Amended in Assembly April 13, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 2699


Introduced by Assembly Member Gonzalez

(Coauthor: Assembly Member Weber)

February 19, 2016


An act tobegin insert amend Section 7159.5 of, and toend insert addbegin delete Chapter 2.4 (commencing with Section 18892) to Division 8 ofend deletebegin insert Sections 7169, 7170, and 7171 to,end insert the Business and Professions Code, relating to business.

LEGISLATIVE COUNSEL’S DIGEST

AB 2699, as amended, Gonzalez. begin deleteDepartment of Consumer Affairs: end deletebegin insertContractors’ State License Board: end insertsolarbegin insert energy systemsend insert companies:begin delete solar energy systems.end deletebegin insert regulations.end insert

Existing law provides for the licensure and regulation of various professions and vocations by boards within the Department of Consumer Affairs. Existing law, the Contractors’ State License Law, provides for the licensure and regulation of contractors by the Contractors’ State License Board. Existing law requires licensed contractors to be classified and authorizes them to be classified as, among other things, a solar contractor. Under existing law, a solar contractor installs, modifies, maintains, and repairs thermal and photovoltaic solar energy systems. Existing law prohibits a solar contractor from performing building or construction trades, crafts, or skills, except when required to install a thermal or photovoltaic solar energy system.

This billbegin delete would, among other things, require a solar company selling, financing, or leasing a solar energy system, as defined, to provide each customer withend deletebegin insert would require, on or before July 1, 2017, the board to develop and make available on its Internet Web siteend insert a specified “solar energy system disclosure document.”begin delete The bill would also require the Department of Consumer Affairs to adopt a regulation that includes a specified “Department of Consumer Affairs solar energy system disclosure document” informing customers of the risks and rewards of solar energy system ownership and warranty issues, and protecting those customers from unscrupulous or unfair business practices.end delete The bill would requirebegin delete these disclosuresend deletebegin insert this disclosure documentend insert to be provided by the solarbegin insert energy systemsend insert company to thebegin delete customerend deletebegin insert consumerend insert prior tobegin delete theend deletebegin insert completion of aend insert sale,begin delete finance,end deletebegin insert financing,end insert or lease of a solar energy system.begin delete The bill would make a violation of these provisions by a solar company punishable by an unspecified fine. The bill would also authorize a customer damaged by a willful violation of these provisions to bring a civil cause of action against a solar company for specified damages.end delete

begin delete

This bill would also declare the intent of the Legislature to enact legislation that would require the Department of Consumer Affairs to certify a solar company and establish an insurance pool for customers to access in order to obtain compensation for solar energy system claims, as provided.

end delete

begin insertExisting law requires a home improvement contract to contain, as specified, a notice stating that the owner or tenant has the right to require the contractor to have a performance and payment bond.end insert

begin insert

The bill would require the board to establish through regulation requirements for a contractor to maintain a blanket performance and payment bond for the purpose of solar installation.

end insert
begin insert

Existing law prohibits the downpayment for a home improvement contract from exceeding $1,000 or 10% of the contract amount, whichever is less. Existing law exempts from this restriction a contractor who, among other things, furnishes a blanket performance and payment bond.

end insert
begin insert

The bill would subject a contractor for the installation of a solar energy system to the restriction despite having those performance and payment arrangements.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 7159.5 of the end insertbegin insertBusiness and Professions
2Code
end insert
begin insert is amended to read:end insert

P3    1

7159.5.  

This section applies to all home improvement contracts,
2as defined in Section 7151.2, between an owner or tenant and a
3contractor, whether a general contractor or a specialty contractor,
4that is licensed or subject to be licensed pursuant to this chapter
5with regard to the transaction.

6(a) Failure by the licensee or a person subject to be licensed
7under this chapter, or by his or her agent or salesperson, to comply
8with the following provisions is cause for discipline:

9(1) The contract shall be in writing and shall include the agreed
10contract amount in dollars and cents. The contract amount shall
11include the entire cost of the contract, including profit, labor, and
12materials, but excluding finance charges.

13(2) If there is a separate finance charge between the contractor
14and the person contracting for home improvement, the finance
15charge shall be set out separately from the contract amount.

