HOUSE BILL REPORT

HB 364

BYRepresentative Wang

Changing provisions relating to contractor registration and disclosure.

House Committe on Commerce & Labor

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (11)

     Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher, R. King, O'Brien, Patrick, Sanders, Sayan, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR FEBRUARY 18, 1987

BACKGROUND:

General and specialty construction contractors are required to register with the Department of Labor and Industries and post a bond or other security.  Any person having claim against the contractor for breach of contract, wages or materials supplied may bring suit against the bond to recover.  In many cases, the amount of the bond is not enough to cover the potential liability of the contractor.  A default by the contractor in payment of wages or cost of materials furnished for a project on an owner's property may result in the owner's property being subject to lien to enforce payment.

SUMMARY:

SUBSTITUTE BILL:  A contractor performing construction work with a contract price of $1,000 or more or under a written bid or contract is required to provide the customer with a disclosure statement that includes the contractor's registration number.  The disclosure statement must also reveal the amount of the contractor's bond and an explanation of steps that the customer might take to procure additional protection if a claim arises from the work done under the contract.

A contractor who fails to provide a customer with the disclosure statement may not bring or maintain any action in court to collect compensation for work done under a contract subject to the disclosure provisions. Failure to comply is also an infraction under the contractor registration law.

The Department of Labor and Industries is directed to produce model disclosure statements and other educational materials to assist contractors and customers under the disclosure provisions.

The director of the department or authorized compliance inspectors may inspect and investigate job sites to determine whether the contractor is complying with the registration law.  If the department reasonably believes that a contractor has failed to register as required, the director must issue an order immediately restraining further construction at the site.  Procedures are provided for hearings and for enforcement of the department's order in superior court.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The customer disclosure requirements of the bill are changed to apply to all construction projects that involve:  (1)  a contract price of one thousand dollars or more;  or (2) a written bid or contract of any amount. The requirement that the project be on property used primarily for residential purposes is deleted.

References in the disclosure statement to the availability of a specific payment and performance bonds are deleted.  The requirement that lien release documents be given to the customer before payment is made is deleted.

It is clarified in the disclosure statement that the information available from the Department of Labor and Industries to consumers is of a general nature. 

For the purpose of bringing a court action, the contractor's duty to comply with the act is clarified to require the contractor to prove that a disclosure statement was given to the customer as required. Failure to comply with the act is changed to an infraction under the contractor registration law.

Fiscal Note:    Attached.

House Committee ‑ Testified For:     Larry Fuchs, Painting and Decorating Contractors Association (with concerns);  Larry Sundquist and Bob Austin, Home Builders Association;  Duke Schaub, Associated General Contractors;  Gary Smith, Independent Business Association;  Doug Bohlke, Contractor's Bonding and Insurance Company.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     Requiring disclosure of the contractor's registration number, the amount of the contractor's bond, and other pertinent information to the contractor's customer will provide consumers with an opportunity to inquire about added protection in case of default on the project.

House Committee - Testimony Against: None Presented.