First Regular Session Sixty-eighth General Assembly STATE OF COLORADO INTRODUCED LLS NO. 11-0496.01 Christy Chase SENATE BILL 11-207 SENATE SPONSORSHIP Tochtrop, HOUSE SPONSORSHIP (None), Senate Committees House Committees Business, Labor and Technology A BILL FOR AN ACT Concerning the regulation of roofers by the division of registrations in the department of regulatory agencies. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill requires residential roofers, master roofers, and roofing contractors who perform roofing work that exceeds $1,000 in cost to obtain a registration from the division of registrations (division) in the department of regulatory agencies in order to perform roofing work in this state on or after March 1, 2012. The director of the division (director) is to issue: A "residential roofer" registration to an individual or sole proprietorship who performs roofing work only on residential property; A "master roofer" registration to an individual or sole proprietorship who performs roofing work on commercial property or both commercial and residential property; and A "roofing contractor" registration to a roofing contractor business that employs at least one full-time registered roofer, permitting the roofing contractor to perform roofing work only on the type of property on which the employed registered roofer is permitted to perform roofing work. To receive a registration, an applicant must pay the required fee, pass a nationally recognized examination approved by the director, submit proof of minimum general liability coverage, and post a bond of at least $25,000 if performing residential roofing work only and at least $100,000 if performing commercial roofing work. The bill permits the director to issue a provisional registration to a residential or master roofer who has not yet passed the examination and who applies for a registration on or after March 1, 2012, but prior to a date determined by the director. The roofer who receives a provisional registration must pass the examination by the date determined by the director, and failure to do so automatically invalidates the registration. A registered residential roofer, master roofer, or roofing contractor is required to provide a written contract to clients before performing any roofing work, and the contract must contain certain minimum information, such as the scope of roofing services to be performed; the dates and costs of the services; the roofing contractor's contact information, registration number, and type of registration; and the name of the roofing contractor's surety and liability insurer. Contracts also must contain a rescission clause allowing the client to rescind the contract and obtain a full refund of any deposit within 72 hours after entering the contract. Registered roofers and roofing contractors are prohibited from advertising or promising to waive or pay an insurance deductible applicable to a claim for coverage under a property or casualty insurance policy for roofing work on residential property and are subject to claims for damages resulting from a violation of the prohibition. Additionally, an insurer is not bound by a registered roofer or roofing contractor's estimate of roofing work costs if the roofer or roofing contractor promises to waive an applicable deductible. Residential property owners who enter into a contract for roofing work with a registered roofer or roofing contractor, the payment for which is to be made from a property or casualty insurance policy covering the property, may cancel the contract within 72 hours after receipt of notice from the insurer that the claim is denied. The property owner must give a written cancellation notice to the roofer or roofing contractor, and the roofer or roofing contractor must return any payments or deposits to the property owner within 10 days after the contract is canceled. The regulation of roofing contractors is subject to sunset review and repeal on September 1, 2017. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. Title 12, Colorado Revised Statutes, is amended BY THE ADDITION OF A NEW ARTICLE to read: ARTICLE 61.5 Roofing Contractors and Roofers 12-61.5-101. Legislative declaration. (1) The general assembly hereby finds that: (a) Upon application of the Colorado roofing association, the department of regulatory agencies conducted a sunrise review and analysis in accordance with section 24-34-104.1, C.R.S., of a proposal to regulate roofing contractors operating in the state and issued a report on September 29, 2010, recommending that roofing contractors performing roofing work in Colorado register with the state; and (b) The purpose of enacting this article is to protect Colorado consumers by: (I) Establishing a registration system and enforcement program to ensure that Colorado roofing contractors meet minimum professional qualifications and carry adequate insurance and bonding to protect and compensate injured consumers; and (II) Eliminating unregistered, unregulated roofing contractors in Colorado. 