Working out the kinks
Consumers have a new law designed to protect them from unscrupulous contractors... Eight months later, the verdict is mixed. Legislators and consumers say the law is worthwhile; complaints are down this year... State officials are pleased with the law. The Division of Consumer Affairs last year received 3,137 complaints from residents unhappy about contractors they hired to fix, tear down or expand their homes.
Working out the kinks
Consumers have a new law designed to protect them from unscrupulous contractors. But some contractors say the law is getting bogged down by bureaucracy.
Gary Hillebrand last year paid a contractor more than $90,000 to renovate a home in the Bayville section of Berkeley Township that he inherited from his father and planned to use as a summer home.
The contractor did about 90 percent of the job, Hillebrand said, and then he left, never to be heard from again.
"It's been horrible. My wife's ready to kill me. No air conditioning," Hillebrand, 54, of Neptune, said. "We're just at our wits' end."
It's the type of complaint New Jersey wanted to stamp out when the Contractors' Registration Act took effect in January, requiring home improvement contractors to get a license from the state -- a license which could be revoked for fraud, negligence or occupational misconduct.
Eight months later, the verdict is mixed. Legislators and consumers say the law is worthwhile; complaints are down this year. But contractors are less enamored.
Part of the problem, contractors say: The New Jersey Division of Consumer Affairs, which issues the licenses, has been inundated with applications from contractors, leaving some of the builders waiting months to receive them.
Home improvement complaints have long ranked as the division's biggest source of complaints. The Contractors' Registration Act aimed to fix that.
How does the law work? In order to get a construction permit from a municipality, a requirement for most major home improvement projects, a contractor must show his state contractor's license.
The idea is to give homeowners another resource to research whether a contractor is legitimate. The division's Web site, for example, lists contractors whose licenses have been revoked or denied.
Moreover, homeowners who think they have been defrauded can make a complaint with Consumer Affairs. The division can deny or revoke a license for a variety of reasons, including fraud, negligence or occupational misconduct. The license can be reinstated only if the contractor pays fines, penalties and restitution to consumers that might be levied by the state. Anyone who violates the law can be fined up to $10,000 for the first offense and $20,000 for subsequent violations.
The law is appealing to Hillebrand, who hasn't heard from the contractor in six months and is losing hope. He has called and written letters warning the contractor that he's ready to alert the Division of Consumer Affairs.
"At least they can pull his license," he said.
State officials are pleased with the law. The Division of Consumer Affairs last year received 3,137 complaints from residents unhappy about contractors they hired to fix, tear down or expand their homes.
It has received 1,292 complaints so far this year, putting it on pace to receive 2,214 complaints in 2006, a 29 percent drop. Factors other than the new law may be in play; higher interest rates, for example, may mean homeowners are doing fewer home improvement projects overall.
Assemblyman Neil M. Cohen, D-Union, one of the bill's sponsors, said he expected only a fraction of contractors to register. Instead, as of last week, the state received 37,000 applications, issued 28,000 licenses and still receives hundreds of applications a week, spokeswoman Kara Wood said.
"Considering the extraordinary volume of applications received, and the fact that many contractors waited to submit their applications at or after the deadline . . . the process has gone quite smoothly," Wood said.
To accommodate the delays, the state allowed contractors who had proof they paid the registration fee but hadn't received a license to still get municipal construction permits by signing documents that certified they had taken the proper steps.
It was an imperfect solution. The exemption only applies to contractors already in business when the law took effect; new contractors just starting their business still have to wait for their licenses.
Tom Carrollo of Beachwood started his patio construction company, Country View Inc., in June. He registered his business with the state. He got an identification number from the IRS. And he mailed in his application and check to the Division of Consumer Affairs for a contractor's license.
Two months later, his check hasn't been processed by the division, and he doesn't have a license. He drove to the division's offices in Newark recently to plead his case and was told the process could take six months.
"Effectively what it does is, it puts me out of business," Carrollo said. He has contracts with two customers, but he hasn't been able to begin the work. The customers are "going to say, 'He did a nice job, but it took him forever.' I lose them as references. It's a bad situation."
Robert Gaestel Jr., a construction code official for Stafford and Eagleswood, pointed to another problem. He said contractors without licenses continue to show up in his department and simply sign the document giving them the exemption.
He said there's no way to know if contractors are telling the truth, but he has little choice but to give them the construction permits.
"It made sense for the first couple of months, but I think now contractors should either have their license or not have their license," Gaestel said.
Wood said the division has coped with the backlog by setting up three telephone numbers for contractors to call to check the status of their applications -- 973-792-4228, 973-424-8119, and 973-424-8177.
Cohen said he was stunned to hear how many contractors have signed up. "That must have caused an enormous backup," he said, suggesting contractors who have excessive delays contact his office at 908-624-0880.
But he considered the law a success, and he said it's now up to consumers to ensure contractors are registered before they hire them.
"I can't legislate consumer intelligence," Cohen said. "I can legislate that a contractor should register, and, apparently, overwhelmingly, they have."