Existing law authorizes a buyer to rescind a home solicitation contract or offer, as defined, within a limited period of time if specified requirements are met. Under existing law, a contract or offer, subject to approval, for the sale, lease, or rental of a water treatment device is deemed a home solicitation contract or offer. Existing law prohibits a water treatment device or any other materials that are the subject of a home solicitation contract or offer from being delivered or installed, or other services performed, until the expiration of the rescission period, as provided. Existing law makes a violation of these provisions a crime.

Existing law prescribes additional requirements on a home improvement contract if obtaining a loan is a condition precedent to the contract or if the contractor provides financing or assists the buyer in obtaining a loan. Existing law renders the home improvement contract unenforceable if the additional requirements are not met, including, among others, if the buyer rescinds the loan or financing transaction within the 3-day period prescribed for rescission pursuant to the federal Truth in Lending Act. Under existing law, a contractor is prohibited from delivering any property or performing any services in relation to the home improvement project until the additional requirements are met.

This bill would authorize the delivery and installation of a water treatment device or any other materials during the home solicitation contract rescission period, subject to the above-described additional rescission requirements for a home improvement contract. The bill would make the seller responsible for all costs in removing the installed water treatment device or other materials, and would require that removal to occur within 20 days if the buyer rescinds the contract before the expiration of the rescission period. The bill would also require the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the sellers services result in the alteration of property of the buyer. Because a violation of the bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes a buyer to rescind a home solicitation contract or offer, as defined, within a limited period of time if specified requirements are met. Under existing law, a contract or offer, subject to approval, for the sale, lease, or rental of a water treatment device is deemed a home solicitation contract or offer. Existing law prohibits a water treatment device or any other materials that are the subject of a home solicitation contract or offer from being delivered or installed, or other services performed, until the expiration of the rescission period, as provided. Existing law makes a violation of these provisions a crime.

Existing law prescribes additional requirements on a home improvement contract if obtaining a loan is a condition precedent to the contract or if the contractor provides financing or assists the buyer in obtaining a loan. Existing law renders the home improvement contract unenforceable if the additional requirements are not met, including, among others, if the buyer rescinds the loan or financing transaction within the 3-day period prescribed for rescission pursuant to the federal Truth in Lending Act. Under existing law, a contractor is prohibited from delivering any property or performing any services in relation to the home improvement project until the additional requirements are met.

This bill would authorize the delivery and installation of a water treatment device or any other materials during the home solicitation contract rescission period, subject to the above-described additional rescission requirements for a home improvement contract. The bill would make the seller responsible for all costs in removing the installed water treatment device or other materials, and would require that removal to occur within 20 days if the buyer rescinds the contract before the expiration of the rescission period. The bill would also require the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the sellers services result in the alteration of property of the buyer. Because a violation of the bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes a buyer to rescind a home solicitation contract or offer, as defined, within a limited period of time if specified requirements are met. Under existing law, a contract or offer, subject to approval, for the sale, lease, or rental of a water treatment device is deemed a home solicitation contract or offer. Existing law prohibits a water treatment device or any other materials that are the subject of a home solicitation contract or offer from being delivered or installed, or other services performed, until the expiration of the rescission period, as provided. Existing law makes a violation of these provisions a crime.

This bill would authorize the delivery and installation of a water treatment device or any other materials during the home solicitation contract rescission period. period, subject to the above-described additional rescission requirements for a home improvement contract. The bill would make the seller responsible for all costs in removing the installed water treatment device or other materials, and would require that removal to occur within 20 days if the buyer rescinds the contract before the expiration of the rescission period. The bill would also require the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the sellers services result in the alteration of property of the buyer. Because a violation of the bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes a buyer to rescind a home solicitation contract or offer, as defined, within a limited period of time if specified requirements are met. Under existing law, a contract or offer, subject to approval, for the sale, lease, or rental of a water treatment device is deemed a home solicitation contract or offer. Existing law prohibits a water treatment device or other materials that are the subject of a home solicitation contract or offer from being delivered or installed, or other services performed, until the expiration of the rescission period, as provided. Existing law makes a violation of these provisions a crime.

This bill would authorize the delivery and installation of a water treatment device or other materials during the rescission period. The bill would make the contractor seller responsible for all costs in removing the installed water treatment device or other materials materials, and would require that removal to occur within 20 days if the buyer rescinds the contract before the expiration of the rescission period. The bill would also require the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the sellers services result in the alteration of property of the buyer. Because a violation of the bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law authorizes a buyer to rescind a home solicitation contract or offer, as defined, within a limited period of time if specified requirements are met. Under existing law, a contract or offer, subject to approval, for the sale, lease, or rental of a water treatment device is deemed a home solicitation contract or offer. Existing law prohibits a water treatment device or other materials that are the subject of a home solicitation contract or offer from being delivered or installed, or other services performed, until the expiration of the rescission period, as provided. Existing law makes a violation of these provisions a crime.

This bill would authorize the delivery and installation of a water treatment device or other materials during the rescission period. The bill would make the contractor responsible for all costs in removing the installed water treatment device or other materials if the buyer rescinds the contract before the expiration of the rescission period. Because a violation of the bills requirements would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

 UNFINISHED BUSINESS  

Bill No: SB 981

Author:

:

Vote:

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 4/9/18

AYES: Hill, Fuller, Dodd, Galgiani, Glazer, Hernandez, Newman, Pan, Wilk

SENATE JUDICIARY COMMITTEE: 7-0, 4/24/18

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SENATE FLOOR: 38-0, 5/10/18

AYES: Allen, Anderson, Atkins, Bates, Beall, Berryhill, Bradford, Cannella, De León, Dodd, Fuller, Gaines, Galgiani, Glazer, Hernandez, Hill, Hueso, Jackson, Lara, Leyva, McGuire, Mitchell, Monning, Moorlach, Morrell, Newman, Nguyen, Nielsen, Pan, Portantino, Roth, Skinner, Stern, Stone, Vidak, Wieckowski, Wiener, Wilk

NO VOTE RECORDED: Hertzberg

ASSEMBLY FLOOR: 80-0, 8/27/18 - See last page for vote

SUBJECT: Home solicitation contract or offer: water treatment devices: rescission

SOURCE: Pacific Water Quality Association

DIGEST:

The bill removes the restriction on the delivery and installation of water treatment devices during the three-day right to rescission period required under existing law.

Assembly Amendments

require a water treatment device or any other materials that are the subject of a contract, as specified, to be delivered and installed in accordance with the federal Truth in Lending Act as specified.

ANALYSIS:

Existing law:

1. Defines “water treatment device” to mean any product that is: (a) designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing, and (b) is used or sold, leased or rented for use on residential property primarily for personal, family or household purposes. (Business and Professions Code (BPC) § 17577.1(b))
2. Deems that a contract for the sale, lease, or rental of a water treatment device is a home solicitation contract as defined in Civil Code (CIV) Section 1689.5 regardless of where the contract is made and subjects the cancellation of water treatment device contract to contract cancellation provisions specified in CIV Sections 1689.5-1689.13. (BPC § 17577.3(a))
3. Specifies that no water treatment device or any other materials that are related to the water treatment device may be delivered and no installation services may be performed until the expiration of the rescission period specified in CIV Sections 1689.5-1689.13. (BPC § 17577.3(b))

This bill:

1. Revises current law to allow materials to be delivered for a water treatment device or the installation of a water treatment device during the three-day rescission period.
2. Specifies that if a buyer exercises his or her right to rescind the contract for a water treatment device in accordance with the rescission provisions, the seller is responsible for all costs in removing the installed water treatment device or other materials, and is required to remove that device or materials within 20 days of the rescission.
3. Requires, in the event of a rescission, the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the seller’s service results in alteration of the buyer’s property.
4. Requires a water treatment device or any other materials that are the subject of a contract, as specified, to be delivered and installed in accordance with the federal Truth in Lending Act as specified.