12-61.5-102. Definitions. As used in this article, unless the context otherwise requires: (1) "Applicant" means a person applying for a registration pursuant to this article as a residential roofer, a master roofer, or a roofing contractor. (2) "Commercial property" means any building or structure that is not a residential property. (3) "Director" means the director of the division of registrations in the department of regulatory agencies or the director's designee. (4) "Division" means the division of registrations in the department of regulatory agencies. (5) "Master roofer" means a roofer who performs roofing work or roofing services on commercial or residential property or a combination of commercial and residential property. (6) "Person" means an individual, sole proprietorship, partnership, corporation, business trust, limited liability company, or other legal entity. (7) "Registrant" means a residential roofer, master roofer, or roofing contractor registered with the division pursuant to this article. (8) "Residential property" means: (a) A detached, one- or two-family dwelling; or (b) Multiple single-family dwellings that are not more than three stories above grade plane height and provide separate means of egress. (9) "Residential roofer" means a roofer who performs roofing work or roofing services on residential property only. (10) "Roofer" means an individual or sole proprietorship that performs roofing work or roofing services in the state for compensation in excess of one thousand dollars per contract. (11) "Roofing contractor" means a firm, partnership, corporation, association, business trust, limited liability company, or other legal entity that performs or offers to perform roofing work in this state on residential or commercial property for compensation in excess of one thousand dollars per contract. In order to act as a roofing contractor, the firm, partnership, corporation, association, business trust, limited liability company, or other legal entity must employ a full-time roofer who is registered pursuant to this article. (12) (a) "Roofing work" or "roofing services" means the construction, reconstruction, alteration, maintenance, or repair of a roof on a residential or commercial property and the use of materials and items in the construction, reconstruction, alteration, maintenance, and repair of roofing and waterproofing of roofs, all in a manner to comply with plans, specifications, codes, laws, rules, and regulations applicable to the construction, reconstruction, alteration, maintenance, and repair of roofs on residential or commercial properties. (b) "Roofing work" or "roofing services" does not include roofing work or services for which the compensation is one thousand dollars or less per contract. 12-61.5-103. Applicability. This article applies to a roofer or roofing contractor who performs roofing work on or after March 1, 2012, on residential or commercial property and receives compensation in excess of one thousand dollars per contract. 12-61.5-104. Use of titles restricted. No person shall advertise or use the title or designation of residential roofer, master roofer, or roofing contractor unless the person is qualified and registered under this article. 12-61.5-105. Limitation on roofing work - roofing contractors. Only a roofing contractor who employs a registered master roofer may perform roofing work on commercial property in this state. A roofing contractor who employs only registered residential roofers may perform roofing work only on residential property. 12-61.5-106. Registration required. On and after March 1, 2012, a person who performs roofing work in this state or advertises in any publication or represents himself or herself as a residential roofer, master roofer, or roofing contractor shall possess a valid registration issued by the director pursuant to this article and rules promulgated pursuant to this article. A person shall not continue to perform roofing work as a residential roofer, master roofer, or roofing contractor if the director has suspended or revoked the person's registration or the person's registration has expired. 12-61.5-107. Requirements for registration - application - denial - renewal - reinstatement - expiration - fees - penalty. (1) An applicant for a registration as a residential roofer or master roofer shall: (a) Submit an application in the form and manner specified by the director and pay the required fee determined by the director; (b) (I) For a residential roofer registration, pass a nationally recognized examination approved by the director that addresses roofing work on residential property; (II) For a master roofer registration, pass a nationally recognized examination approved by the director that addresses roofing work on commercial and residential property; (c) Obtain coverage under a general liability policy in the following amounts, unless the roofer is employed by and covered under a general liability policy maintained by a roofing contractor: (I) For a residential roofer, at least five hundred thousand dollars in coverage; and (II) For a master roofer, at least one million dollars in coverage; and (d) Post a surety bond in the following amounts, unless the roofer is employed by and covered under a surety bond posted by a roofing contractor: (I) For a residential roofer, at least twenty-five thousand dollars; and (II) For a master roofer, at least one hundred thousand dollars. (2) An applicant for a registration as a roofing contractor shall: (a) Submit an application in the form and manner specified by the director and pay the required fee determined by the director; (b) Employ at least one registered roofer on a full-time basis; (c) Obtain coverage under a general liability policy in the following amounts: (I) If the roofing contractor employs a residential roofer, at least five hundred thousand dollars in coverage; and (II) If the roofing contractor employs a master roofer, at least one million dollars in coverage; and (d) Post a surety bond in the following amounts: (I) If the roofing contractor employs a residential