Sureties Defeat Recovery Funds in Two States
Monday, April 7, 2014
Alabama and Mississippi have adjourned for the year and both states declined to enact a recovery fund in lieu of a license bond.
Alabama HB 143, as introduced, would have revised the bond requirement for master plumbers and master gas fitters. Existing law requires a $2,000 bond to be filed with the judge of probate in the county of the plumber or gas fitter’s principal place of business. The bill would have increased the bond amount to $15,000 and converted it into a statewide bond requirement. The bill prohibited cities and counties from requiring a bond if the plumber or gas fitter had a bond with the Alabama Plumbers and Gas Fitters Examining Board. The bill was amended on the House floor right before it passed to repeal the current bond requirement and replace it with a recovery fund for consumers. The bill also provided that participation in the recovery fund would be in lieu of any performance bonds required by a city or county.
A Senate committee passed SB 150, which was identical to HB 143 as originally introduced. When the amended HB 143 came to the Senate, a committee substituted SB 150 for HB 143. SB 150 was on the Senate floor when the legislature adjourned without taking action on it.
The genesis of the Alabama legislation was concerns expressed to legislators regarding the additional bonds that plumbers and gas fitters had to obtain under various local government ordinances. Another concern was that the bond amount was too low to achieve the intended purpose of the bond, which then led to consideration of a recovery fund as an alternative method of consumer protection.
Mississippi SB 2671, as introduced, would have repealed the $20,000 license bond requirement for real estate appraisal management companies and replaced it with a recovery fund. The bill passed the Senate and was sent to the House, which stripped these provisions out of the bill and sent it back to the Senate. A conference committee was convened and the conference report does not contain either the repeal of the $20,000 license bond or the recovery fund considered under the Senate legislation. The conference report is identical to the House version of the bill, which revises the authority of the Real Estate Appraiser Board with no impact on bonding. The conference report was adopted in both chambers before the legislature adjourned. The genesis of this bill also was a concern that the bond amount was too low to be effective.
SFAA worked with AIA on these bills and we know that a number of our members were actively engaged as well.
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