Report Title:
Contractors; Exemption
Description:
Raises the amount for the handyman exemption from an aggregate contract of $1,000 to $3,500.
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THE SENATE |
S.B. NO. |
2809 |
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TWENTY-THIRD LEGISLATURE, 2006 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO CONTRACTORS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Throughout the past decade, a strong economy and low interest rates have fueled booming construction and housing industries in Hawaii. Large residential and commercial real estate developments with high-profit margins are more attractive to contractors than small home improvement and repair projects.
Each year, however, homeowners spend an average of $1,300 to $1,900 on home improvement projects or products. Studies from the Home Improvement Research Institute indicate there is a growing market of consumers who do home improvements themselves. This trend is also evident from the growing number of do-it-yourself magazines and television show targeting consumers.
Despite this do-it-yourself trend, Hawaii law requires that a licensed contractor be hired for any construction work that is more than $1,000 or for which a building permit is required. Commonly referred to as the handyman exemption, section 444-2(4), Hawaii Revised Statutes, allows the hiring of an unlicensed person if the total cost of the project, including labor, materials, taxes, and all other items, is equal to or less than $1,000. This exemption has not been increased since 1992 when the cap was raised from $100 to $1,000.
This law is unrealistically low by today's standards, especially because the exemption includes labor and materials. According to the Consumer Price Index (CPI), prices of goods have increased thirty per cent since 1992. The CPI Inflation Calculator estimates that $1,000 in 1992 has the same buying power as $1,420 today. Factoring in Hawaii's traditionally higher cost of living, consumers now pay thirty to forty per cent higher prices for materials related to their home improvement and repair projects.
With the rising demand for and limited supply of general contractors who take on home repair, remodeling and small construction jobs, consumers are faced with inflationary bids or endless delays because the size and nature of their projects have lower priority and offer smaller profit margins. Finding a licensed contractor is also difficult for homeowners in rural communities. The legislature finds that there is a need to ease the burden on consumers seeking a timely and affordable remedy to their home repair projects and on the building industry to accommodate small construction jobs.
The purpose of the Act is to raise the amount of the handyman exemption from $1,000 to $3,500 to provide Hawaii homeowners more affordable options to hiring reputable handymen.
SECTION 2. Section 444-2, Hawaii Revised Statutes, is amended to read as follows:
"§444-2 Exemptions. This chapter shall not apply to:
(1) Officers and employees of the United States, the State, or any county while in the performance of their governmental duties;
(2) Any person acting as a receiver, trustee in bankruptcy, personal representative, or any other person acting under any order or authorization of any court;
(3) A person who sells or installs any finished products, materials, or articles of merchandise that are not actually fabricated into and do not become a permanent fixed part of the structure, or to the construction, alteration, improvement, or repair of personal property;
(4) Any project or operation for which the aggregate contract price for labor, materials, taxes, and all other items is not more than [$1,000.] $3,500. This exemption shall not apply in any case where a building permit is required regardless of the aggregate contract price, nor where the undertaking is only a part of a larger or major project or operation, whether undertaken by the same or a different contractor or in which a division of the project or operation is made in contracts of amounts not more than [$1,000] $3,500 for the purpose of evading this chapter or otherwise;
(5) A registered architect or professional engineer acting solely in the person's professional capacity;
(6) Any person who engages in the activities regulated in this chapter as an employee with wages as the person's sole compensation;
(7) Owners or lessees of property who build or improve residential, farm, industrial, or commercial buildings or structures on property for their own use, or for use by their grandparents, parents, siblings, or children and who do not offer the buildings or structures for sale or lease; provided that this exemption shall not apply to electrical or plumbing work that must be performed only by persons or entities licensed under this chapter, or to the owner or lessee of the property if the owner or lessee is licensed under chapter 448E. In all actions brought under this paragraph, proof of the sale or lease, or offering for sale or lease, of the structure not more than one year after completion is prima facie evidence that the construction or improvement of the structure was undertaken for the purpose of sale or lease; provided that this provision shall not apply to residential properties sold or leased to employees of the owner or lessee; provided further that in order to qualify for this exemption the owner or lessee must register for the exemptions as provided in section 444-9.1. Any owner or lessee of property found to have violated this paragraph shall not be permitted to engage in any activities pursuant to this paragraph or to register under section 444-9.1 for a period of three years. There is a presumption that an owner or lessee has violated this section, when the owner or lessee obtains an exemption from the licensing requirements of section 444-9 more than once in two years;
(8) Any joint venture if all members thereof hold licenses issued under this chapter;
(9) Any project or operation where it is determined by the board that less than ten persons are qualified to perform the work in question and that the work does not pose a potential danger to public health, safety, and welfare; or
(10) Any public works project that requires additional qualifications beyond those established by the licensing law and which is deemed necessary and in the public interest by the contracting agency."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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