Rep. Frank A. Shimkus - New Home Construction Consumer Protection Act
A new home is the American Dream, but for far too many Pennsylvanians victimized by fraudulent new home builders that dream has become a nightmare. In my legislative district an individual who moved to the Keystone State from New Jersey posing as an honest new home builder lied to consumer groups, bilked consumers out of literally millions of dollars, and there was no state oversight that could have stopped him.

July 25, 2007

TO: All House Members

FROM: Rep. Frank A. Shimkus

SUBJECT: Co-Sponsorship of Legislation

     New Home Construction Consumer Protection Act

A new home is the American Dream, but for far too many Pennsylvanians victimized by fraudulent new home builders that dream has become a nightmare. In my legislative district an individual who moved to the Keystone State from New Jersey posing as an honest new home builder lied to consumer groups, bilked consumers out of literally millions of dollars, and there was no state oversight that could have stopped him.

We need to change that, and that’s why I’m respectfully seeking your support for legislation I plan to introduce that would create the New Home Construction Consumer Protection Act.

While the vast majority of new home builders have earned their reputation as trusted, dedicated members of their communities, we have to slam the door on thieves and cheaters who would prey upon working families looking to build their dream home. After handing over tens of thousands of dollars to a fraudulent home builder, consumers must then spend more money to hire an attorney and it’s very difficult to collect damages if the builder declares bankruptcy, has all of his assets in another person’s name or simply disappears.

My legislation would require all new home builders to register with the Bureau of Consumer Protection. In order to register with the Bureau, builders must provide a biannual fee to the Attorney General and supply important information such as driver’s license number, partnership/corporation and liability information. All applicants must provide a statement disclosing any fraudulent activity or Commonwealth court action including any revocation/suspension of right to work.

Should a new home builder have any judgments against him, he will not be able to register. All unregistered salespersons and new home builders lose their right to sue, counter sue or raise a defense of non-payment or file a mechanics lien to a new home project. In addition, the Bureau must operate a toll-free number and internet website so consumers can check to see if builders are registered, and all registered builders would be required to display their registration number on all contracts, business cards and advertisements.

New Home Builders must pay a biannual fee – to be determined -- to the Home Construction Guaranty Fund. This guaranty fund helps reimburse a consumer if after investigation, a builder has been deemed fraudulent after an investigation by the Bureau or Attorney General. Due to the high cost of new home construction, we will determine an appropriate claim ceiling that can be obtained by consumers for the acts or omissions of their builder. If the consumer receives payment from the fund they are still permitted to collect the remaining balance of the judgment received from the court.

Some say this is "punishing" good home builders for the mistakes of other, disreputable builders. However, the small fee will come back to registered and legitimate builders ten-fold because, in essence, this legislation weeds out fraudulent builders and provides more work for legitimate business men and women.

This law would be similar to the strong Maryland law that protects people building new homes south of our Commonwealth.

Please join me in co-sponsoring this legislation by contacting my office at 717-772-1314