Two Consumer Bills Target Contractors, Bond Companies : Construction: Measures would make it easier for homeowners to collect damages for shoddy work and tighten requirements on builders.

Flooded with complaints about unscrupulous operators in the building trades, a state lawmaker has introduced two bills designed to protect homeowners from shoddy or illegal work by contractors and from problems with construction bond companies.

Assemblywoman Jackie Speier (D-Burlingame) introduced the legislation in response to complaints by several disgruntled Orange County residents and dozens of others from across the state during hearings last fall.

Those special sessions revealed myriad problems with the Contractors State License Board, which is responsible for disciplining the 275,000 builders it licenses in California, and prompted a series of administrative changes to improve consumer protections.

Speier’s bills would broaden the reach of those reforms by making it easier for homeowners to collect damages for shoddy work and tightening requirements on contractors.

One measure would increase the likelihood that surety bond companies pay for contractor errors. Under current law, the bond firms can avoid paying claims for a contractor’s failure to perform if it was not “deliberate” or “willful.” Speier’s bill would remove those conditions.

“The companies liberally apply that standard to a point where it’s very difficult for legitimate claims to be collected upon,” said Michael Miiller, a senior consultant with the Assembly’s Consumer Protection Committee, which Speier chairs.

The bill would also increase the minimum bond amount to $10,000 from the current $7,500. In addition, it would require that surety bond companies pay claims if the Contractors State License Board finds a builder at fault.

Speier’s second bill would hit unscrupulous builders on a variety of fronts. It would prohibit California’s contractor board from approving licenses for builders suspended by another state. “We’ve seen a couple of cases where a contractor moved to California after committing offenses in Arizona or Oregon and then committed similar offenses here,” Miiller said.

The bill also would require contractors to provide Social Security numbers and other identification on licenses so they could be tracked down more easily by wronged clients. In addition, it would extend the statute of limitations for the license board to investigate violations; the board would have 10 years instead of the current three years to look into defects.

Finally, the bill would require that residential construction contracts disclose in writing that homeowners waive any right to a jury trial by accepting binding arbitration to resolve disputes with a builder. During the hearings last year, several homeowners complained that they were unaware of that legal reality.

Miiller said it remains unclear what kind of reception the bills will receive but said the Legislature and Gov. Pete Wilson have received “a ton of complaints” from residents unhappy over problems with contractors.

Dugald Gillies, a lobbyist representing a regional surety bond firm, said he has yet to consult with his client but guesses that Speier’s legislation will not be warmly embraced.

Surety firms will likely be troubled by efforts to remove the requirement that construction bonds be paid only for willful or deliberate actions by a contractor, he said. Moreover, a requirement that bonds be paid if the license board rules against a contractor means the agency is “taking the place of a court,” Gillies said. “Issues of due process have to be explored.”

But the construction industry may be a bit more receptive.

“The bills are probably not going to be a problem at all,” said Paul P. Gladfelty, a lobbyist for the Associated General Contractors of California. “We like to believe we represent a membership of the white hats, the guys who do a good job. To the extent this can clean up some of the bad actors, it certainly benefits the construction industry.”

Although the Contractors State License Board has yet to take a stand on Speier’s bills, the agency’s top executive predicted that the board will welcome them.

“I believe, in principle, the board would support these proposed changes,” said Mickey Matsumoto, the agency’s acting director. “I think the assemblywoman has identified some specific areas that can be strengthened to provide better protection.”