REPORT TITLE:
Contractors; Unlicensed


DESCRIPTION:
Authorizes the forfeiture of tools and other property that are
the proceeds of or are used in unlicensed contracting activities.
Requires the reimbursement of moneys paid to an unlicensed
contractor or payment to the Contractors Education Fund.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1933
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                S.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO UNLICENSED CONTRACTORS.


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The prevalence of unlicensed contractors in this
 
 2 State is a public safety hazard.  Licensure assures the public
 
 3 that the contractor so licensed has passed a written competency
 
 4 test, has the specified experience, has a history of honesty and
 
 5 fair dealing, has valid workers' compensation coverage for the
 
 6 contractor's employees, has personal injury and property damage
 
 7 insurance, and participates in the contractors recovery fund.
 
 8 These provisions protect the integrity of the profession and
 
 9 provide assurances to the public that their homes and businesses
 
10 will be built safely and competently.  Unlicensed contractors
 
11 often bilk the public by promising more than they can perform
 
12 competently, and then failing to complete the job or doing so
 
13 inadequately.
 
14      The purpose of this Act is to:
 
15      (1)  Provide that property owned or used by a person to
 
16           engage in unlicensed contracting is subject to
 
17           forfeiture;
 
18      (2)  Require the reimbursement of moneys paid to an
 
19           unlicensed contractor or the payment of the moneys to
 
20           the contractors education fund; and
 

 
Page 2                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      (3)  Clarify that unlicensed contracting is an unfair and
 
 2           deceptive practice under chapter 480, Hawaii Revised
 
 3           Statutes.
 
 4      SECTION 2.  Chapter 444, Hawaii Revised Statutes, is amended
 
 5 by adding three new sections, to be appropriately designated and
 
 6 to read as follows:
 
 7      "§444-     Forfeiture of property for unlicensed activity.
 
 8 (a)  If an investigator finds that a person has acted in the
 
 9 capacity of, or engaged in the business of a contractor within
 
10 this State without having a current license as required by this
 
11 chapter to so act or engage, the investigator may issue a notice
 
12 of forfeiture of property owned for use in, or used by such
 
13 person in the unlicensed activity, and the property that is the
 
14 subject of the notice of forfeiture shall be turned over to the
 
15 department for disposition in accordance with this chapter.
 
16      (b)  Each notice of forfeiture shall be in writing and shall
 
17 describe the tools, implements, armamentariums, documents,
 
18 materials, or any other property owned for use in, or used by any
 
19 person in unlicensed activity that violates section 444-9.
 
20      (c)  Service of a notice of forfeiture issued under this
 
21 section shall be made:
 
22      (1)  If the name and current address of the unlicensed
 
23           person, owner, or interest-holder is known:
 

 
Page 3                                                     1933
                                     H.B. NO.           H.D. 1
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 1           (A)  By personal service; or
 
 2           (B)  By mailing a copy of the notice to the unlicensed
 
 3                person, owner, or interest-holder by certified
 
 4                mail to the last address on record with a state
 
 5                agency;
 
 6           or
 
 7      (2)  If the address of the unlicensed person, owner, or
 
 8           interest-holder is not known or is not on record with a
 
 9           state agency, by public notice once as provided in
 
10           section 1-28.5.
 
11      (d)  An unlicensed person served with a notice of forfeiture
 
12 under this section may submit a written request to the director
 
13 for a hearing:
 
14      (1)  Within twenty days of receipt of the notice of
 
15           forfeiture, if the person is served personally or by
 
16           mail; or
 
17      (2)  Within twenty days of public notice of forfeiture.
 
18 If a request for a hearing is not timely filed with the director,
 
19 the notice of forfeiture shall be deemed a final order of the
 
20 director.
 
21      (e)  An owner or interest-holder served with a notice of
 
22 forfeiture, other than an unlicensed person, may file a petition
 
23 for remission of forfeiture with the department within twenty
 

 
Page 4                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 days of service by personal service or mail, or within twenty
 
 2 days of the date of public notice, if service is by public
 
 3 notice.  The petition shall be signed by the petitioner and sworn
 
 4 on oath before a notary public and shall contain the following:
 
 5      (1)  A reasonably complete description of the property
 
 6           subject to forfeiture; and
 
 7      (2)  A statement of the interest of the petitioner in the
 
 8           property subject to forfeiture, with supporting
 
 9           documentary evidence.
 
10 If a petition for remission of forfeiture is not timely filed
 
11 with the director, the notice of forfeiture shall be deemed a
 
12 final order of the director.
 
13      (f)  The department shall review the petition for remission
 
14 of forfeiture and, if remission is warranted, return the property
 
15 subject to forfeiture to the petitioner.  If the department
 
16 determines that remission is not warranted, the department shall
 
17 issue a written decision to the petitioner within sixty days of
 
18 receipt of the petition.
 
19      (g)  A petitioner whose petition for remission has been
 
20 denied may file with the director a written request for a hearing
 
21 as provided under subsections (h) and (i).  The written request
 
22 shall be filed within twenty days of receipt of the written
 
23 decision denying the petition for remission.  If a request for
 

 
Page 5                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 hearing is not timely filed with the director, the notice of
 
 2 forfeiture shall be deemed a final order of the director.
 
