AB 654

This bill prohibits a contractor from promising to pay or rebate all or any portion

of a property insurance deductible as an incentive for entering into certain contracts

with a "consumer," which the bill defines as an owner or possessor of residential

property containing four dwelling units or less. The contracts that are subject to the

bill are written or oral contracts for doing any of the following activities: 1) repairing

or replacing a roof system or 2) performing any other exterior repair, replacement,

construction, or reconstruction of the residential property.

The bill also allows such a consumer to cancel a written contract with a

contractor for the above activities if all or part of the activities is to be paid under a

property insurance policy and the insured receives written notice from the insurer

that all or any part of the claim or contract is not a covered loss under the policy. The

bill permits a consumer to make such a cancellation prior to the end of the fifth

business day after the insured receives the written notice from the insurer. Also, the

consumer must give the contractor a written notice of cancellation by personal

delivery or 1st class mail. The bill provides that the written notice of cancellation

is sufficient if the consumer uses a form specified in the bill or provides other written

notice indicating the consumer's intent not to be bound by the contract. Within ten

days after a contractor receives the written notice of cancellation, the bill requires

the contractor to return to the consumer any payment, deposit, and note or other

evidence of indebtedness related to the contract. However, if the contractor has

performed any emergency services which the consumer has acknowledged in writing

to be necessary to prevent damage to the residential property, the bill provides that

the contractor is entitled to the reasonable value of those services.

The bill also does the following:

1. Requires a contractor to furnish a written statement to a consumer prior to

entering into a contract for the above activities that describes the bill's provisions

allowing a consumer to cancel the contract.

2. Prohibits a contractor from representing or negotiating on behalf of a

consumer, as defined in the bill, with respect to any insurance claim related to the

above activities.

3. Specifies that a violation of the bill is an unfair trade practice that is subject

to the enforcement authority of the Department of Agriculture, Trade and Consumer

Protection (DATCP) under current law.

4. Subjects a person who violates the bill to a fine of not more than $200,

imprisonment in the county jail for not more than six months, or both, which are

penalties that apply to certain other violations of current law enforced by DATCP.