Background

Water treatment devices. Water treatment devices are primarily used for personal, family, or household use. Under BPC Section 17577.1, they are defined as any product that is designed (or claims to be designed) to alter the chemical or physical properties or characteristics of water or plumbing. Until 2014, a water treatment device solicited for sale in California was required to be certified by the California Department of Public Health. As a result of AB 119 (Committee of Environmental Safety and Toxic Materials, Chapter 403, Statutes of 2013), the law was revised to instead require the California State Water Resource Control Board to oversee water treatment devices, which are now certified by outside third parties.

Sales and history. AB 2348 (McCorquodale, Chapter 1053, Statutes of 1988) revised the law on the sale, lease or rental of water treatment devices and deemed any contract for a water treatment device to be considered a “home solicitation contract” as specified in CIV Section 1689.5. AB 2348 also prohibited the delivery of materials or the installation of a water treatment device until the expiration of the rescission period as specified in the “home solicitation contract” provisions, which under current law is three days.

As currently drafted, this bill strikes the existing prohibition and instead allows the materials for, or the installation of a water treatment device prior to the conclusion of the three-day rescission period. This bill does not exempt a water treatment device sale, lease or rental from the current provisions of law pertaining to a “home solicitation contract”. This bill also specifies that if the buyer chooses to rescind the contract for a water treatment device within the three-day period, the seller is required to restore the property to the same condition before the device was installed and further requires the removal of the materials within 20 days of the rescission.

Home solicitation contract. According to information provided by the Department of Consumer Affairs, virtually any consumer transaction in the amount of $25 or more which takes place in the buyer's home or away from "appropriate trade premises" can be canceled by the buyer, without penalty or obligation, if the consumer gives a proper notice within three business days after the buyer signs the contract. In order to cancel, the buyer must give the seller written notice of the buyer's intention not to be bound by the contract. This cancellation right is created by the Home Solicitation Sales Act, whose purpose is to “protect consumers against pressure to make an immediate purchasing decision when a salesperson appears at their home, or where the sales pitch is given at a non-business location.” The three-day rescission period as specified under the home improvement act can be waived under specified conditions, including a disaster/emergency.

Under CIV Section 1689.7, a seller is required to provide the purchaser with specified information about the contract including information about the three-day cancellation period. Consumers are informed that if they can cancel the contract, they are entitled to a refund of the payment form within 10 days of the receipt of the cancellation notice. Consumers are also informed that they are required to make any delivered materials available to the seller in the same condition as when delivered, and the seller is required to pick up the materials within 20 days. If the seller does not pick them up, the purchaser may retain the materials, and if the purchaser does not make them available, the purchaser is then responsible for the obligations specified under the contract.

In the home solicitation contract requirements for the three-day right to cancel policy, it does not specifically prohibit the installation of other products subject to a home solicitation contract similar to the prohibition for the installation of, or delivery of materials for, water treatment devices.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, costs (special fund and GF) of about $44,000 annually for the Department of Justice to handle increased workload.

SUPPORT: (Verified 8/27/18)

Pacific Water Quality Association (source)

California Retailers Association

Heritage Well Service

Impact Water Products

Plumbing-Heating-Cooling Contractors Association of California

Quality Home Services

San Diego, Southern California and Central California Chapters of Associated Builders and Contractors

Water Quality Association

OPPOSITION: (Verified 8/27/18)

Contractors State License Board

ARGUMENTS IN SUPPORT: The Pacific Water Quality Association and Water Quality Association, and the California Retailers Association write in support, and note that this bill still preserves the right of the purchaser to cancel the purchase during the three days and requires the seller to be responsible for all costs in removing the water treatment device.

Impact Water Products, Heritage Well Service, Quality Home Services, the Plumbing-Heating-Cooling Contractors Association of California and the San Diego, Southern California and Central California Chapters of Associated Builders and Contractors write in support and note that this bill does a good job of balancing consumer protections with the need to allow legitimate business to provide immediate access to safer water by installing water treatment systems.

ARGUMENTS IN OPPOSITION: Contractors State License Board writes in opposition, “the bill would remove the prohibition against installing a water treatment device during the buyer’s three-day right to rescind a home solicitation contract, eliminate a consumer protection relating to financed contracts for such installations, and may confuse the license requirements for licensees and consumers.”

ASSEMBLY FLOOR: 80-0, 8/27/18

AYES: Acosta, Aguiar-Curry, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bonta, Brough, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dahle, Daly, Eggman, Flora, Fong, Frazier, Friedman, Gabriel, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Harper, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Rivas, Rodriguez, Rubio, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood, Rendon

Prepared by: 916-651-4104

8/28/18 9:36:35

**** END ****

SENATE THIRD READING

STR Bill Id:SB 981

Author:(Dodd)

As Amended Ver:August 23, 2018

Majority vote

SENATE VOTE: 38-0

SUMMARY: This bill removes the restriction on the delivery and installation of water treatment devices during the three-day right to rescission period required under existing law. Specifically, this bill:

1. Provides that a water treatment device subject to a home solicitation contract, as specified, may be delivered and installed during the rescission period required by the Civil Code.
2. Provides that, in the event that a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs associated with removing the installed water treatment device or other materials, and would require the seller to remove the device any other materials within 20 days of the rescission. If the seller's services result in the alteration of the property of the buyer, the seller would be required to restore the property to substantially as good of condition as it was at the time the services were rendered.
3. Require that any water treatment device or any other materials that are the subject of a contract offer described above shall be delivered and installed in accordance with the federal Truth in Lending Act and specified restrictions on condition precedents.

EXISTING LAW:

1. Provides that in addition to any other right to revoke an offer, the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase, with specified exceptions. (Civil Code Section (CIV) 1689.6(a).)
2. Provides that a contract or offer which is subject to approval, for the sale, lease, or rental of a water treatment device shall be deemed a home solicitation contract or offer regardless of where the contract or offer was made, and shall be subject to specified provisions of the Civil Code, above, if the contract or offer arises out of a scheduled presentation to promote the sale, lease, or rental of a water treatment device to a person invited to attend the presentation at a location other than a private residence. (Business and Professions Code Section (BPC) 17577.3(a).)
3. Provides that no water treatment device or any other materials that are the subject of such a contract offer shall be delivered and no installation or other services shall be performed until the expiration of the three-day rescission period, as specified. (BPC 17577.3(b).)
4. Makes it unlawful for any person to do any of the following in connection with the sale, lease, rental, or other disposition of a water treatment device:
   1. Make any untrue or misleading oral or written statements regarding the presence of one or more contaminants in water, or the performance of water treatment devices, as specified;
   2. Perform precipitation tests, which may only be used to demonstrate the hardness of the water or other non-health related characteristics, of the consumer's drinking water without also clearly informing the consumer of the results, scope, and limits of the test;
   3. Make product performance claims or product benefit claims that the device affects the health or safety of drinking water unless the device complies with specified requirements;
   4. Use pictures, exhibits, graphs, charts, endorsements, or testimonials in any untrue or misleading manner; or
   5. Fail to clearly disclose in writing prior to purchase, lease, or rent, the importance of maintaining the water treatment device according to the manufacturer's instructions, as specified. (BPC 17577.2.)
5. Provides that, in addition to any other rights or remedies provided by law, a buyer, lessee, or renter of a water treatment device may bring an action against any person who violates the above provisions for the recovery of actual damages, exemplary damages, reasonable attorney's fees and costs, and appropriate equitable relief. (BPC 17577.6.)
6. Defines "water treatment device" as any product that a) is designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing and b) is used or sold, leased, or rented for use on residential real property primarily for personal, family, or household purposes. (BPC 17577.1.)
7. Defines "home solicitation contract or offer" as any contract, whether single or multiple, or any offer which is subject to approval, for the sale, lease, or rental of goods or services or both, made at other than appropriate trade premises in an amount of $25 or more, including any interest or service charges, as specified. (Civil Code Section 1689.5.)
8. FISCAL EFFECT: According to the Assembly Appropriations Committee, costs for this bill (special fund and General Fund) would be about $44,000 annually for the Department of Justice to handle an increased workload.
9. COMMENTS: Nationwide publicity regarding the existence of and health dangers presented by contaminated drinking water in the 1980s left the public vulnerable to deceptive practices in the sale of water treatment devices. In response, SB 2348 (McCorquodale), Chapter 1053, was approved by the Legislature in 1988. The legislative findings and declarations illustrate the Legislature's motivation in passing that bill, which extended consumer protections to homeowners seeking to ensure safe drinking water for their families:

