Residential Contractor Registry: Does it apply to me?
Friday, November 4, 2022
Section: Legislative Update

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Almost a decade ago reports of fraudulent residential contractors were hot in the press. There was one individual who was reported multiple times for randomly arriving at vulnerable peoples homes, claiming there was damage to the roof then taking deposits and never returning. It was front and center in the press which garnered attention of the Vermont legislature who asked the Office of Professional Regulation (OPR) under the Secretary of States Office to begin a "sunrise study" to see if regulating the profession would help stop or limit the fraud in the marketplace. The study was presented in 2018 to Government Operations committees who working with many different advocates created the first draft of the residential contractors registry bill.

The effort to regulate residential contractors was supported vigorously by the Vermont Home Builders and Remodelers Association (VHBR), Vermont’s Attorney General, Secretary of State and the climate advocates. The state agencies supported the policy because they had no way of identifying who the contractors were who were committing fraud and the public had no way of knowing if they were choosing a legitimate contractor. The VHBR supported it because they wanted to create more "professionalism" in their industry by forcing the industry to register and follow other laws that a legitimate business would such as paying minimum wages, carrying insurance and paying employer taxes. The climate advocates were interested in a database that would identify residential contractors so they could push out and enforce the residential building energy standards which traditionally had been unenforced.

What started out as a complicated bill that would unnecessarily impact small contractors and commercial contractors was negotiated to the bill that passed the 2022 legislature and was signed into law. AGC/VT testified on the bill many times and helped increase minimum thresholds to trigger the law, exempted subcontractors working for a registered GC and kept licensed professions such as electricians and plumbers out of the registry. AGC/VT helped shape the bill with specific language that allowed people to continue to participate in small inexpensive projects and maintain a supply of smaller contractors which the market needed.

In short, the bill requires residential contractors who take any one contract over $10,000 to register with the OPR ($50/individuals and $200/companies for 2 years), carry minimum liability coverage, limits on deposits, and requires a written agreement over $10,000. There are exemptions such as landscaping or delivering electronics and the full requirements can be found on OPRs website.

For the most part we do not expect many AGC/VT members to fall into the registration system. For example: road builders and commercial builders need not apply. But that raises a question: Am I a residential builder???? Its not quite so easy to define and some who may be 99.9% commercial contractors may need to register.

Residential property as defined in the bill is any residential property under 4 units. The 4 units described include rental units per the Federal Housing Authority definition so if a contractor works on one of these properties, registration is required. We have had discussions about large condo developments being built for a developer. Those large developments result (generally) in individual deeds being conveyed to an owner who will use the property as a residence, which means that either the developer or the GC must become registered. We even discussed projects that are mixed use. For example: City Place in Burlington is being built which will be a mix of commercial and residential units. The residential units will be rentals managed by a local housing group and this does not meet the requirement to register with OPR. However, if there are townhome units that will have individual deeds which will be conveyed to the "homeowner" that would trigger the project to require registration. 

OPR has stated many times that their efforts over the coming months and year will be to identify contractors who should be registered and create guidance to help them understand whether or not to register. They stated repeatedly that if someone erroneously doesn’t get registered that they will work with the organization without penalizing them (unless its intentional or repeated). They are using this approach because they understand that there will be a learning curve and this is not intended to be a "gotcha" regulation.

Here at AGC/VT we will be continuing to work with the agency and the legislature on this policy as well as identify any shortcomings of the program. For contractors we urge you to really think about whether this will apply to you and please use us here at AGC/VT as a resource to help navigate any questions or you can reach out directly to OPR.