ARIZONA STATE SENATE
Phoenix, Arizona
swimming pool;
spa; construction contracts
Establishes contract requirements and a payment schedule for pool construction and establishes a sliding scale for determining the amount of surety bond or cash deposit required of swimming pool builders.
Currently, there are more than 300 pool building companies in Arizona, constructing approximately 14,000 pools within Arizona each year. Last summer, several local swimming pool contractors had financial problems and left several consumers with unfinished pools and subcontractors who supplied the materials and manpower with a loss in invested capital.
The minimum elements required in a contract between a licensed contractor and a property owner include contact information for the contractor and owner, the job site location, the estimated date of work completion and a description of the work to be performed under the contract. The contracts must also include the total amount due to the contractor for the work, any down payments or progress payments and the stages of construction that progress payments are due. Currently, the amount of money that a contractor can collect as a down payment or before the pool is complete is not statutorily defined and is determined by the parties. H.B. 2413 establishes contract requirements and a payment schedule for pool construction.
Typically pool contractors subcontract different aspects of the construction to multiple subcontractors and suppliers in order to complete construction at several sites simultaneously. When pool builders that began construction at a residential site and subcontracted different aspects of that construction go out of business before the project is complete, subcontractors who supplied the materials and manpower lose a large amount of invested capital. In such a situation, subcontractors can recoup some of their losses by collecting the surety bond or cash deposit furnished by the contractor to the Arizona Registrar of Contractors (Registrar) before obtaining licensure. However, according to the Registrar and the Arizona Contractors Association, oftentimes the bond provided by the folded contractor fails to cover the losses incurred by the multiple subcontractors who were under contract with that company. H.B. 2413 modifies the current amounts of surety bonds or cash deposits furnished by pool builders to a sliding scale of $50,000 or more based on the annual volume of construction performed.
There is a possible unknown fiscal impact to the state general fund associated with this measure. The Registrar is self-funded by licensing fees and remits ten percent of those monies to the state general fund. If the minimum $50,000 surety bond or cash deposit impacts the number of contractors seeking licensure, this may impact the Registrar’s contribution to the state general fund.
1. Requires a contract for a residential in-ground swimming pool or spa to contain at least the following:
2. Stipulates that if the purchaser requires the contractor to furnish a payment and performance bond the payment schedule can be changed in any manner agreed to by the parties to the contract.
3. Requires any changes, additions or deletions to the original contract to be included in a written change order.
4. Specifies that a contractor’s noncompliance with the inclusion of required contract provisions is a violation of statute relating to the grounds for suspension or revocation of a contractor’s license.
5.
Requires all written contracts for residential
construction to contain a confirmation initialed by the customer verifying the
customer has received a notice of the right to file a complaint with the
Registrar. Prescribes the statement for
the notification.
6.
Requires, for all verbal contracts for residential
construction, customers be given a preprinted written notification of the right
to file a complaint with the Registrar. Prescribes the statement for the
notification.
7. Exempts from the notification requirements any person other than a licensed contractor engaging in work on one project that is casual or minor in nature and for which the aggregate contract price is less than $750.
8. Applies current bond requirements to all residential pool contractors.
9. Replaces the current method for determining the amount of surety bonds or cash deposits for dual licensed swimming pool contractors and residential swimming pool contractors with a sliding scale based upon annual volume of construction work by the applicant as follows:
a) If estimated annual volume is $10 million or more, the applicant must furnish a surety bond or cash deposit between $50,000 and $100,000.
b) If estimated annual volume is $5 million to $10 million, the applicant must furnish a surety bond or cash deposit between $50,000 and $75,000.
c) If estimated annual volume is less than $5 million, the applicant must furnish a surety bond or cash deposit of $50,000.
10. Provides for a general effective date.
Amendments
Adopted by Committee
1. Removes the stipulation that a contractor's noncompliance with the notification requirements is a violation of statute relating to the grounds for suspension or revocation of the license.
2. Makes a conforming change.
Amendments
Adopted by Committee of the Whole
· Adds all the provisions of Senate engrossed S.B. 1261, which replaces the current method for determining the amount of surety bonds or cash deposits paid by swimming pool contractors with a sliding scale of $50,000 or more based upon the annual volume of construction work by the contractor.
CED 2/4/02 DP 6-0-0-4 COM 4/3/02 DPA
5-0-1-0
3rd Read 3/27/02 34-22-4-0 3rd
Read 4/17/02 29-0-1-0
Prepared
by Senate Staff
April
18, 2002