roofer, at least twenty-five thousand dollars; and (II) If the roofing contractor employs a master roofer, at least one hundred thousand dollars. (3) (a) Except as provided in paragraph (b) of this subsection (3), the director shall issue a registration to an applicant who satisfies the requirements of subsection (1) or (2) of this section as applicable. The director may deny registration if the applicant has committed an act that is grounds for disciplinary action under section 12-61.5-109 (2). (b) On or after March 1, 2012, and prior to a date determined by the director by rule, the director may issue a provisional registration to an applicant for a residential or master roofer registration who has not satisfied the requirements of paragraph (b) of subsection (1) of this section. An applicant who is issued a provisional registration pursuant to this paragraph (b) shall comply with the requirements of paragraph (b) of subsection (1) of this section by a date determined by the director by rule, and if the provisional registrant fails to comply with those requirements by that date, the provisional registration expires. (4) (a) The director shall establish a schedule for the renewal or reinstatement of a registration in accordance with section 24-34-102 (8), C.R.S., and a registrant shall renew his or her registration pursuant to that schedule in the form and manner required by the director and shall pay a renewal fee as determined by the director. (b) The director may establish renewal fees and delinquency fees for reinstatement pursuant to section 24-34-105, C.R.S. If a registrant fails to renew his or her registration within the period specified in the schedule, the registration expires, and the registrant shall not perform roofing work until he or she reinstates the registration in the manner required by the director. A person whose registration expires is subject to penalties as provided in section 24-34-102 (8), C.R.S. 12-61.5-108. Scope of article - exclusions. (1) Nothing in this article requires a person who engages in the following activities to obtain a registration pursuant to this article: (a) Roofing work for which the person receives no compensation or compensation of one thousand dollars or less; (b) Roofing work as an employee of a registered roofer or roofing contractor; or (c) Repair, replacement, installation, painting, or other work that is limited to gutters and downspouts on a property. (2) Nothing in this article precludes a registered roofer or roofing contractor from employing a person who is not registered under this article to perform roofing work at the direction of the registered roofer or roofing contractor so long as the registered roofer or roofing contractor employs at least one registered roofer. 12-61.5-109. Grounds for discipline - disciplinary proceedings - rules. (1) The director may take disciplinary action against a registrant if the director finds that the registrant has represented himself or herself as a registered roofer or roofing contractor after the expiration, suspension, or revocation of his or her registration. (2) The director may revoke, deny, suspend, or refuse to renew a registration, impose an administrative fine pursuant to subsection (3) of this section, or issue a cease-and-desist order in accordance with this section upon reasonable grounds that the registrant has: (a) Falsified information in an application or has attempted to obtain or has obtained a registration by fraud, deception, or misrepresentation; (b) Had a registration or license suspended or revoked by another jurisdiction for actions that violate this article; (c) Been convicted of or pled guilty or nolo contendere to a felony or any crime defined in title 18, C.R.S. A certified copy of the judgment of a court of competent jurisdiction of the conviction or plea is prima facie evidence of the conviction or plea. In considering the disciplinary action, the director is governed by section 24-5-101, C.R.S. (d) Failed to notify the director of any disciplinary action in regard to the person's past or currently held license, certificate, or registration required to perform roofing work in this state or any other jurisdiction; (e) Failed to include in a contract to perform roofing services the minimum terms required by section 12-61.5-111; (f) Failed to maintain a general liability policy with coverage in the amount required by section 12-61.5-107 (1) (c) or (2) (c), as applicable; (g) Failed to maintain a surety bond in the amount required by section 12-61.5-107 (1) (d) or (2) (d), as applicable; or (h) Otherwise violated this article, any rule adopted pursuant to this article, or an order of the director. (3) The director may adopt rules establishing fines that he or she may impose on a registrant, which rules must include a graduated fine structure, with a maximum allowable fine of not more than three thousand dollars per violation. The director shall transmit any fines he or she collects from a registrant to the state treasurer for deposit in the general fund. (4) Except as otherwise provided in subsection (2) of this section, the director need not find that the actions that are grounds for discipline were willful but may consider whether the actions were willful when determining the nature of disciplinary sanctions to be imposed. (5) (a) The director may commence a proceeding to discipline a registrant when the director has reasonable grounds to believe that the registrant has committed an act enumerated in this section. (b) In any proceeding held under this section, the