The Legislature finds and declares that there have been situations where homeowners have been subjected to fraud, deception, and unfair dealing by certain promoters of water treatment devices. Water contamination problems throughout the nation have created concern among homeowners concerning the quality and healthfulness of home water for drinking. Some promoters of water treatment devices have made false, misleading, and unfair statements in connection with sale of water treatment devices, including, but not limited to, false, misleading, and unfair statements regarding general levels of water contamination, water contamination problems actually or potentially affecting particular homeowners, actual or potential health risks associated with the consumption of water, and the features and performance of water treatment devices. As a result […] many homeowners have been pressured into purchasing water treatment devices without the opportunity to verify the accuracy of the sales representations. The Legislature also finds and declares that current law does not afford homeowners who enter transactions for the acquisition of water treatment devices the right in all instances to cancel the transaction within three days of its consummation. Moreover, homeowners may be subjected to the loss of their homes through the foreclosure of liens securing financing of water treatment devices.

[…]

The intent and purposes of this article are to safeguard the public against deceit; to ensure, foster, and encourage fair dealing in the sale of water treatment devices; to prohibit misleading representations; to prohibit certain liens on real property; and to afford homeowners a reasonable and meaningful opportunity to rescind transactions for the acquisition of water treatment devices. (BPC 17577.)

To that end, SB 2348 classified agreements for the sale, lease, or rental of water treatment devices as "home solicitation contracts or offers," regardless of where the agreement was made, and applied the relevant Civil Code sections governing home solicitation contracts to contracts for water treatment devices. (See CIV 1689.5-1689.13.) A significant consumer protection found within those code sections is the right of a buyer to cancel a home solicitation agreement until midnight of the third business day after the day on which the buyer signs the agreement. (CIV 1689.6.)

Beyond the protections afforded to buyers of other home solicitation contracts, SB 2348 additionally provided that no water treatment device could be delivered or installed, or other services performed, until the expiration of the rescission period.

While maintaining existing law's three-day "cooling off" period, this bill eliminates the prohibition on installing water treatment devices during those initial three days. Thus, while this bill still affords buyers the right to cancel a water treatment device home solicitation contract for three days, buyers would also be able to elect to have the device installed immediately.

The three-day prohibition on installation under SB 2348 was arguably intended to protect the effectiveness and utility of the three-day rescission period. According to proponents of the bill, this provision has resulted in licensed businesses that encounter difficulties in trying to compete with unlicensed sellers.

Tempering concerns that this change might undermine the three-day right of rescission, this bill also provides that if a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs in removing the installed water treatment device or other materials, and requires that such removal take place within 20 days of the recession. The bill also requires a seller to restore the property to substantially as good of condition as it was at the time the services were rendered.

The author notes that by eliminating the 72-hour prohibition on installation, this bill treats water treatment devices that same as other home solicitation contracts under the Civil Code. The author writes, "water treatment companies, unlike similar door to door sales industries, are uniquely singled out with this 3-day prohibition against installation. SB 981 simply creates parity in the application of the law for water treatment companies."

Analysis Prepared by: Nichole Rapier / P. & C.P. / (916) 319-2200 FN: 0004545

SENATE THIRD READING

STR Bill Id:SB 981

Author:(Dodd)

As Amended Ver:April 16, 2018

Majority vote

SENATE VOTE: 38-0

SUMMARY: This bill removes the restriction on the delivery and installation of water treatment devices during the three-day right to rescission period required under existing law. Specifically, this bill:

1. Provides that a water treatment device subject to a home solicitation contract, as specified, may be delivered and installed during the rescission period required by the Civil Code.
2. Provides that, in the event that a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs associated with removing the installed water treatment device or other materials, and would require the seller to remove the device any other materials within 20 days of the rescission. If the seller’s services result in the alteration of the property of the buyer, the seller would be required to restore the property to substantially as good of condition as it was at the time the services were rendered.

EXISTING LAW:

1. Provides that in addition to any other right to revoke an offer, the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase, with specified exceptions. (Civil Code Section (CIV) 1689.6(a).)
2. Provides that a contract or offer which is subject to approval, for the sale, lease, or rental of a water treatment device shall be deemed a home solicitation contract or offer regardless of where the contract or offer was made, and shall be subject to specified provisions of the Civil Code, above, if the contract or offer arises out of a scheduled presentation to promote the sale, lease, or rental of a water treatment device to a person invited to attend the presentation at a location other than a private residence. (Business and Professions Code Section (BPC) 17577.3(a).)
3. Provides that no water treatment device or any other materials that are the subject of such a contract offer shall be delivered and no installation or other services shall be performed until the expiration of the three-day rescission period, as specified. (BPC 17577.3(b).)
4. Makes it unlawful for any person to do any of the following in connection with the sale, lease, rental, or other disposition of a water treatment device:
   1. make any untrue or misleading oral or written statements regarding the presence of one or more contaminants in water, or the performance of water treatment devices, as specified;
   2. perform precipitation tests, which may only be used to demonstrate the hardness of the water or other non-health related characteristics, of the consumer’s drinking water without also clearly informing the consumer of the results, scope, and limits of the test;
   3. make product performance claims or product benefit claims that the device affects the health or safety of drinking water unless the device complies with specified requirements;
   4. use pictures, exhibits, graphs, charts, endorsements, or testimonials in any untrue or misleading manner; or
   5. fail to clearly disclose in writing prior to purchase, lease, or rent, the importance of maintaining the water treatment device according to the manufacturer’s instructions, as specified. (BPC 17577.2.)
5. Provides that, in addition to any other rights or remedies provided by law, a buyer, lessee, or renter of a water treatment device may bring an action against any person who violates the above provisions for the recovery of actual damages, exemplary damages, reasonable attorney’s fees and costs, and appropriate equitable relief. (BPC 17577.6.)
6. Defines "water treatment device" as any product that a) is designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing and b) is used or sold, leased, or rented for use on residential real property primarily for personal, family, or household purposes. (BPC 17577.1.)
7. Defines "home solicitation contract or offer" as any contract, whether single or multiple, or any offer which is subject to approval, for the sale, lease, or rental of goods or services or both, made at other than appropriate trade premises in an amount of $25 or more, including any interest or service charges, as specified. (Civ. Code Sec. 1689.5.)

