail or otherwise 18
deliver a signed and dated copy of this cancellation notice, or any other written 19
notice of cancellation which you sign and date, to (enter physical address of 20
contractor), or email a notice of cancellation to (enter email address of contractor), 21
or transmit a notice of cancellation to (enter facsimile number of contractor), not 22
later than midnight of the fifth day after you receive notice from the insurer . If you 23
cancel, a ny payments made by you under the contract will be returned to you 24
within ten (10) business days following receipt by the contractor of your 25
cancellation notice, and any security interest arising out of the transaction will be 26
cancelled. You shall retain a copy of the notice of cancellation that is transmitted 27
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to the contractor. 1
I HEREBY CANCEL THIS TRANSACTION. 2
........................................................ 3
(Date) 4
........................................................ 5
(Buyer's Signature)" 6
Section 12. KRS 367.628 is amended to read as follows: 7
(1) (a) Except as provided in paragraphs (b) and (c) of this subsection, a contractor, 8
or person representing a contractor, shall not represent, negotiate, or advertise 9
to represent or negotiate on behalf of any insured on any insurance claim in 10
connection with the provision of goods or services relating to real estate. 11
(b) Nothing in this subsection shall be construed to prohibit a contractor, or 12
person representing a contractor, from: 13
1. Providing an estimate for the provision of goods or services relating to 14
real estate; or 15
2. Conferring with an insurance company's representative about damage to 16
real estate after a claim has been submitted by an insured. 17
(c) This subsection shall not apply to a public adjuster licensed under Subtitle 9 18
of KRS Chapter 304. 19
(2) Where goods or services relating to real estate are expected to be paid from 20
property, casualty, or property and casualty insurance proceeds, a contractor or 21
person representing a contractor shall not: 22
(a) Cause damage to any part of the real estate in order to increase the scope of 23
goods or services provided [,] or encourage a person to cause damage to any 24
part of the real estate in order to secure a contract for goods or services; 25
(b) Offer to pay or rebate all or any portion of an insurance deductible or claims 26
proceeds as an inducement to the sale of goods or services by a contractor; 27
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(c) Grant an allowance or discount against the fee to be charged by a contractor; 1
(d) Pay or offer to pay the insured, or his or her representative, for whom services 2
have been or will be performed, for any reason, any form of compensation in 3
excess of one hundred dollars ($100), including but not limited to a: 4
1. Bonus; 5
2. Coupon; 6
3. Credit; 7
4. Gift; 8
5. Prize; 9
6. Referral fee; or 10
7. Any other item having a monetary value;[ or] 11
(e) File or claim a mechanic's lien pursuant to KRS 376.010 against an insured by 12
reason of the insured's failure or refusal to pay any excess charge over and 13
above the amount paid or expected to be paid by an insurer under a property, 14
casualty, or property and casualty insurance policy; 15
(f) Require a deposit of more than fifty percent 50% of the contract price; 16
(g) Mandate that a particular form of pay ment be made in order to start 17
services; 18
(h) Induce the sale of any goods or services by offering or providing any 19
upgraded work, material, or product; 20
(i) Operate without a contractor's license issued by the department in 21
accordance with Sections 1 to 8 of this Act; 22
(j) Abandon or fail to perform, without justification, any ongoing contract or 23
project or deviate from or disregard plans or specifications in any material 24
respect without consent of the consumer; 25
(k) Fail to credit the consumer for any payment the consumer has made to the 26
contractor in connection with the contract; 27
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(l) Make any material misrepresentation in the procurement of a contract or 1
make any false promise likely to influence, persuade, or induce the 2
procurement of a contract; 3
(m) Violate the building code of the state or municipality; 4
(n) Fail to notify the department within thirty (30) business days of any change 5
of trade name or address, or conducting a business in any name other than 6
the one in which the contractor is registered; 7
(o) Fail to pay for materials or services rendered in connection with his or her 8
operating as a contractor where he or she has received sufficient funds as 9
payment for the particular construction work, project, or operation for 10
which the services or materials were rendered or purchased; 11
(p) Perform the reporting, adjusting, or negotiation of a claim on behalf of the 12
consumer or receive compensation for the referral to any entity that reports, 13
adjusts, or negotiates a claim on behalf of a consumer; or 14
(q) Fail to possess any insurance required as defined by Section 5 of this Act or 15
any other law. 16
Section 13. This Act applies to contracts entered on or after the effective date of 17
this Act. 18