director may accept as evidence of grounds for disciplinary action any disciplinary action taken against a registrant in another jurisdiction if the violation that prompted the disciplinary action in the other jurisdiction would be grounds for disciplinary action under this article. (6) The director shall conduct disciplinary proceedings in accordance with article 4 of title 24, C.R.S., and the director or administrative law judge appointed by the director pursuant to paragraph (c) of subsection (7) of this section shall conduct the hearing and opportunity for review pursuant to that article. The director has the authority to exercise all powers and duties conferred by this article during the disciplinary proceedings. (7) (a) The director may request the attorney general to seek an injunction, in any court of competent jurisdiction, to enjoin a person from committing an act prohibited by this article. When seeking an injunction under this paragraph (a), the attorney general is not required to allege or prove the inadequacy of any remedy at law or that substantial or irreparable damage is likely to result from a continued violation of this article. (b) (I) The director may investigate, hold hearings, and gather evidence in all matters related to the exercise and performance of the powers and duties of the director. (II) In order to aid the director in any hearing or investigation instituted pursuant to this section, the director or an administrative law judge appointed pursuant to paragraph (c) of this subsection (7) may administer oaths, take affirmations of witnesses, and issue subpoenas compelling the attendance of witnesses and the production of all relevant records, papers, books, documentary evidence, and materials in any hearing, investigation, accusation, or other matter before the director or an administrative law judge. (III) Upon failure of any witness or registrant to comply with a subpoena or process, the district court of the county in which the subpoenaed person or registrant resides or conducts business, upon application by the director with notice to the subpoenaed person or registrant, may issue to the person or registrant an order requiring the person or registrant to appear before the director; to produce the relevant papers, books, records, documentary evidence, or materials if so ordered; or to give evidence touching the matter under investigation or in question. If the person or registrant fails to obey the order of the court, the court may hold the person or registrant in contempt of court. (c) The director may appoint an administrative law judge pursuant to part 10 of article 30 of title 24, C.R.S., to conduct hearings, take evidence, make findings, and report such findings to the director. (8) (a) The director, the director's staff, any person acting as a witness or consultant to the director, any witness testifying in a proceeding authorized under this article, or any person who lodges a complaint pursuant to this article is immune from liability in any civil action brought against him or her for acts occurring while acting in his or her capacity as director, staff, consultant, or witness, respectively, if such individual was acting in good faith within the scope of his or her respective capacity, made a reasonable effort to obtain the facts of the matter as to which he or she acted, and acted in the reasonable belief that the action taken by him or her was warranted by the facts. (b) A person participating in good faith in making a complaint or report or in an investigative or administrative proceeding pursuant to this section is immune from any civil or criminal liability that otherwise might result by reason of the participation. (9) A final action of the director is subject to judicial review by the court of appeals pursuant to section 24-4-106 (11), C.R.S. The director may institute a judicial proceeding in accordance with section 24-4-106, C.R.S., to enforce an order of the director. (10) When a complaint or an investigation discloses an instance of misconduct that, in the opinion of the director, warrants formal action, the director shall not resolve the complaint by a deferred settlement, action, judgment, or prosecution. (11) (a) If it appears to the director, based upon credible evidence as presented in a written complaint, that a registrant is acting in a manner that is an imminent threat to the health and safety of the public, or a person is acting or has acted without the required registration, the director may issue an order to cease and desist the activity. The director shall set forth in the order the statutes and rules alleged to have been violated, the facts alleged to have constituted the violation, and the requirement that all unlawful acts or unregistered practices immediately cease. (b) Within ten days after service of the order to cease and desist pursuant to paragraph (a) of this subsection (11), the respondent may request a hearing on the question of whether acts or practices in violation of this article have occurred. The director or administrative law judge, as applicable, shall conduct the hearing pursuant to sections 24-4-104 and 24-4-105, C.R.S. (12) (a) If it appears to the director, based upon credible evidence as presented in a written complaint, that a person has violated any other portion of this article, in addition to any specific powers granted pursuant to this article, the director may issue to the person an order to show cause as to why the director should not issue a final order directing the person to cease and desist from the