FISCAL EFFECT: According to the Assembly Appropriations Committee, costs for this bill (special fund and General Fund) would be about $44,000 annually for the Department of Justice to handle an increased workload.

COMMENTS: Nationwide publicity regarding the existence of and health dangers presented by contaminated drinking water in the 1980s left the public vulnerable to deceptive practices in the sale of water treatment devices. In response, SB 2348 (McCorquodale), Chapter 1053, was approved by the Legislature in 1988. The legislative findings and declarations illustrate the Legislature’s motivation in passing that bill, which extended consumer protections to homeowners seeking to ensure safe drinking water for their families:

The Legislature finds and declares that there have been situations where homeowners have been subjected to fraud, deception, and unfair dealing by certain promoters of water treatment devices. Water contamination problems throughout the nation have created concern among homeowners concerning the quality and healthfulness of home water for drinking. Some promoters of water treatment devices have made false, misleading, and unfair statements in connection with sale of water treatment devices, including, but not limited to, false, misleading, and unfair statements regarding general levels of water contamination, water contamination problems actually or potentially affecting particular homeowners, actual or potential health risks associated with the consumption of water, and the features and performance of water treatment devices. As a result […] many homeowners have been pressured into purchasing water treatment devices without the opportunity to verify the accuracy of the sales representations. The Legislature also finds and declares that current law does not afford homeowners who enter transactions for the acquisition of water treatment devices the right in all instances to cancel the transaction within three days of its consummation. Moreover, homeowners may be subjected to the loss of their homes through the foreclosure of liens securing financing of water treatment devices.

[…]

The intent and purposes of this article are to safeguard the public against deceit; to ensure, foster, and encourage fair dealing in the sale of water treatment devices; to prohibit misleading representations; to prohibit certain liens on real property; and to afford homeowners a reasonable and meaningful opportunity to rescind transactions for the acquisition of water treatment devices. (BPC 17577.)

To that end, SB 2348 classified agreements for the sale, lease, or rental of water treatment devices as "home solicitation contracts or offers," regardless of where the agreement was made, and applied the relevant Civil Code sections governing home solicitation contracts to contracts for water treatment devices. (See CIV 1689.5-1689.13.) A significant consumer protection found within those code sections is the right of a buyer to cancel a home solicitation agreement until midnight of the third business day after the day on which the buyer signs the agreement. (CIV 1689.6.)

Beyond the protections afforded to buyers of other home solicitation contracts, SB 2348 additionally provided that no water treatment device could be delivered or installed, or other services performed, until the expiration of the rescission period.

While maintaining existing law’s three-day "cooling off" period, this bill eliminates the prohibition on installing water treatment devices during those initial three days. Thus, while this bill still affords buyers the right to cancel a water treatment device home solicitation contract for three days, buyers would also be able to elect to have the device installed immediately.

The three-day prohibition on installation under SB 2348 was arguably intended to protect the effectiveness and utility of the three-day rescission period. According to proponents of the bill, this provision has resulted in licensed businesses that encounter difficulties in trying to compete with unlicensed sellers.

Tempering concerns that this change might undermine the three-day right of rescission, this bill also provides that if a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs in removing the installed water treatment device or other materials, and requires that such removal take place within 20 days of the recession. The bill also requires a seller to restore the property to substantially as good of condition as it was at the time the services were rendered.

The author notes that by eliminating the 72-hour prohibition on installation, this bill treats water treatment devices that same as other home solicitation contracts under the Civil Code. The author writes, "water treatment companies, unlike similar door to door sales industries, are uniquely singled out with this 3-day prohibition against installation. SB 981 simply creates parity in the application of the law for water treatment companies."

Analysis Prepared by: Nichole Rapier / P. & C.P. / (916) 319-2200 FN: 0004224

Date of Hearing: August 8, 2018

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

SBPCA Bill Id:SB 981

Author:(Dodd) – As Amended Ver:April 16, 2018

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill removes the restriction on the delivery and installation of water treatment devices during the three-day right to rescission period required under existing law. Specifically, this bill:

1. Provides a water treatment device subject to a home solicitation contract, as specified, may be delivered and installed during the rescission period required by the Civil Code.
2. Provides, in the event that a buyer exercises their right to rescind the contract, the seller is responsible for all costs associated with removing the installed water treatment device or other materials, and requires the seller to remove the device and any other materials within 20 days of the rescission. If the seller’s services result in the alteration of the property of the buyer, the seller is required to restore the property to substantially as good of condition as it was at the time the services were rendered.

FISCAL EFFECT:

Costs (special fund and GF) of about $44,000 annually for the Department of Justice to handle increased workload.

COMMENTS:

Background and purpose. Unlike other home solicitation contracts, contracts for the installation of water treatment devices require the seller to wait three days—until the expiration of the right to rescission or “cooling-off” period—before installing the device. However, licensed contractors within the industry claim that unlicensed businesses are unfairly competing with licensed companies by failing to wait until the conclusion of the three-day period before installing the water treatment device. According to the author:

The “Right to Cancel” statute is important in protecting the rights of Californians from deceitful door to door sales. As an unintended result of the “Right to Cancel” statute, unlicensed sellers are competing with legitimate sellers by illegally installing water treatment systems prior to expiration of the three-day window. The Legislature should amend section 17577.3 of the Business and Professions Code to allow licensed installers of water treatment devices to install devices during the three-day right to cancel period, with the right of the purchaser to still cancel the purchase within the three days.

Analysis Prepared by: Jessica Peters / APPR. / (916) 319-2081

Date of Hearing: June 19, 2018

ASSEMBLY COMMITTEE ON PRIVACY AND CONSUMER PROTECTION

Ed Chau, Chair

SBPCA Bill Id:SB 981

Author:(Dodd) – As Amended Ver:April 16, 2018

SENATE VOTE: 38-0

SUBJECT: Home solicitation contract or offer: water treatment devices: rescission

SUMMARY: This bill would remove the restriction on the delivery and installation of water treatment devices during the three-day right to rescission period required under existing law. Specifically, this bill would:

1. Provide that a water treatment device subject to a home solicitation contract, as specified, may be delivered and installed during the rescission period required by the Civil Code.
2. Provide that, in the event that a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs associated with removing the installed water treatment device or other materials, and would require the seller to remove the device any other materials within 20 days of the rescission. If the seller’s services result in the alteration of the property of the buyer, the seller would be required to restore the property to substantially as good of condition as it was at the time the services were rendered.

