Rule-Making Notices
Notice of Hearing
Agriculture, Trade and Consumer Protection
(DATCP Docket # 12-R-08)
The Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP) announces that it will hold public hearings on a proposed rule revising Chapters
ATCP 110 and
111, relating to home improvement practices and basement waterproofing practices.
DATCP will hold four public hearings at the times and places shown below:
Hearing Information
Date: Tuesday, September 24, 2013
Time: 3:00 p.m. to 4:30 p.m.
Location: Board Room (BR-106)
Department of Agriculture, Trade and
Consumer Protection
2811 Agriculture Drive
Madison, WI 53718-6777
Date: Thursday, September 26, 2013
Time: 2:30 p.m. to 4:00 p.m.
Location: Room 131
Eau Claire State Office Building
718 West Clairemont Ave.
Eau Claire, Wi 54701
Date: Tuesday, October 1, 2013
Time: 2:00 p.m. to 3:30 p.m.
Location: Room 40
Milwaukee State Office Building
819 North 6th Street
Milwaukee, WI 53203
Date: Wednesday, October 2, 2013
Time: 3:00 p.m. to 4:30 p.m.
Location: Room 152A
Green Bay State Office Building
200 N Jefferson Street
Green Bay, WI 54301
Hearing impaired persons may request an interpreter for this hearing. Please make reservations for a hearing interpreter by September 10, 2013, by writing to Kevin LeRoy, Division of Trade and Consumer Protection, P.O. Box 8911, Madison, WI 53708-8911; or by emailing
kevin.leroy@wisconsin.gov or by telephone at (608) 224-4928. Alternatively, you may contact the DATCP TDD at (608) 224-5058. The hearing facility is handicap accessible.
Appearances at the Hearings, Copies of Proposed Rule, and Submittal of Written Comments
DATCP invites the public to attend the hearings and comment on the proposed rule. Following the public hearings, the hearing record will remain open until October 16, 2013, for additional written comments. Comments may be sent to the Division of Trade and Consumer Protection at the address below, or to
kevin.leroy@wisconsin.gov, or to
http://adminrules.wisconsin.gov.
You can obtain a free copy of this hearing draft rule and related documents including the economic impact analysis by contacting the Wisconsin Department of Agriculture, Trade and Consumer Protection, Division of Trade and Consumer Protection, 2811 Agriculture Drive, P.O. Box 8911, Madison, WI 53708. You can also obtain a copy by calling (608) 224-4928 or by emailing
kevin.leroy@wisconsin.gov. Copies will also be available at the hearing. To view the hearing draft rule online, go to:
http://adminrules.wisconsin.gov.
Comments or concerns relating to small business may also be addressed to DATCP's small business regulatory coordinator Keeley Moll at the address above, or by email to
keeley.moll@wisconsin.gov, or by telephone at (608) 224-5039.
Analysis Prepared by the Department of Agriculture, Trade and Consumer Protection
This rule revises and updates current rule relating to home improvement practices.
Statutes interpreted
Statutory authority
Explanation of statutory authority
DATCP has broad general authority, under s.
93.07 (1), Stats., to interpret laws under its jurisdiction.
DATCP has authority under s.
100.20 (2) (a), Stats., to promulgate rules forbidding methods of competition in business or trade practices in business that are determined to be unfair. DATCP also has authority to promulgate rules prescribing methods of competition or trade practices that that DATCP determines to be fair.
Related statutes and rules
Some of the home improvement contractors regulated by ch.
ATCP 110 may also be regulated by Ch.
101 — Subchapter II, One and Two Family Dwelling Code, Wis. Stats., associated Department of Safety and Professional Services (DSPS) administrative rules, and building codes administered by local units of government.
Under statutes and rules administered by DSPS, persons who apply for building permits for one or two unit dwellings (and who are not an owner and resident), are required to have a Dwelling Unit Contractor Certification from DSPS. These statutes and rules do not distinguish between building permits for new construction and building permits for home repairs or improvement. Therefore, certified dwelling unit contractors who specialize in new home construction are not regulated by ch.
ATCP 110. And home improvement contractors who perform jobs that do not require building permits are not regulated by the dwelling unit contractor certification program.
Plain language analysis
Rule content
Chapter
ATCP 110 currently regulates home improvement practices. Pursuant to the definition of “home improvement," new residential construction is outside of the scope of the current rule and DATCP does not regulate trade practices in the construction of new homes.
Under this rule, the rights and duties contained in ch.
ATCP 110 would not apply to very large home improvement projects; those where the value of the project is more than 100% of the assessed value of the property. A typical example of this might be a contract to build a new structure on a preexisting foundation.
Under the current rule, home improvement contractors are required to obtain all required state or local building permits before work can begin under the contract. Under this proposed rule, if a home improvement contract consists of multiple subprojects, contractors may start work on the overall project before obtaining all building permits. However, they may not begin work on a subproject that requires a building permit until after they obtain the permit.
Under the current rule, sellers must provide manufacturers product warranties either at the time the buyer and seller enter into the contract or when the product is installed. Under this proposed rule, the seller has the option of providing written manufacturers' warranties at the completion of the project – as long as it is specified in the contract.
Under the current rule, if a home improvement contract contains liquidated damages that penalize a buyer for breaching the contract, the liquidated damages may not exceed 10% of the contract price or $100, whichever is less. This proposed rule maintains the 10 percent limit, but it repeals the $100 maximum.
