New Home Construction Contractor Registration Act
Registration and Other Requirements
The following 1/5/2004 memo to all HBA builder members explains the requirements and definitions under the NHCC act as of that date. Take note of certain updates since this article was written below and other pages on this web site. You should check with your attorney for current law.
DATE: January 5, 2004
TO: Home Builder Members of the HBA of CT
FROM: Bill Ethier, EVP/CEO
REGARDING: New Home Construction Contractor Act Requirements
As of October 1, 1999, any person or business (with certain exceptions) who contracts with a consumer to construct a new home, or any portion of a new home, in Connecticut must register as a “new home construction contractor” (“NHCC”) with the Department of Consumer Protection (“DCP”) and follow other requirements under the law. Associate Members of the HBA should also pay attention to the definition of “new home construction contractor” (see below).
Background: This home builder registration program is different from the home improvement contractor (“HIC”) registration program applicable to remodeling contractors working on existing homes. The Home Builders Association of Connecticut worked with the state legislature, under tight legislative deadlines, to craft the NHCC law. The Association fought off proposals that would have been unworkable for the industry, such as surety bonding for builders, or that would not have protected consumers, such as building code skills testing. The building industry is the only industry where the government approves the plans for and inspects every single product that is made, not just a product line or process. Thus, building code testing as a prerequisite to enter the business would be duplicative with the code inspection process. There is no test that can screen out fraudulent or dishonest contractors, which lead to the major problems faced by consumers. The HBA kept out of the NHCC law most of the troublesome contract requirements found in the home improvement registration act.
Along with their registration application, new home construction contractors must pay $120 for registration fees and $480 for the new home guaranty fund every two years. However, the $120 fee is waived if the contractor also maintains a home improvement contractor registration. The new home guaranty fund is, for now, kept separate from the existing home improvement guaranty fund.
This law was crafted as a compromise in the search for ways to rid the home building industry of its bad actors and protect consumers without overly regulating all the good, honest contractors. The law was pushed through in 1999 primarily by the Attorney General’s office, not the Department of Consumer Protection. But like many new laws, problems with its implementation led to corrective legislation in 2000 sought by the HBA of CT (see Public Act 00-132). Other amendments have also been made (see footnote 1).
Definitions: Among other definitions in the act, a “new home construction contractor” means “any person who contracts with a consumer to construct or sell a new home or any portion of a new home prior to occupancy.” A person includes one or more individuals or any type of business. A “new home” is “any newly constructed (A) single family dwelling unit, (B) dwelling consisting of not more than two units, or (C) unit, common element or limited common element in a condominium . . . or in a common interest community . . ..” Finally, a “consumer” means “the buyer or prospective buyer, or the buyer’s or prospective buyer’s heirs or designated representatives, of any new home or the owner of property on which a new home is being or will be constructed regardless of whether such owner obtains a building permit as the owner of the premises affected ….” The last part in italics was added in 2003 and became effective Oct. 1, 2003 (PA 03-167).
Who Must Register: The amendments to the law in 2000 closed the original “speculative builder” loophole. Now, even if you build a home on speculation (i.e., you have no contract with a consumer), you must be registered under this law. Section 20-417b of the law clearly states “No person shall engage in the business of new home construction or hold oneself out as a new home construction contractor unless such person has been issued a certificate of registration . . ..” (emphasis added). Thus, if you advertise your spec home or advertise the fact that you are in the business of new home construction, you must be registered, and, in fact, you cannot advertise your spec homes until you are registered. For builders who create a new business entity for each project they undertake, each new entity will have to register as a new home construction contractor if it meets the definitions under the act.
Exemptions: Consumers building their own home do not have to register but, subject to the following exemptions, contractors or subcontractors that the consumer contracts with must be registered under this law. The law exempts licensed real estate brokers or salespersons and licensed, registered or certified trade contractors and other professionals who perform only the work for which they are licensed, registered or certified. Since new home construction work is not within the scope of a home improvement contractor’s registration, home improvement contractors must also register as a new home construction contractor if they also perform new home construction work. However, the law also exempts all small contractors, regardless of licensure or registration, who contract separately with new homebuyers but whose total work on a new home does not exceed $3,500. These exemptions are necessary so as not to include businesses never intended to be covered under the homebuilder registration program.
Enforcement: The failure to register as a new home construction contractor subjects contractors to revocation or suspension of their registration to work, civil fines of up to $1,500 per violation, and arrest and criminal prosecution. Additionally, building officials are prohibited from issuing permits to any contractor who does not provide a copy of their registration certificate and registration number to the official. The failure to follow other requirements under this act could result in a Misdemeanor A conviction and treble damages for the failure to return a deposit under 20-417d(d) (see the last bullet on page 4).
The act provides authority to DCP to revoke, suspend or refuse to issue or renew any certificate of registration for a number of reasons. These reasons appear in section 20-417c of the act.
What you must do: We advise all members required to do so to fill out the official DCP application completely and send it in with your payment to DCP so you are issued a registration. The NHCC application can be downloaded from DCP’s web site. Note, however, that the required registration notice (see below) found at DCP’s web site with its application may still be in error since it had not been updated according to the 2000 and 2003 amendments when we checked it on Jan. 2, 2004.
In addition to registering with DCP, the NHCC Act requires contractors to do certain other things:
Updating the reference list is problematical. If one sales person presents a list of prior customers to a prospect unaware that hours ago a certificate of occupancy was issued on another home, the reference list does not technically comply with the law.
Finally, as noted above, the act says the list shall contain the twelve most recent individuals for whom the contractor engaged in new home construction services. It does not say the last twelve who did not opt out of being contacted (see below). Thus, contractors do not have to reach back into time beyond twenty-four months until they find twelve customers who do not opt out. It would be even more of a paperwork burden to do so, and what if all prior customers in the past twenty-four months opt out because they want their privacy? Then, what list does the contractor provide to prospective customers and how is it explained? We are finding that almost all customers are opting out of the reference list so complying with this list requirement in the future is becoming a practicable impossibility. For now, we advise members to follow this requirement as best they can by including the opt out language in their contracts (see the next bullet) and updating their reference list as homes for which the buyer did not opt out receive a certificate of occupancy.
If any HBA Member would like a copy of the full NHCC Act (~10 pages), please call the state HBA office. The general number to call at the DCP for licensing, registration and filing complaints is 860-713-6300 in Hartford or 1-800-842-2649.
 Conn. General Statutes (“CGS”), sections 20-417a to 20-417j (Adopted by the CT General Assembly as follows: Public Act 99-246; as amended by Public Act 00-132; Public Act 01-195; Public Act 02-1 (May 9, 2002, Special Session); Public Act 03-19; Public Act 03-167; and Public Act 03-3 (June 30, 2003, Special Session); PA 06-73).
 See also what DCP advises consumers about new home construction contractors.