16(3) If a downpayment will be charged, the downpayment may
17not exceed one thousand dollars ($1,000) or 10 percent of the
18contract amount, whichever is less.

19(4) If, in addition to a downpayment, the contract provides for
20payments to be made prior to completion of the work, the contract
21shall include a schedule of payments in dollars and cents
22specifically referencing the amount of work or services to be
23performed and any materials and equipment to be supplied.

24(5) Except for a downpayment, the contractor may neither
25request nor accept payment that exceeds the value of the work
26performed or material delivered.

27(6) Upon any payment by the person contracting for home
28improvement, and prior to any further payment being made, the
29contractor shall, if requested, obtain and furnish to the person a
30full and unconditional release from any potential lien claimant
31claim or mechanics lien authorized pursuant to Sections 8400 and
328404 of the Civil Code for any portion of the work for which
33payment has been made. The person contracting for home
34improvement may withhold all further payments until these releases
35are furnished.

36(7) If the contract provides for a payment of a salesperson’s
37commission out of the contract price, that payment shall be made
38on a pro rata basis in proportion to the schedule of payments made
39to the contractor by the disbursing party in accordance with
40paragraph (4).

P4    1(8) begin deleteA end deletebegin insertExcept as provided by Section 717end insertbegin insert1, a end insertcontractor
2furnishing a performance and payment bond, lien and completion
3bond, or a bond equivalent or joint control approved by the registrar
4covering full performance and payment is exempt from paragraphs
5(3), (4), and (5), and need not include, as part of the contract, the
6statement regarding the downpayment specified in subparagraph
7(C) of paragraph (8) of subdivision (d) of Section 7159, the details
8and statement regarding progress payments specified in paragraph
9(9) of subdivision (d) of Section 7159, or the Mechanics Lien
10Warning specified in paragraph (4) of subdivision (e) of Section
117159. A contractor furnishing these bonds, bond equivalents, or a
12joint control approved by the registrar may accept payment prior
13to completion. If the contract provides for a contractor to furnish
14joint control, the contractor shall not have any financial or other
15interest in the joint control.

16(b) A violation of paragraph (1), (3), or (5) of subdivision (a)
17by a licensee or a person subject to be licensed under this chapter,
18or by his or her agent or salesperson, is a misdemeanor punishable
19by a fine of not less than one hundred dollars ($100) nor more than
20five thousand dollars ($5,000), or by imprisonment in a county
21jail not exceeding one year, or by both that fine and imprisonment.

22(1) An indictment or information against a person who is not
23licensed but who is required to be licensed under this chapter shall
24be brought, or a criminal complaint filed, for a violation of this
25section, in accordance with paragraph (4) of subdivision (d) of
26Section 802 of the Penal Code, within four years from the date of
27the contract or, if the contract is not reduced to writing, from the
28date the buyer makes the first payment to the contractor.

29(2) An indictment or information against a person who is
30licensed under this chapter shall be brought, or a criminal complaint
31filed, for a violation of this section, in accordance with paragraph
32(2) of subdivision (d) of Section 802 of the Penal Code, within
33two years from the date of the contract or, if the contract is not
34reduced to writing, from the date the buyer makes the first payment
35to the contractor.

36(3) The limitations on actions in this subdivision shall not apply
37to any administrative action filed against a licensed contractor.

38(c) Any person who violates this section as part of a plan or
39scheme to defraud an owner or tenant of a residential or
40nonresidential structure, including a mobilehome or manufactured
P5    1home, in connection with the offer or performance of repairs to
2the structure for damage caused by a natural disaster, shall be
3ordered by the court to make full restitution to the victim based
4on the person’s ability to pay, as defined in subdivision (e) of
5Section 1203.1b of the Penal Code. In addition to full restitution,
6and imprisonment authorized by this section, the court may impose
7a fine of not less than five hundred dollars ($500) nor more than
8twenty-five thousand dollars ($25,000), based upon the defendant’s
9ability to pay. This subdivision applies to natural disasters for
10which a state of emergency is proclaimed by the Governor pursuant
11to Section 8625 of the Government Code, or for which an
12emergency or major disaster is declared by the President of the
13United States.

14begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 7169 is added to the end insertbegin insertBusiness and Professions
15Code
end insert
begin insert, to read:end insert

begin insert
16

begin insert7169.end insert  

On or before July 1, 2017, the board shall develop, and
17make available on its Internet Web site, a “solar energy system
18disclosure document” which a solar energy systems company must
19provide to a consumer prior to completion of a sale, financing, or
20lease of a solar energy system. The “solar energy system disclosure
21document” shall include the following information:

22
(a) The amounts and sources of financing obtained.

23
(b) The total cost and payments for the system, including
24financing costs.

25
(c) The calculations used by the home improvement salesperson
26to determine how many panels the homeowner needs to install.

27
(d) The calculations used by the home improvement salesperson
28to determine how much energy the panels will generate.

29
(e) Any additional monthly fees the homeowner’s electric
30company may bill, any turn-on charges, and any fees added for
31the use of an Internet monitoring system of the panels or inverters.

32
(f) The terms and conditions of any guaranteed rebate.

33
(g) The final contract price, without the inclusion of possible
34rebates.

35
(h) The solar energy system company’s contractor license
36number.

37
(i) The impacts of solar energy system installations not
38performed to code.

39
(j) Types of solar energy system malfunctions.

P6    1
(k) Information about the difference between a solar energy
2system lease and a solar energy system purchase.

3
(l) Information on how and to whom consumers may provide
4complaints.

end insert
5begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 7170 is added to the end insertbegin insertBusiness and Professions
6Code
end insert
begin insert, to read:end insert

begin insert
7

begin insert7170.end insert  

The board shall establish through regulation
8requirements for a contractor to maintain a blanket performance
9and payment bond for the purpose of solar energy systems
10installation.

end insert
11begin insert

begin insertSEC. 4.end insert  

end insert

begin insertSection 7171 is added to the end insertbegin insertBusiness and Professions
12Code
end insert
begin insert, to read:end insert

begin insert
13

begin insert7171.end insert  

Notwithstanding paragraph (8) of subdivision (a) of
14Section 7159.5, a contractor installing a solar energy system shall
15be subject to the down payment restrictions in paragraph (3) of
16subdivision (a) of Section 7159.5.

end insert
begin delete
17

SECTION 1.  

(a) The Legislature finds and declares that the
18Governor set a goal of one million solar rooftop systems installed
19by 2018. As of November 2015, this state leads the nation in the
20installation of residential and business distributed solar projects
21with approximately 438,250 solar projects.

22(b) It is the intent of the Legislature to enact this act to ensure
23that prospective solar customers are provided accurate, clear, and
24concise information to make an informed decision about solar
25energy system installation, and to ensure that new solar energy
26systems continue to reliably provide clean power to millions of
27Californians for many years.

28

SEC. 2.  

Chapter 2.4 (commencing with Section 18892) is added
29to Division 8 of the Business and Professions Code, to read:

30 

31Chapter  2.4. Solar Companies
32

 

33

18892.  

(a) As used in this section, the following terms have
34the following meanings:

35(1) “Customer” shall include any person, firm, corporation, or
36other entity that is solicited by, inquires about, or seeks the services
37of a solar company for the purchase, financing, or lease of a solar
38energy system.

39(2) “Department” means the Department of Consumer Affairs.

P7    1(3) “Solar company” means any company and its broker,
2brokers, or agents that sell, finance, or lease solar energy systems.

3(4) “Solar energy system” has the same meaning as set forth in
4paragraphs (1) and (2) of subdivision (a) of Section 801.5 of the
5Civil Code.

6(b) (1) Prior to completion of a sale, financing, or lease of a
7solar energy system to a customer, a solar company shall provide
8each customer with a “solar energy system disclosure document,”
9which shall include all of the following information:

10(A) A list of current residential or business electric rates by
11kilowatthour, as established by the applicable Public Utilities
12Commission tariff or other regulatory rate document.

13(B) If a payback calculation for the solar energy system is
14provided, the calculation must be based on the customer’s current
15electric rate, which shall be disclosed to the customer.

16(C) A notification that electric rates are subject to change in the
17 future and that estimates of savings are based on today’s electric
18rates. If a payback calculation is included, the notification shall
19be located immediately next to the payback calculation.

