On January 8, 2024, Governor Murphy signed into law P.L. 2023, c. 237, which brought significant changes to the Contractors’ Business Registration Act (CBRA) and introduced the Home Improvement and Home Elevation Contractor Licensing Act. These changes aim to enhance consumer protection and ensure that contractors meet specific security requirements, including the new surety bond requirement.

Key Changes to the CBRA

The amended CBRA now mandates that Home Improvement Contractor Businesses (HICBs) and Home Elevation Contractor Businesses (HECBs) maintain additional security in the form of a compliance bond.

Additional Security Requirement

HICBs and HECBs must maintain additional security. The principal sum of the compliance bond varies based on the value of the contracts:

• $50,000 for contracts valued at more than $120,000 or for services performed in the previous 12 months for contracts valued at a minimum of $750,000.
• $25,000 for contracts valued between $10,000 and $120,000 or for services performed in the previous 12 months for contracts valued between $150,000 and $750,000.
• $10,000 for contracts valued at less than $10,000 or for services performed in the previous 12 months for contracts valued less than $150,000.

Renewal and Compliance

Existing registrations will expire on March 31, 2025, and renewal applications will be available in January 2025. As part of the renewal process, you must submit proof of compliance with the new requirements. This includes having the necessary additional security. Failure to comply may result in delays or denial of registration renewal.

Legal Language and Compliance

You must provide proof of insurance to homeowners before entering into an agreement for home elevation services. The compliance bond covers penalties assessed for violations and must be replenished as claims are paid. The aggregate liability of the surety is limited to the amount of the bond.

Who May Be Exempt from the Bond?

Certain individuals and entities may be exempt from the bond requirement, including:

• Individuals performing home improvements on their own residential or non-commercial property, or that of their family.
• Those performing home improvements on properties owned by bona fide charities or non-profit organizations.
• Professionals regulated by the state, such as architects, engineers, and plumbers, when acting within their scope of practice.
• Employees of community associations or cooperative corporations making home improvements within their scope of employment.
• Public utilities and licensed home financing agencies, home repair contractors, or home repair salesmen when acting within the scope of their license.
• Home improvement retailers with a net worth of more than $50,000,000 and their employees when making or selling home improvements within their scope of employment.
• Individuals holding a valid registration as a home elevation contractor, provided their registration is valid and not surrendered, suspended, revoked, or not renewed.

Need a Bond?

If you need a bond, you can contact Lexington National Insurance Corporation. We will refer you to an insurance agent who specializes in surety to help you obtain the bond. Contractors can also opt to obtain other instruments in lieu of a bond.

Conclusion

These new requirements are designed to protect consumers by ensuring that contractors are financially responsible and capable of fulfilling their contractual obligations. Make sure to comply with these new regulations to ensure a smooth registration renewal process and maintain your business operations.

For more information and to access the registration renewal portal, visit the New Jersey Division of Consumer Affairs website.