unlawful act or unregistered practice. (b) The director shall promptly notify the person against whom an order to show cause has been issued pursuant to paragraph (a) of this subsection (12) of the issuance of the order and shall include in the notice a copy of the order, the factual and legal basis for the order, and the date set by the director for a hearing on the order. The director may serve the notice on the person against whom the order has been issued by personal service, by first-class, postage-prepaid United States mail, or in another manner as may be practicable. Personal service or mailing of an order or document pursuant to this paragraph (b) constitutes notice of the order to the person. (c) (I) The director shall hold the hearing on an order to show cause no sooner than ten and no later than forty-five calendar days after the date of transmission or service of the notification by the director as provided in paragraph (b) of this subsection (12). The director may continue the hearing by agreement of all parties based upon the complexity of the matter, number of parties to the matter, and legal issues presented in the matter, but in no event shall the director hold the hearing later than sixty calendar days after the date of transmission or service of the notification. (II) If a person against whom an order to show cause has been issued pursuant to paragraph (a) of this subsection (12) does not appear at the hearing, the director may present evidence that notification was properly sent or served on the person pursuant to paragraph (b) of this subsection (12) and such other evidence related to the matter as the director deems appropriate. The director shall issue the order within ten days after the director's determination related to reasonable attempts to notify the respondent, and the order becomes final as to that person by operation of law. The hearing must be conducted pursuant to sections 24-4-104 and 24-4-105, C.R.S. (III) If the director reasonably finds that the person against whom the order to show cause was issued is acting or has acted without the required registration, or has or is about to engage in acts or practices constituting violations of this article, the director may issue a final cease-and-desist order directing the person to cease and desist from further unlawful acts or unregistered practices. (IV) The director shall provide notice, in the manner set forth in paragraph (b) of this subsection (12), of the final cease-and-desist order within ten calendar days after the hearing conducted pursuant to this paragraph (c) to each person against whom the final order has been issued. The final order issued pursuant to subparagraph (III) of this paragraph (c) is effective when issued and is a final order for purposes of judicial review. (13) If it appears to the director, based upon credible evidence presented to the director, that a person has engaged or is about to engage in an unregistered act or practice; an act or practice constituting a violation of this article, a rule promulgated pursuant to this article, or an order issued pursuant to this article; or an act or practice constituting grounds for administrative sanction pursuant to this article, the director may enter into a stipulation with the person. (14) If any person fails to comply with a final cease-and-desist order or a stipulation, the director may request the attorney general or the district attorney for the judicial district in which the alleged violation exists to bring, and if so requested such attorney shall bring, suit for a temporary restraining order and for injunctive relief to prevent any further or continued violation of the final order. (15) A person aggrieved by the final cease-and-desist order may seek judicial review of the director's determination or of the director's final order as provided in subsection (9) of this section. 12-61.5-110. Unauthorized practice - penalties. Any person who engages or offers or attempts to engage in activities as a residential roofer, master roofer, or roofing contractor without an active registration issued under this article commits a class 2 misdemeanor and shall be punished as provided in section 18-1.3-501, C.R.S. 12-61.5-111. Contracts for roofing services - writing required - required terms. (1) Prior to engaging in any roofing work, a registered residential roofer, master roofer, or roofing contractor shall provide a written contract to the client signed by both the registrant or the registrant's designee and the client, stating at least the following terms: (a) The scope of roofing services and materials to be provided; (b) The approximate dates of service; (c) The costs of the services; (d) The registrant's contact information, including physical address, electronic mail address, telephone number, registration number, type of registration, and any other contact information available for the registrant; (e) Identification of the registrant's surety and liability coverage insurer and their contact information; (f) (I) The registrant's policy regarding cancellation of the contract and refund of any deposit, including a rescission clause allowing the client to rescind the contract and obtain a full refund of any deposit within seventy-two hours after entering the contract; and (II) A written statement that the client may cancel a roofing contract pursuant to section 12-61.5-112; (g) (I) For contracts entered into by a registered roofer, a written statement that the activities of roofers are regulated by the director of the division of registrations