EXISTING LAW:

1. Provides that in addition to any other right to revoke an offer, the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase, with specified exceptions. (Civ. Code Sec. 1689.6(a).)
2. Provides that a contract or offer which is subject to approval, for the sale, lease, or rental of a water treatment device shall be deemed a home solicitation contract or offer regardless of where the contract or offer was made, and shall be subject to specified provisions of the Civil Code, above, if the contract or offer arises out of a scheduled presentation to promote the sale, lease, or rental of a water treatment device to a person invited to attend the presentation at a location other than a private residence. (Bus. & Prof. Code Sec. 17577.3(a).)
3. Provides that no water treatment device or any other materials that are the subject of such a contract offer shall be delivered and no installation or other services shall be performed until the expiration of the three-day rescission period, as specified. (Bus. & Prof. Code Sec. 17577.3(b).)
4. Makes it unlawful for any person to do any of the following in connection with the sale, lease, rental, or other disposition of a water treatment device:

• make any untrue or misleading oral or written statements regarding the presence of one or more contaminants in water, or the performance of water treatment devices, as specified;
• perform precipitation tests, which may only be used to demonstrate the hardness of the water or other non-health related characteristics, of the consumer’s drinking water without also clearly informing the consumer of the results, scope, and limits of the test;
• make product performance claims or product benefit claims that the device affects the health or safety of drinking water unless the device complies with specified requirements;
• use pictures, exhibits, graphs, charts, endorsements, or testimonials in any untrue or misleading manner; or
• fail to clearly disclose in writing prior to purchase, lease, or rent, the importance of maintaining the water treatment device according to the manufacturer’s instructions, as specified. (Bus. & Prof. Code Sec. 17577.2.)

1. Provides that, in addition to any other rights or remedies provided by law, a buyer, lessee, or renter of a water treatment device may bring an action against any person who violates the above provisions for the recovery of actual damages, exemplary damages, reasonable attorney’s fees and costs, and appropriate equitable relief. (Bus. & Prof. Code Sec. 17577.6.)
2. Defines “water treatment device” as any product that (1) is designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing and (2) is used or sold, leased, or rented for use on residential real property primarily for personal, family, or household purposes. (Bus. & Prof. Code Sec. 17577.1.)
3. Defines “home solicitation contract or offer” as any contract, whether single or multiple, or any offer which is subject to approval, for the sale, lease, or rental of goods or services or both, made at other than appropriate trade premises in an amount of $25 or more, including any interest or service charges, as specified. (Civ. Code Sec. 1689.5.)

FISCAL EFFECT: The Senate Appropriations Committee found, pursuant to Senate Rule 28.8, that any additional state costs are not significant, and do not and will not require the appropriation of additional state funds, and that the bill will cause no significant reduction in revenues.

COMMENTS:

1. Purpose of this bill: This bill would remove the restriction on the delivery and installation of water treatment devices during the required three-day “cooling-off” period. This bill is sponsored by the Pacific Water Quality Association.
2. Author’s statement: According to the author, “The ‘Right to Cancel’ statute is important in protecting the rights of Californians from deceitful door to door sales. As an unintended result of the “Right to Cancel” statute, unlicensed sellers are competing with legitimate sellers by illegally installing water treatment systems prior to expiration of the three-day window. The Legislature should amend section 17577.3 of the Business and Professions Code (‘BPC’) to allow licensed installers of water treatment devices to install devices during the three-day right to cancel period, with the right of the purchaser to still cancel the purchase within the three days.

Consumers today have much more information online about the products and options available to them and this bill empowers consumers to do their research to determine which water system is right for them and have it installed at their convenience if they so choose.”

1. Background: Nationwide publicity regarding the existence of and health dangers presented by contaminated drinking water in the 1980s left the public vulnerable to deceptive practices in the sale of water treatment devices. In response, SB 2348 (McCorquodale) was approved by the Legislature in 1988. The legislative findings and declarations illustrate the Legislature’s motivation in passing that bill, which extended consumer protections to homeowners seeking to ensure safe drinking water for their families:

The Legislature finds and declares that there have been situations where homeowners have been subjected to fraud, deception, and unfair dealing by certain promoters of water treatment devices. Water contamination problems throughout the nation have created concern among homeowners concerning the quality and healthfulness of home water for drinking. Some promoters of water treatment devices have made false, misleading, and unfair statements in connection with sale of water treatment devices, including, but not limited to, false, misleading, and unfair statements regarding general levels of water contamination, water contamination problems actually or potentially affecting particular homeowners, actual or potential health risks associated with the consumption of water, and the features and performance of water treatment devices. As a result […] many homeowners have been pressured into purchasing water treatment devices without the opportunity to verify the accuracy of the sales representations. The Legislature also finds and declares that current law does not afford homeowners who enter transactions for the acquisition of water treatment devices the right in all instances to cancel the transaction within three days of its consummation. Moreover, homeowners may be subjected to the loss of their homes through the foreclosure of liens securing financing of water treatment devices.

[…]

The intent and purposes of this article are to safeguard the public against deceit; to ensure, foster, and encourage fair dealing in the sale of water treatment devices; to prohibit misleading representations; to prohibit certain liens on real property; and to afford homeowners a reasonable and meaningful opportunity to rescind transactions for the acquisition of water treatment devices. (Bus. & Prof. Code Sec. 17577.)

To that end, SB 2348 classified agreements for the sale, lease, or rental of water treatment devices as “home solicitation contracts or offers,” regardless of where the agreement was made, and applied the relevant Civil Code sections governing home solicitation contracts to contracts for water treatment devices. (See Civ. Code Secs. 1689.5-1689.13.) A significant consumer protection found within those code sections is the right of a buyer to cancel a home solicitation agreement until midnight of the third business day after the day on which the buyer signs the agreement. (Civ. Code Sec. 1689.6.)

Beyond the protections afforded to buyers of other home solicitation contracts, SB 2348 additionally provided that no water treatment device could be delivered or installed, or other services performed, until the expiration of the rescission period.

1. Proponents argue that the three-day waiting period limits legitimate businesses’ ability to compete with unlicensed sellers: While maintaining existing law’s three-day “cooling off” period, this bill would eliminate the prohibition on installing water treatment devices during those initial three days. Thus, while this bill would still afford buyers the right to cancel a water treatment device home solicitation contract for three days, buyers would also be able to elect to have the device installed immediately.

The three-day prohibition on installation under SB 2348 was arguably intended to protect the effectiveness and utility of the three-day rescission period. According to proponents of the bill, this provision has resulted in licensed businesses that encounter difficulties in trying to compete with unlicensed sellers. In support, the Plumbing-Heating-Cooling Contractors Association of California, and the San Diego, Southern California and Central California Chapters of Associated Builders and Contractors explain that, “[u]nfortunately, an unintended result of this ‘Right to Cancel’ statute is that unlicensed sellers are competing with legitimate sellers by illegally installing water treatment systems prior to the expiration of the three-day rescission window. This bill balances consumer protection with the need to allow legitimate business to provide immediate access to safer water by installing water treatment systems in home during the rescission period.”

Tempering concerns that this change might undermine the three-day right of rescission, this bill would also provide that if a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs in removing the installed water treatment device or other materials, and would require that such removal take place within 20 days of the recession. The bill would also require a seller to restore the property to substantially as good of condition as it was at the time the services were rendered.

The author notes that by eliminating the 72-hour prohibition on installation, this bill would treat water treatment devices that same as other home solicitation contracts under the Civil Code. The author writes, “water treatment companies, unlike similar door to door sales industries, are uniquely singled out with this 3-day prohibition against installation. SB 981 simply creates parity in the application of the law for water treatment companies.”

1. Prior Legislation: SB 2348 (McCorquodale, Ch. 1053, Stats. 1989) see Comment 3.

REGISTERED SUPPORT / OPPOSITION:

Support

Pacific Water Quality Association (sponsor)

Water Quality Association

California Retailers Association

Plumbing-Heating-Cooling Contractors Association of California

Southern California and Central California Chapters of Associated Builders and Contractors

Heritage Well Service

Impact Water Services

Quality Home Services

Opposition

None on file

Analysis Prepared by: Nichole Rapier / P. & C.P. / (916) 319-2200

 THIRD READING  

Bill No: SB 981

Author:

:

Vote:

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 4/9/18

AYES: Hill, Fuller, Dodd, Galgiani, Glazer, Hernandez, Newman, Pan, Wilk

SENATE JUDICIARY COMMITTEE: 7-0, 4/24/18

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

SUBJECT: Home solicitation contract or offer: water treatment devices: rescission

SOURCE: Pacific Water Quality Association

DIGEST:

This bill removes the existing prohibition on the installation of a water treatment device before the expiration of the three-day cancellation period.