20(D) A link to a page on the customer’s electricity provider’s
21Internet Web site that provides information about the electrical
22provider’s filings regarding future rates.

23(E) A description of the solar company’s contractor’s license
24issued pursuant to Chapter 9 (commencing with Section 7000) of
25Division 3, license number, and name of the license qualifier for
26each of the solar company’s licenses for solar system installation.

27(F) Valid, current certificates of insurance for the solar
28company’s commercial general liability and workers’ compensation
29insurance policies.

30(G) A description of the average level of electricity per month
31that would be produced by the solar panels planned for installation
32given the actual physical limitations and conditions specific to the
33customer.

34(H) A notification that, when renewable energy attributes are
35retained by the solar company, the customer is not buying solar
36power, nor buying renewable energy.

37(I) A notification that the balance of any financing or lease
38arrangement is payable to the solar company in the event of the
39death of the customer during the term of the agreement.

P8    1(J) An estimate of the cost of removing and reinstalling solar
2panels in the event that the roof material beneath solar panels is
3replaced.

4(K) An explanation of the potential change in electricity
5production of a solar energy system if the panels become dirty or
6covered with debris, and instructions on how to maintain the solar
7energy system.

8(L) An explanation that if a solar system installation is financed
9by a loan that requires a superpriority lien on the homeowner’s
10mortgage, the homeowner may be unable to refinance his or her
11mortgage because of this financing.

12(M) A notification that customer bill credits are compensated
13by other customers of the electricity provider.

14(2) A solar company that sells, finances, or leases a solar energy
15system to a customer primarily in Spanish, Chinese, Tagalog,
16Vietnamese, or Korean, whether orally or in writing, shall be
17required to provide the disclosure document in paragraph (1) in
18that same language.

19(c) Subject to the Administrative Procedure Act (Chapter 3.5
20(commencing with Section 11340) of Part 1 of Division 3 of Title
212 of the Government Code), the department shall adopt a regulation
22that includes a “Department of Consumer Affairs solar energy
23system disclosure document” informing customers of the risks and
24rewards of solar energy system ownership and warranty issues,
25and protecting those customers from unscrupulous or unfair
26business practices. The solar company shall provide this disclosure
27document developed by the department at the same time that the
28disclosure document in subdivision (b) is provided to the customer.
29The disclosure document developed by the department shall
30include, but shall not be limited to, information about all of the
31following:

32(1) Solar energy system malfunctions.

33(2) Installations not performed to code.

34(3) Roof intrusions and related structural concerns.

35(4) Bankruptcy, insolvency, default, takeover, or closure of a
36solar company with existing customers, especially with respect to
37solar companies who lease systems.

38(5) Loss of warranty on solar energy systems caused by
39bankruptcy, insolvency, default, takeover, or closure of a solar
40company or a solar manufacturer.

P9    1(d) It is the intent of the Legislature to enact legislation that
2would (1) require the department to certify a solar company and
3(2) establish an insurance pool for customers to access in order to
4obtain compensation for solar energy system claims, the funds for
5which shall be raised yearly from all solar companies actively
6doing business in this state at the time of assessment.

7(e) When marketing its services to customers, solar companies
8shall not use the trade dress of other energy providers such that it
9creates a likelihood of confusion that an affiliation or connection
10exists between a solar company and the electrical corporation,
11unless the solar company has express authorization from the
12electrical corporation to do so.

13(f) A violation of this section by a solar company is punishable
14by a fine of not less than ___ ($___) and not more than ___ ($___),
15which shall be in addition to any other punishment imposed for a
16violation of this section. All fines collected by the department
17pursuant to this subdivision shall be deposited in the Professions
18and Vocations Fund described in Section 205, and these fines shall
19be subject to appropriation by the Legislature.

20(g) (1) In addition to the authority granted to the department
21in subdivision (f), a customer damaged by a willful violation of
22the provisions of this chapter may bring a civil cause of action
23against a solar company for damages, including, but not limited
24to, general damages, special damages, and punitive damages.

25(2) The court in an action pursuant to this section may award
26equitable relief, including, but not limited to, an injunction, costs,
27and any other relief the court deems proper.

28(3) The rights and remedies provided in this chapter are in
29addition to any other rights and remedies provided by law.

end delete


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