 3      (h)  Hearings shall be subject to chapter 91 and shall be
 
 4 conducted by the director or a hearings officer designated by the
 
 5 director.  The director or designated hearings officer may issue
 
 6 subpoenas, administer oaths, hear testimony, find facts, make
 
 7 conclusions of law, and issue a final order of forfeiture.  The
 
 8 department shall have the burden to show by a preponderance of
 
 9 the evidence that the property is subject to forfeiture.  In
 
10 determining whether the property is subject to forfeiture, the
 
11 director or hearings officer shall consider evidence of
 
12 ownership, the description of the property, and any other
 
13 relevant evidence.
 
14      (i)  Any person aggrieved by the decision of the director or
 
15 designated hearings officer may appeal the decision in the manner
 
16 provided in chapter 91, to the circuit court of the circuit in
 
17 which:
 
18      (1)  The person resides;
 
19      (2)  The person's principal place of business is located; or
 
20      (3)  The activity in question occurred.
 
21      (j)  The director may file an action in the circuit court
 
22 for a judgment to enforce any final order issued by the director
 
23 or designated hearings officer pursuant to this section.  A
 

 
Page 6                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 judgment enforcing the final order shall issue upon a showing by
 
 2 the director either that notice was given and a hearing was held,
 
 3 or, that the time granted for requesting a hearing has run
 
 4 without the timely filing of a request.
 
 5      (k)  The department may dispose of all property forfeited in
 
 6 accordance with this chapter by:
 
 7      (1)  Transferring property to any local or state government
 
 8           entity, municipality, or law enforcement agency within
 
 9           the State;
 
10      (2)  Selling property to the public by public sale; or
 
11      (3)  Using any other means of disposition authorized by law.
 
12      (l)  All proceeds of a forfeiture action conducted pursuant
 
13 to this section, after payment of expenses of administration and
 
14 sale, shall be deposited in the compliance resolution special
 
15 fund established under section 26-9(o).  Moneys in the fund shall
 
16 be appropriated for the payment of any expenses necessary to
 
17 seize, detain, appraise, inventory, safeguard, maintain,
 
18 advertise, or sell property seized, detained, or forfeited
 
19 pursuant to this section or any other necessary expenses incident
 
20 to the seizure, detention, or forfeiture of such property.
 
21      (m)  Forfeiture under this section shall be separate from
 
22 and in addition to all other applicable remedies, either civil or
 
23 criminal.  This section shall not apply to the violations set
 

 
Page 7                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1 forth in section 444-23(a) and (b).
 
 2      (n)  The director may adopt rules as necessary to fully
 
 3 effectuate this section.
 
 4      §444-     Return of money or other consideration.  An
 
 5 unlicensed contractor shall reimburse or return any money or
 
 6 other consideration received pursuant to the contracting
 
 7 arrangement to the person who made the payment of money or
 
 8 provided the consideration; provided that if the person who made
 
 9 the payment or provided the consideration files an action for
 
10 reimbursement based upon the fact that the contractor was
 
11 unlicensed and the person was aware at the time of the
 
12 contracting arrangement that the contractor was unlicensed, the
 
13 court may award a portion or all of the reimbursement amount to
 
14 the contractors education fund established under section 444-29,
 
15 instead of to the person who made the payment.  Nothing herein
 
16 shall prevent the person who made the payment or provided the
 
17 consideration from recovering a full reimbursement or return of
 
18 money based upon an alternate theory of law.
 
19      §444-     Unlicensed contracting an unfair and deceptive
 
20 practice.  Failure to obtain a license under this chapter prior
 
21 to entering into a contracting arrangement shall be deemed an
 
22 unfair and deceptive practice and shall be subject to chapter
 
23 480, as well as this chapter."
 

 
Page 8                                                     1933
                                     H.B. NO.           H.D. 1
                                                        S.D. 1
                                                        

 
 1      SECTION 3.  Section 444-23, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (c) to read as follows:
 
 3      "(c)  Except as provided in subsections (a), (b), (d), and
 
 4 (e), any person who violates or fails to comply with this chapter
 
 5 shall be fined not less than $100 or more than $5,000 for each
 
 6 violation; provided that any person who violates section 444-9
 
 7 shall be fined:
 
 8      (1)  $500 or forty per cent of the total contract price,
 
 9           whichever is greater, for the first offense;
 
10      (2)  $1,000 or forty per cent of the total contract price,
 
11           whichever is greater, for the second offense; and
 
12      (3)  $5,000 or forty per cent of the total contract price,
 
13           whichever is greater, for any subsequent offense[.],
 
14 and all tools, implements, armamentariums, documents, materials,
 
15 or any other property that is owned for use, or used by any
 
16 person in activities violating section 444-9 shall be subject to
 
17 forfeiture as provided by section 444-   and shall be turned over
 
18 to the department for disposition under that section."
 
19      SECTION 4.  This Act does not affect proceedings that were
 
20 begun before its effective date.
 
21      SECTION 5.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 6.  This Act shall take effect upon its approval.