Under the current rule, the seller may not substitute products or materials from those specified in the home improvement contract, or for those which the seller represented would be used, without prior consent from the buyer. If the home improvement contract is in writing, the prior consent must also be in writing. Under this proposed rule, the seller may deviate from the written home improvement contract, but only under the following limited conditions:
• The buyer verbally agrees to the deviation
•
The seller maintains documentation of the deviation, and the buyer agreed to the deviation.
•
The deviation does not represent any additional cost to the buyer
•
The deviation does not represent a decrease in the value of the finished product.
Under the current rule, the seller is required to provide the buyer with lien waivers before accepting final payment. Further, if the contract requires partial payments at various stages in the performance of the contract, the seller is required to provide lien waivers for the proportionate value of all labor, services and products or materials furnished or delivered as of the time payment is made. This rule does not alter the current rule's treatment of lien waivers before final payment. However, it does allow the seller to forego proportionate lien waivers before partial payments as long as the seller takes steps to educate the buyer about lien waivers and the buyer provides written consent to foregoing the partial waivers.
Under the current rule, sellers are required to give buyers timely notice of any impending delay in contract performance. If the home improvement contract is in writing (or required to be in writing), the buyer must agree in writing to the change in the schedule. This rule qualifies this requirement by specifying that, if the seller can show that the delay was caused by the buyer, the seller is not responsible for the delay.
The current rule contains protections for buyers in the event that the seller fails to complete the project, but also assigns the rights to collect payment to a third party. This rule does not alter this provision. But it does insert an explanatory note that includes an example of how it might be applied.
Under current rules, sellers who provide basement waterproofing services are regulated both as home improvement contractors under ch.
ATCP 110 and also under ch.
ATCP 111 — Basement Waterproofing Practices. This rule consolidates the content of ch.
ATCP 111 into a section of
ATCP 110, without making any substantial changes.
Summary of, and comparison with, existing or proposed federal statutes and regulations.
The federal government does not, in general, regulate home improvement practices.
Comparison with rules in adjacent states
Most states, including all of Wisconsin's neighbors, have home improvement practices laws. Many of the provisions in ATCP 110 are common in these other states as well.
Illinois regulates home improvement practices through its Home Repair and Remodeling Act and its Home Repair Fraud Act. These provisions are generally similar to Wisconsin's Home Improvement Practices rule.
Iowa grants consumers a private right of action which enables consumers to sue businesses that engage in deceptive or unfair practices or misrepresentation, or that fail to disclose material facts. This law covers home improvement practices, among other areas.
Contractors who do home improvement work in Minnesota and Michigan are required to obtain a license from the state (there are some exceptions). In Minnesota, licensed contractors are required to pay into the Minnesota Contractor's Recovery Fund. This fund compensates people who have suffered losses due to a licensed contractor's fraudulent, deceptive or dishonest practices, misuse of funds, or failure to do the work the contractor was hired to do.
Summary of factual data and analytical methodologies
We do not have statistics specific to Wisconsin, but fixr.com (a web-based contractor referral service) has reported the extent of the home improvement industry on a national basis.
United States Annual Averages 1995 - 2009
|
Number of Projects
|
Total Expenditure
|
Average Cost Per Project
|
Room additions and alterations
|
1,156,018
|
$ 23,141,745,151
|
$ 20,019
|
Systems and equipment
|
9,462,782
|
$ 15,061,419,820
|
$ 1,592
|
Outside attachments
|
549,917
|
$ 3,560,131,931
|
$ 6,474
|
Kitchen remodels
|
1,052,211
|
$ 10,638,971,786
|
$ 10,111
|
Other property additions and replacements
|
3,758,351
|
$ 19,767,613,249
|
$ 5,260
|
Exterior additions and replacements
|
5,636,949
|
$ 23,734,265,908
|
$ 4,210
|
Interior additions and replacements
|
5,186,460
|
$ 13,211,085,021
|
$ 2,547
|
Bath remodels
|
1,030,736
|
$ 6,475,917,156
|
$ 6,283
|
Disaster repairs
|
528,062
|
$ 6,448,663,562
|
$ 12,212
|
Complaints against home improvement contractors are consistently ranked in the top ten complaint categories received by the department's bureau of consumer protection. In 2012, DATCP received 391 written complaints against home improvement contractors.
Analysis and supporting documents used to determine effect on small business or in preparation of an economic impact analysis
DATCP has consulted with the Wisconsin Builders Association and the National Association of Remodelers – Milwaukee Chapter on the economic impact and the small business impact of this rule.
Effect on Small Business
The existing ch.
ATCP 110 regulates businesses that provide home improvement services. Many of these businesses are “small businesses." They include general contractors, landscapers, plumbers, roofers, window installers, cabinet makers, electricians, and many more. Some of the changes to ch.
ATCP 110 proposed in this rule will have an effect on some of these businesses. DATCP anticipates that the majority of these effects will be beneficial. The rule streamlines existing regulations to make them easier for home improvement providers to comply. But the rule does not eliminate these regulations, thereby preserving important protections for consumers.
This rule may benefit home improvement contractors in the following ways:
•
General contractors working on significant reconstruction projects would no longer be regulated under this proposed rule. Currently, ch.
ATCP 110 does not regulate new home construction but it does regulate home improvement projects. Under this proposal, major reconstructions — those projects where the price of the contract is greater than the assessed property value — would be treated like new home construction.
