Commerce – Week of March 31, 2011

STAFF CONTACT:  Julie T. Simon

SF 466 – Residential construction contracts

HF 329 – Farm equipment dealer and suppliers agreements

FLOOR ACTION:

SF 466 will protect consumers and reputable business owners from unscrupulous residential repair contractors known as “storm chasers” who travel from state to state following natural catastrophes, including severe wind and hail storms, floods and tornadoes, that produce widespread property damages. The scammers then swoop in on towns and cities to take advantage of citizens by using high-pressure tactics, false promises and bogus endorsements, and often “advise” consumers as to what insurance policies should pay.  Typically the contractors offer to repair or replace roofs, garages and siding on single-family homes or small residential rental units. The bill addresses exterior work performed in response to natural catastrophes that will be paid from proceeds of a property/casualty insurance policy when the contractor wants a contract signed prior to the settlement of the consumer’s claim with the insurer. If the consumer signs the contract before the claim is settled, the consumer may cancel the contract within three business days after notification that the damage is in fact not covered by the insurance policy. Contractors must provide notice with specified content, type-size and format that clearly explains the consumer’s rights. [3/30: 47-2 (Behn, Zaun “no”)]

COMMITTEE ACTION:

HF 329 addresses farm equipment supplier-dealership agreements. It clarifies that the cancellation of a dealership agreement without good cause if the supplier fails to pay or credit the dealer is grounds for civil liability. Iowa law regulates terms and conditions of supplier-dealership agreements and provides a list of supplier violations and a list of causes for a supplier’s liability, including damages sustained by a dealer as a consequence of a supplier’s violation of Iowa law. If a supplier terminates a dealership agreement, the supplier must re-purchase the dealer’s equipment and parts inventory. If a supplier is found liable for damages resulting from a violation of Iowa law, the amount due the supplier bears interest at the same rate as for the failure to repurchase equipment and  a supplier’s civil liability is in addition to the re-purchase amount that must be paid to the dealer. The bill passed the House 96-0. (Note: The same language is in SF 320 by Agriculture, which passed the Senate on a 50-0 vote March 7, the same day HF 329 by Commerce was assigned to a Senate subcommittee. Procedurally, HF 329 takes precedence.) [3/29: short form]