H. B. 4260

(By Delegates Douglas, Kuhn, Varner and Leggett)

[Introduced January 28, 2002 ; referred to the

Committee on Government Organization then Finance.]

A BILL to amend article eleven, chapter twenty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, by adding thereto a new section, designated section twenty-one, relating to requirements for a contractor's license; requiring financial assurance as condition of licensure; providing for rule-making authority; and providing for termination of financial assurance.

Be it enacted by the Legislature of West Virginia:
That article eleven, chapter twenty-one of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended by adding thereto a new section, designated section twenty-one, to read as follows:
ARTICLE 11. WEST VIRGINIA CONTRACTOR LICENSING ACT.
§21-11-21. F

inancial assurance required as condition of licensure.
(a) Pursuant to the legislative rule to be promulgated as provided in this section, the board may require each contractor licensed under the provisions of this article to furnish a surety bond or other form of financial assurance of the contractor's financial responsibility. The form of financial assurance may include, but not be limited to, a surety bond, cash bond, certificate of deposit, irrevocable letter of credit or performance insurance as specified by the board by legislative rule.

(b) The surety bond or other form of financial assurance shall be in an amount equal to thirty percent of the contractor's gross volume of business, or thirty percent of the contractor's projected gross volume of business, or fifty thousand dollars, whichever is greater.
(c) The surety bond or other form of financial assurance shall be payable to the board and shall protect against any misappropriation of funds of a consumer or prospective consumer, any deceptive or false or fraudulent representations or deceitful practices, breach of contract written or implied, any failure by a licensee because of bankruptcy, insolvency or other reason to fulfill warranty obligations and any failure of the contractor, its agents or employees to comply with any state law, this article or any rules promulgated by the board pursuant to this article.

(d) The contractor shall maintain the surety bond or other form of financial assurance as a condition of licensure under this article.
(e) If there is a forfeiture of any surety bond or other form of financial assurance, the proceeds shall be deposited in the special revenue account created under section seventeen of this article. The proceeds of the forfeiture may be used by the board to repay consumers for their actual losses, but may not exceed the value of the surety bond or other form of assurance. The board may not award punitive damages.
(f) A contractor who ceases to do business in this state, and who has no consumer complaints pending before the board, is exempt from the financial assurance requirements of this article.
(g) Prior to requiring financial assurance as a condition of licensure, the board shall propose rules for legislative approval in accordance with the provisions of article three, chapter twenty- nine-a of this code, which shall specify the forms, terms and conditions of the financial assurance required, the conditions and procedures for payment for actual losses of consumers, and any other provisions necessary to carry out the provisions of this section.

NOTE: The purpose of this bill is to require contractors to provide a surety bond or other form of financial assurance to protect consumers from loss in the event the contractor fails to fulfill all legal obligations to the consumer.

This section is new; therefore, strike-throughs and underscoring have been omitted.

This bill is recommended by the Joint Committee on Government Operations for passage during the 2002 Regular Session of the Legislature.