in the department of regulatory agencies; or (II) For contracts entered into by a registered roofing contractor, a written statement that the activities of roofing contractors are regulated by the director of the division of registrations in the department of regulatory agencies; (h) For contracts entered into to perform roofing work on a residential property, a written statement that if the client plans to use the proceeds of a property or casualty insurance policy issued pursuant to part 1 of article 4 of title 10, C.R.S., to pay for the roofing work, pursuant to section 12-61.5-113, the registered roofer or roofing contractor cannot pay, waive, rebate, or promise to pay, waive, or rebate all or part of any insurance deductible applicable to the claim for payment for roofing work on the covered residential property; and (i) Any other contract provisions required by the director by rule. 12-61.5-112. Residential roofing contract - right to cancel - return of payments. (1) A person who enters into a written contract with a registered roofer or roofing contractor to perform roofing work on the person's residential property, the payment for which will be made from the proceeds of a property or casualty insurance policy issued pursuant to part 1 of article 4 of title 10, C.R.S., may cancel the contract within seventy-two hours after the person receives written notice from the property or casualty insurer that the claim for payment for roofing work on the residential property is denied. The person shall give written notice of cancellation of the contract to the registrant at the physical address provided in the contract within seventy-two hours after he or she is notified of the denial, and the cancellation is effective upon receipt by the registrant at the physical address stated in the contract. (2) Within ten days after cancellation of a contract in accordance with subsection (1) of this section, the registrant shall return to the person any payments or deposits made by or evidence of indebtedness of the person in connection with the contract for roofing work on the residential property. (3) Nothing in this section precludes a registered roofer or roofing contractor from retaining all or a portion of any payments or deposits made by a person to compensate the registrant for roofing work actually performed on the residential property, but the registrant may retain only an amount required to compensate the registrant for the actual work performed. 12-61.5-113. Waiver of insurance deductible prohibited. (1) A registered residential roofer or roofing contractor that performs roofing work on residential property, the payment for which will be made from the proceeds of a property or casualty insurance policy issued pursuant to part 1 of article 4 of title 10, C.R.S., shall not advertise or promise to pay, waive, or rebate all or part of any insurance deductible applicable to the claim for payment for roofing work on the covered residential property. (2) If a registered residential roofer or roofing contractor violates this section: (a) The insurer to whom the insured submitted the claim for payment for the roofing work is not obligated to consider the estimate of costs for the roofing work prepared by the registered residential roofer or roofing contractor; and (b) The person insured under the property or casualty insurance policy or the insurer that issued the policy may bring an action against the registered roofer or roofing contractor in a court of competent jurisdiction to recover damages sustained by the insured or insurer as a consequence of the violation. 12-61.5-114. Fees - cash fund. (1) The director shall establish and collect fees under this article pursuant to section 24-34-105, C.R.S. All fees collected pursuant to this article must be determined, collected, and appropriated in the same manner as set forth in section 24-34-105, C.R.S., and periodically adjusted in accordance with section 24-75-402, C.R.S. (2) Except as otherwise provided in this article, the division shall transmit all fees collected pursuant to this article to the state treasurer, who shall credit the fees to the division of registrations cash fund created pursuant to section 24-34-105 (2) (b), C.R.S. The general assembly shall make annual appropriations from the division of registrations cash fund for expenditures of the division incurred in the performance of its duties under this article. 12-61.5-115. Local government regulatory authority preserved. Nothing in this article limits or otherwise restricts the authority of a local government to regulate the operation of roofing contractors within the jurisdiction of the local government. 12-61.5-116. Repeal of article - review of functions. This article is repealed, effective September 1, 2017. Prior to such repeal, the powers, duties, and functions of the director specified in this article shall be reviewed in accordance with section 24-34-104, C.R.S. SECTION 2. 24-34-104 (48.5), Colorado Revised Statutes, is amended to read: 24-34-104. General assembly review of regulatory agencies and functions for termination, continuation, or reestablishment. (48.5) The following agencies, functions, or both, shall terminate on September 1, 2017: (a) The domestic violence offender management board created in section 16-11.8-103, C.R.S.; (b) The regulation of roofers and roofing contractors by the director of the division of registrations in the department of regulatory agencies pursuant to article 61.5 of title 12, C.R.S. SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.