ANALYSIS:

Existing law:

1. Defines “water treatment device” to mean any product that is: (a) designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing, and (b) is used or sold, leased or rented for use on residential property primarily for personal, family or household purposes. (Business and Professions Code (BPC) § 17577.1(b))
2. Deems that a contract for the sale, lease, or rental of a water treatment device is a home solicitation contract as defined in Civil Code (CIV) Section 1689.5 regardless of where the contract is made and subjects the cancellation of water treatment device contract to contract cancellation provisions specified in CIV Sections 1689.5-1689.13. (BPC § 17577.3(a))
3. Specifies that no water treatment device or any other materials that are related to the water treatment device may be delivered and no installation services may be performed until the expiration of the rescission period specified in CIV Sections 1689.5-1689.13. (BPC § 17577.3(b))

This bill:

1. Revises current law to allow materials to be delivered for a water treatment device or the installation of a water treatment device during the three-day rescission period.
2. Specifies that if a buyer exercises his or her right to rescind the contract for a water treatment device in accordance with the rescission provisions, the seller is responsible for all costs in removing the installed water treatment device or other materials, and is required to remove that device or materials within 20 days of the rescission.
3. Requires, in the event of a rescission, the seller to restore the property to substantially as good condition as it was at the time the services were rendered if the seller’s service results in alteration of the buyer’s property.

Background

Water treatment devices. Water treatment devices are primarily used for personal, family, or household use. Under BPC Section 17577.1, they are defined as any product that is designed (or claims to be designed) to alter the chemical or physical properties or characteristics of water or plumbing. Until 2014, a water treatment device solicited for sale in California was required to be certified by the California Department of Public Health. As a result of AB 119 (Committee of Environmental Safety and Toxic Materials, Chapter 403, Statutes of 2013), the law was revised to instead require the California State Water Resource Control Board to oversee water treatment devices, which are now certified by outside third parties.

Sales and history. AB 2348 (McCorquodale, Chapter 1053, Statutes of 1988) revised the law on the sale, lease or rental of water treatment devices and deemed any contract for a water treatment device to be considered a “home solicitation contract” as specified in CIV Section 1689.5. AB 2348 also prohibited the delivery of materials or the installation of a water treatment device until the expiration of the rescission period as specified in the “home solicitation contract” provisions, which under current law is three days.

As currently drafted, this bill strikes the existing prohibition and instead allows the materials for, or the installation of a water treatment device prior to the conclusion of the three-day rescission period. This bill does not exempt a water treatment device sale, lease or rental from the current provisions of law pertaining to a “home solicitation contract”. This bill also specifies that if the buyer chooses to rescind the contract for a water treatment device within the three-day period, the seller is required to restore the property to the same condition before the device was installed and further requires the removal of the materials within 20 days of the rescission.

Home solicitation contract. According to information provided by the Department of Consumer Affairs, virtually any consumer transaction in the amount of $25 or more which takes place in the buyer's home or away from "appropriate trade premises" can be canceled by the buyer, without penalty or obligation, if the consumer gives a proper notice within three business days after the buyer signs the contract. In order to cancel, the buyer must give the seller written notice of the buyer's intention not to be bound by the contract. This cancellation right is created by the Home Solicitation Sales Act, whose purpose is to “protect consumers against pressure to make an immediate purchasing decision when a salesperson appears at their home, or where the sales pitch is given at a non-business location.” The three-day rescission period as specified under the home improvement act can be waived under specified conditions, including a disaster/emergency.

Under CIV Section 1689.7, a seller is required to provide the purchaser with specified information about the contract including information about the three-day cancellation period. Consumers are informed that if they can cancel the contract, they are entitled to a refund of the payment form within 10 days of the receipt of the cancellation notice. Consumers are also informed that they are required to make any delivered materials available to the seller in the same condition as when delivered, and the seller is required to pick up the materials within 20 days. If the seller does not pick them up, the purchaser may retain the materials, and if the purchaser does not make them available, the purchaser is then responsible for the obligations specified under the contract.

In the home solicitation contract requirements for the three-day right to cancel policy, it does not specifically prohibit the installation of other products subject to a home solicitation contract similar to the prohibition for the installation of, or delivery of materials for, water treatment devices.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 5/8/18)

Pacific Water Quality Association (source)

California Retailers Association

Heritage Well Service

Impact Water Products

Plumbing-Heating-Cooling Contractors Association of California

Quality Home Services

San Diego, Southern California and Central California Chapters of Associated Builders and Contractors

Water Quality Association

OPPOSITION: (Verified 5/8/18)

None received

ARGUMENTS IN SUPPORT: The Pacific Water Quality Association and Water Quality Association, and the California Retailers Association write in support, and note that this bill still preserves the right of the purchaser to cancel the purchase during the three days and requires the seller to be responsible for all costs in removing the water treatment device.

Impact Water Products, Heritage Well Service, Quality Home Services, the Plumbing-Heating-Cooling Contractors Association and the San Diego, Southern California and Central California Chapters of Associated Builders and Contractors write in support and note that this bill does a good job of balancing consumer protections with the need to allow legitimate business to provide immediate access to safer water by installing water treatment systems.

Prepared by: 916-651-4104

5/9/18 13:47:24

**** END ****

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: SB 981 (Author:Dodd)

Version: April 16, 2018

Hearing Date: April 24, 2018

Fiscal: Yes

Urgency: No

Consultant: CK

SUBJECT

Home solicitation contract or offer: water treatment devices: rescission

DESCRIPTION

This bill would remove the restriction on the delivery and installation of water treatment devices during the required three-day right to rescission period.

BACKGROUND

SB 2348 (McCorquodale, Ch. 1053, Stats. 1988) went into effect on January 1, 1989. According to this Committee’s analysis of the bill, it was introduced in response to “nationwide publicity regarding the existence of and health dangers presented by contaminated drinking water” that proponents argued left “the public vulnerable to deceptive practices in the sale of water treatment devices.” The targeted practice was the sale of “expensive, on-site water treatment devices that do little or no good in the way of improving the quality of their drinking water.” The bill was brought to provide consumers the opportunity to verify claims made by the salespersons selling these devices and rescind any agreements in a designated, three-day, cooling-off period.

Relevant here, SB 2348 added Section 17577.3 to the Business and Professions Code. To accomplish the above goals, this statute classified agreements for the sale, lease, or rental of water treatment devices as “home solicitation contracts or offers,” regardless of where the agreement was made, and applied Sections 1689.5 through 1689.13 of the Civil Code if the agreement arose out of a scheduled presentation to promote the sale, lease, or rental of a water treatment device to a person invited to attend the presentation at a location other than a private residence. Included therein is Section 1689.6, which provides buyers the right to cancel an agreement until midnight of the third business day after the day on which the buyer signs the agreement.

To ensure the effectiveness of the three-day cooling-off period, SB 2348 provided that no water treatment device could be delivered or installed, or other services performed, until the expiration of the rescission period.

