BANKING

DEPARTMENT OF BANKING AND INSURANCE

DIVISION OF BANKING

Home Repair Financing Act Regulations

Proposed Readoption with Amendments: N.J.A.C 3:19

Authorized By: Karen L. Suter, Commissioner, Department of Banking and Insurance

Authority: N.J.S.A. 17:1-8, 17:1-15(e) and 17:16C-62 et seq.

Proposal Number: PRN 2001-

Submit comments by April 18, 2001 to:

Karen Garfing, Assistant Commissioner

Regulatory Affairs

New Jersey Department of Banking and Insurance

P.O. Box 325

Trenton, NJ 08625-0325

Fax: (609) 292-0896

Email: Legsregs@dobi.state.nj.us

The agency proposal follows:

Summary

The Department of Banking and Insurance ("Department") proposes to readopt N.J.A.C. 3:19, which is scheduled to expire on May 6, 2001 pursuant to Executive Order No. 66 (1978). N.J.A.C. 3:19-1.1 sets forth what home repair contracts are subject to the Home Repair Financing Act ("HRFA"), N.J.S.A. 17:16C-62 et seq. The subchapter also sets out who is required to be licensed under the Home Repair Financing Act and exempts self-installation of goods are now specified with the addition of subsection (c) to N.J.A.C. 3:19-1. The rules proposed for readoption also provide examples of how sales and use taxes are to be disclosed and require that all contracts, subcontracts, bids and advertising contain the contractorís current license number. Finally, the rules proposed for readoption provide the procedures for when a home repair salesperson changes employment and the notification required to the Department of that change. The Department has reviewed these rules and determined them to be necessary, reasonable and proper for the purpose for which they were originally promulgated. The Department is also reviewing certain substantive changes to the rules and may propose them as amendments in the future.

The Department also is proposing herein several technical amendments to the rules to make the rules gender-neutral and to replace references to public laws with the current statutory citations.

Social Impact

The rules proposed for readoption with amendments apply to all persons or entities that are involved in home repair financing. They will continue to implement the HRFA by requiring licensing by the Department and certain disclosures to consumers. The rules also clarify the HRFA and reduce misunderstandings on the part of licensees, many of whom are small businesses. Thus, the rules proposed for readoption with amendments will continue to have a beneficial social impact on those subject to the HRFA and consumers.

Economic Impact

It is not expected that the rules proposed for readoption with amendments will have a significant negative economic impact on New Jersey home repair contractors. The requirement that they be licensed and make certain disclosures to consumers is a reasonable and anticipated commercial requirement. The annual license fee for a home repair contractor is $300.00 and is $60.00 for a home repair salesperson. These costs and fees are unchanged from the current rules. Moreover, the licensing and disclosures required by the rules proposed for readoption with amendments will continue to provide a substantial measure of protection to the consumer, thereby averting potential negative economic consequences to a consumer.

Federal Standards Statement

A Federal standards analysis is not required because the rules proposed for readoption with amendments are not subject to any Federal requirements or standards.

Jobs Impact

The Department does not anticipate any jobs will be generated or lost as a result of the rules proposed for readoption with amendments. Home repair contractors will use existing staff for continued compliance with the existing rules. The amendments similarly will not require additional staff because they are technical in nature and will impose no new requirements.

The Department invites commenters to submit any data or studies concerning the jobs impact of the proposed readoption with amendments together with their written comments on other aspects of this proposal.

Agriculture Industry Impact

The Department does not expect any agriculture industry impact from the rules proposed for readoption with amendments.

Regulatory Flexibility Analysis

Many New Jersey home repair contractors are small businesses as defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. The rules proposed for readoption with amendments will continue to impose compliance requirements on these contractors. Home repair contractors should not have to employ professional services to comply with the licensing and disclosure requirements.

The Department believes that these requirements are generally mandated pursuant to the HRFA and are essential to the Departmentís regulation of the industry. Moreover, the Department does not believe that these requirements are unduly burdensome and the benefit to consumers outweighs any burden. Thus, the purpose of these requirements does not vary based upon business size. Accordingly, no differentiation based on business size is provided.

Full text of the rules proposed for readoption may be found in the New Jersey Administrative Code at N.J.A.C. 3:16.

Full text of the proposed amendments follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):

3:19-1.2 Licensing requirement

(a) In the administration of [sections (d) and 16(a) of chapter 41, P.L. 1960,] the Home Repair Financing Act, N.J.S.A. 17:16C-62 (d) and 77a et seq., the following will be deemed to require licensing as a "home repair contractor":

1. A person who, for his or her own account, solicits and procures the execution of a home repair contract by an owner, and who signs said home repair contract as a contractor, or who has such a home repair contract solicited and executed on his or her behalf by his or her [salesman] salesperson, whether or not such contract is subsequently assigned to, or performed by, another; and

2. (No change.)

(b) In the administration of [section 1(n) and 16(a) of chapter 41, P.L. 1960,] the Home Repair Financing Act, N.J.S.A. 17:16C-62(n) and 77(a), the following will be deemed to require licensing as a "home repair [salesman] salesperson":

    1. (No change.)

(c) The annual license fee for a home repair contractor shall be $300.00 and $60.00 for a home repair salesperson.

3:19-1.7 Home repair [salesmen] salesperson; change of affiliation

A licensed home repair [salesman] salesperson must be employed by a licensed home repair contractor and may represent only that employer in the transaction of home repair financing business. A licensed home repair [salesman] salesperson who changes his or her employer shall, within 10 days of this change, submit to the Department a change of notification form. When submitting this form, the [salesman] salesperson shall surrender the license indicating the affiliation with his or her prior employer.