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[1].  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.[2]  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:

  • Contractors required to register as a new home construction contractor must, prior to entering into a contract with a consumer for new home construction, provide to the consumer a copy of your certificate of registration and a written “registration notice” that is spelled out in the act.  This “New Home Construction Contractor Registration Notice” is duplicated in the DCP application but, as noted above, the DCP website notice may not be updated pursuant to the 2000 and 2003 amendments.  The New Home Construction Contractor Registration Notice [updated with changes from PA 06-73] should be copied as is and provided to all prospective buyers (remember - the definition of consumer includes prospective buyers).  We suggest keeping careful records to document your distribution of this notice to all potential customers.
  • [Note the following provisions regarding the list of references has been changed by PA 06-73; see the update note at the bottom of this article]  As stated in the required notice to prospective buyers, consumers are advised to “request from the contractor a list of consumers of the last twelve new homes constructed to completion by the contractor during the previous twenty-four months . . ..”  Completion is defined in the act as the receipt from the municipality of the certificate of occupancy.  Remember, new home construction contractors only have to offer a list of customers to new prospects and provide the actual list if the prospect requests it.  This requirement, not imposed on any other regulated entity, was strongly opposed by the HBA, but was included presumably so prospects can call prior customers for references on the contractor and so the contractor could not develop its own “cleansed” list of references.

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.

  • You must include in every contract with a consumer a provision advising the consumer that the consumer may be contacted by such contractor’s prospective customers concerning the quality and timeliness of such contractor’s work, unless the consumer advises you in writing, at the time the contract is executed, that the consumer prefers not to be contacted.  Unlike home improvement contracts, this opt out provision is the only contract provision required by the new home construction contractor registration act.  We suggest contract language similar to the following, but please have this reviewed by your attorney:  “As required by Connecticut public act 99-246, as amended by public act 00-132, unless the buyer indicates here that the buyer does not wish to be placed on a list that the contractor is required by law to offer to future potential customers, the contractor must place the buyer on such list?  The buyer must sign here if buyer does not want to be placed on such list: ______________________________________________ (Buyer's Signature)
  • You must state in any advertisement, including telephone directory listings, that you are registered and include your registration number in any such advertisement.
  • The act contains specific prohibitions in subsection 20-417d(d).  Specifically, pay close attention to subsection 20-417d(d)(7) which gives consumers the right to request the return of deposit funds if “(A) the consumer has complied with the terms of the written contract up to the time of the request, (B) no substantial portion of the contracted work has been performed at the time of the request, (C) more than thirty days has elapsed since the starting date specified in the written contract or [if no start date is specified, the contract date itself], and (D) the new home construction contractor has failed to provide a reasonable explanation to the consumer concerning such contractor’s failure to perform a substantial portion of the contracted work.”  Pay close attention to the requirements and definitions in this provision to avoid being trapped by savvy consumers looking for ways to get out of a contract.  You may include a start date and a definition of “substantial portion of contracted work” in your contracts to supplement the statutory definition and better comply with this subsection.

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.

[1] 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).

[2] See also what DCP advises consumers about new home construction contractors.

See HBA of CT 2/1/2005 Testimony to State Legislature's General Law Committee on Proposed Changes to the NHCC Act

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