This bill would remove this latter restriction on the delivery and installation of these devices during the three-day rescission period. It would provide that if a buyer exercises their right to rescind the contract, the seller is responsible for all costs in removing the installed water treatment device or other materials and shall remove that device or other materials within 20 days of the rescission. If the seller’s services result in the alteration of property of the buyer, the seller would be required to restore the property to substantially as good condition as it was at the time the services were rendered.

CHANGES TO EXISTING LAW

Existing law defines “water treatment device” as any product that (1) is designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing and (2) is used or sold, leased, or rented for use on residential real property primarily for personal, family, or household purposes. (Bus. & Prof. Code Sec. 17577.1.)

Existing law defines “home solicitation contract or offer” as any contract, whether single or multiple, or any offer which is subject to approval, for the sale, lease, or rental of goods or services or both, made at other than appropriate trade premises in an amount of $25 or more, including any interest or service charges. It does not include any contract under which the buyer has the right to rescind pursuant to the Federal Consumer Credit Protection Act. (Civ. Code Sec. 1689.5.)

Existing law provides that a contract or offer which is subject to approval, for the sale, lease, or rental of a water treatment device shall be deemed a home solicitation contract or offer regardless of where the contract or offer was made, and shall be subject to the provisions of Sections 1689.5 to 1689.13, inclusive, of the Civil Code if the contract or offer arises out of a scheduled presentation to promote the sale, lease, or rental of a water treatment device to a person invited to attend the presentation at a location other than a private residence. (Bus. & Prof. Code Sec. 17577.3(a).) No water treatment device or any other materials that are the subject of such a contract offer shall be delivered and no installation or other services shall be performed until the expiration of the rescission period provided in Sections 1689.5 to 1689.13, inclusive, of the Civil Code. (Bus. & Prof. Code Sec. 17577.3(b).)

Existing law provides that in addition to any other right to revoke an offer, the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase which complies with Section 1689.7, with specified exceptions. (Civ. Code Sec. 1689.6(a).)

Existing law makes it unlawful for any person to do any of the following in connection with the sale, lease, rental, or other disposition of a water treatment device:

• make any untrue or misleading oral or written statements regarding the presence of one or more contaminants in water, or the performance of water treatment devices, as specified;
• perform precipitation tests, which may only be used to demonstrate the hardness of the water or other non-health related characteristics, of the consumer’s drinking water without also clearly informing the consumer of the results, scope, and limits of the test;
• make product performance claims or product benefit claims that the device affects the health or safety of drinking water unless the device complies with specified requirements in Health and Safety Code Sec. 116825;
• use pictures, exhibits, graphs, charts, endorsements, or testimonials in any untrue or misleading manner; or
• fail to clearly disclose in writing prior to purchase, lease or rent, the importance of maintaining the water treatment device according to the manufacturer’s instructions, as specified. (Bus. & Prof. Code Sec. 17577.2.)

Existing law provides that a buyer, lessee, or renter of a water treatment device may bring an action against any person who violates the above provisions for the recovery of actual damages, exemplary damages, reasonable attorney’s fees and costs, and appropriate equitable relief. It further specifies that these rights and remedies are in addition to, and not a limitation of, any other rights and remedies provided by law. (Bus. & Prof. Code Sec. 17577.6.)

This bill would provide that a water treatment device that is the subject of a contract described in Section 17577.3(a) may be delivered and installed during the rescission period provided in Sections 1689.5 to 1689.13, inclusive, of the Civil Code.

This bill would provide that, notwithstanding any other law, if a buyer exercises the buyer’s right to rescind the contract, the seller would be responsible for all costs in removing the installed water treatment device or other materials and shall remove that device or other materials within 20 days of the rescission. If the seller’s services result in the alteration of property of the buyer, the seller shall restore the property to substantially as good condition as it was at the time the services were rendered.

COMMENT

1. Stated need for the bill

According to the author:

The “Right to Cancel” statute is important in protecting the rights of Californians from deceitful door to door sales practices. As an unintended result of the “Right to Cancel” statute, unlicensed sellers are competing with legitimate sellers by illegally installing water treatment systems prior to expiration of the three-day window. The Legislature should amend section 17577.3 of the Business and Professions Code (“BPC”) to allow licensed installers of water treatment devices to install devices during the three-day right to cancel period, with the right of the purchaser to still cancel the purchase within the three days.

There are anecdotal reports from members of the Pacific Water Quality Association, the sponsor of this bill, of unlicensed sellers illegally installing water treatment systems prior to the expiration of the three-day “right to cancel” window. The sponsor asserts this bill is necessary for law-abiding sellers to compete.

2. Changes to the consumer protection elements of this statute

Section 17577.3 provides important consumer protections. Accompanying legislative findings and declarations were codified in Section 17577 of the Business and Professions Code and illustrate this importance:

The Legislature finds and declares that there have been situations where homeowners have been subjected to fraud, deception, and unfair dealing by certain promoters of water treatment devices. Water contamination problems throughout the nation have created concern among homeowners concerning the quality and healthfulness of home water for drinking. Some promoters of water treatment devices have made false, misleading, and unfair statements in connection with sale of water treatment devices, including, but not limited to, false, misleading, and unfair statements regarding general levels of water contamination, water contamination problems actually or potentially affecting particular homeowners, actual or potential health risks associated with the consumption of water, and the features and performance of water treatment devices. As a result of false, misleading, and unfair statements, including statements that have the purpose or effect of alarming the public about the condition of water, many homeowners have been pressured into purchasing water treatment devices without the opportunity to verify the accuracy of the sales representations. The Legislature also finds and declares that current law does not afford homeowners who enter transactions for the acquisition of water treatment devices the right in all instances to cancel the transaction within three days of its consummation. Moreover, homeowners may be subjected to the loss of their homes through the foreclosure of liens securing financing of water treatment devices.

The Legislature further finds and declares that the protection of homeowners and consumers from untrue and misleading statements and from unfair dealing is of the utmost importance.

The intent and purposes of this article are to safeguard the public against deceit; to ensure, foster, and encourage fair dealing in the sale of water treatment devices; to prohibit misleading representations; to prohibit certain liens on real property; and to afford homeowners a reasonable and meaningful opportunity to rescind transactions for the acquisition of water treatment devices.

(Bus. & Prof. Code Sec. 17577, internal lettering omitted.) This bill would alter one of these consumer protection mechanisms.

Current law provides buyers of these water treatment devices a three-day window in which they can fully rescind the agreement. This period provides customers who may have felt pressured during sales pitches or discovered additional information in the wake of the purchase the right to cancel the agreement without penalty or obligation. During this period, the statute provides that the device cannot be delivered or installed.

This latter restriction arguably protects the effectiveness and utility of the three-day rescission period. According to Pacific Water Quality Association, the sponsor of this bill, the installation of these devices can often include cutting into a home’s water main with varying degrees of trenching required. The sponsor states: “The equipment usually required are pipe cutters, soldering tools, plumber’s tape or pex tools. Most jobs are half day . . . .” Given the extent of the work necessary, consumers would likely be less likely to rescind a contract, and feel more obligated to keep the device, if the seller had already delivered the device and spent up to half a day installing it in their home. This bill would now allow the delivery and installation to occur during this three-day period.

Mitigating, to a certain extent, concerns that this change might undermine the three-day right of rescission, the bill would provide that if a buyer exercises his or her right to rescind the contract, the seller would be responsible for all costs in removing the installed water treatment device or other materials. Recent amendments were also taken that take this a step farther, requiring the seller to remove the device or other materials within 20 days of the rescission. In addition, if the seller’s services result in the alteration of property of the buyer, the seller shall restore the property to substantially as good condition as it was at the time the services were rendered. Presumably then, a consumer would still be free from obligation to rescind the contract even if the device is installed and not bear the burden of uninstalling it.

Support: Associated Builders and Contractors: San Diego, Southern California, and Central California Chapters; Plumbing-Heating-Cooling Contractors Association of California;

Opposition: None Known

HISTORY

Source: Pacific Water Quality Association

Related Pending Legislation: None Known

Prior Legislation: SB 2348 (McCorquodale, Ch. 1053, Stats. 1988) See Background.

Prior Vote: Senate Business, Professions, and Economic Development Committee (Ayes 9, Noes 0)

**************

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Jerry Hill, Chair

2017 - 2018 Regular

Bill No: Hearing Date: April 9, 2018

Subject:

SUMMARY:

Removes the existing prohibition on the installation of a water treatment device before the expiration of the three-day cancellation period.

Existing law:

1. Defines “water treatment device” to mean any product that is: 1) designed to alter the chemical or physical properties or characteristics of water or plumbing or the seller, lessor, or renter claims can alter the chemical or physical properties or characteristics of water or plumbing, and 2) is used or sold, leased or rented for use on residential property primarily for personal, family or household purposes. (Business and Professions Code (BPC) § 17577.1(b))
   
2. Makes it unlawful for any person to do any of the following in connection with the sale, lease, rental, or other disposition of a water treatment device:
   (BPC §17577.2(a)(b)(c)(d)(e))
3. Make any untrue or misleading oral or written statements regarding the presence of one or more contaminants in water, or the performance of water treatment devices, as specified;
4. Perform precipitation tests, which may only be used to demonstrate the hardness of the water or other non-health related characteristics, of the consumer’s drinking water without also clearly informing the consumer of the results, scope, and limits of the test;
5. Make product performance claims or product benefit claims that the device affects the health or safety of drinking water unless the device complies with specified requirements in Health and Safety Code § 116825;
6. Use pictures, exhibits, graphs, charts, endorsements, or testimonials in any untrue or misleading manner; or
7. Fail to clearly disclose in writing prior to purchase, lease or rent, the importance of maintaining the water treatment device according to the manufacturer’s instructions, as specified.
   
8. Deems that a contract for the sale, lease, or rental of a water treatment device is a home solicitation contract as defined in Civil Code (CC) § 1689.5 regardless of where the contract is made and subjects the cancellation of water treatment device contract to contract cancellation provisions specified in CC §§ 1689.5-1689.13. (BPC § 17577.3(a))
   
9. Specifies that no water treatment device or any other materials that are related to the water treatment device may be delivered and no installation services may be performed until the expiration of the rescission period specified in CC §§ 1689.5-1689.13. (BPC § 17577.3(b))
   
10. Defines a “home solicitation contract or offer” to mean any contract, whether single or multiple or any other offer for the sale, lease, or rental of goods or services in an amount of $25 or more including interest and service charges, but does not include any contract under which the buyer has the right to rescind pursuant to the Federal Consumer Credit Protection Act. (CC § 1689.5)
    
11. States that except for a home improvement contract or service repair contract as specified in BPC §§ 7151.2, 7159.10, the buyer has the right to cancel a home solicitation contract or offer until midnight of the third business day after the buyer signs the agreement to purchase. (CC § 1689.6(a))
    
12. Makes legislative findings and declarations related to fair dealings in the sale of water treatment devices. (BPC § 17577)

This bill:

1. Revises current law to allow materials to be delivered for a water treatment device or the installation of a water treatment device during the three-day rescission period.
   
2. Specifies that if a buyer exercises his or her right to rescind the contract for a water treatment device in accordance with the cancellation provisions, the contractor is responsible for all costs in removing the installed water treatment device or other materials.

FISCAL EFFECT:

Unknown. This bill is keyed “fiscal” by the Legislative Counsel.

COMMENTS:

1. Purpose. This bill is sponsored by Pacific Water Quality Association. According to the Author, “The Right to Cancel statute is important in protecting the rights of Californians from deceitful door to door sales. As an unintended result of the Right to Cancel statute, unlicensed sellers are competing with legitimate sellers by illegally installing water treatment systems prior to expiration of the three-day window. The Legislature should amend section 17577.3 of the [BPC] to allow licensed installers of water treatment devices to install devices during the three-day right to cancel period, with the right of the purchaser to still cancel the purchase within the three days.”
2. Background.

Water Treatment Devices. Water treatment devices are primarily used for personal, family, or household use. Under BPC § 17577.1, they are defined as any product that is designed (or claims to be designed) to alter the chemical or physical properties or characteristics of water or plumbing. There are two types of water treatment devices: Point of Use (POU) and Point of Entry (POE). According to information provided by the Minnesota Department of Public Health, “(POU) water treatment units are designed to treat small amounts of drinking water for use in the home. These devices can sit on the counter, attach to the faucet, or be installed under the sink. An example of a common POU unit is a water pitcher with a small built-in filter that you might purchase at a department store or drug store. (POE) water treatment units are installed on the water line as it enters the home and treat all the water in the building. An example of a POE unit is a water softener.”

Until 2014, a water treatment device solicited for sale in California was required to be certified by the California Department of Public Health, as a result of AB 119 (Committee of Environmental Safety and Toxic Materials, Chapter 403, Statutes of 2013) the law was revised to instead require the California State Water Resource Control Board to oversee water treatment devices, which are now certified by outside third parties. According to the California State Water Resources Control Board, “California registration means that devices sold in California that make health-related claims have been certified by an independent, accredited certification organization. This certification includes extensive water quality testing in accordance with national standards. Accreditation means that the organization and their testing laboratory have the proper ability, personnel and equipment to fully evaluate these devices.”

According to information provided by the sponsor, the installation of certain water treatment devices can take on average three hours and includes cutting into the home’s water main. Some jobs may require more trenching than others and can take longer. Other systems can take less time and be installed at the kitchen sink and be installed in approximately 90 minutes.

Sales and History. The sale of water treatment devices in California has been regulated since the late 1980s. AB 2348 (McCorquodale, Chapter 1053, Statutes of 1988) revised the law on the sale, lease or rental of water treatment devices and deemed any contract for a water treatment device to be considered a “home solicitation contract” as specified in CC § 1689.5, and made that contract subject to the specific provisions of a home solicitation contract found in CC § 1689.5 through 1689.13. In addition to requiring a contract for a water treatment device be subject to the same laws governing a “home solicitation contract”, AB 2348 also prohibited the delivery of materials or the installation of a water treatment device until the expiration of the rescission period as specified in the “home solicitation contract” provisions, which under current law is three days. According to the Assembly Committee on Governmental Efficiency and Consumer Protection Committee analysis for AB 2348 in June of 1988, it stated that by allowing the purchaser the opportunity to verify claims made by a water treatment device salesperson and rescind any agreement within a specified time is needed for the protection of consumers.

As currently drafted, this bill would strike the existing prohibition and instead allow material for a water treatment device to be delivered to a person’s home and the installation of the device prior to the conclusion of the three-day rescission period. As currently drafted, this bill does not exempt a water treatment device sale, lease or rental from the current provisions of law pertaining to a “home solicitation contract”. Meaning, consumers still have the three-day right to cancel the contract.

Home Solicitation Contract. According to information provided by the DCA, virtually any consumer transaction in the amount of $25 or more which takes place in the buyer's home or away from "appropriate trade premises" can be canceled by the buyer, without penalty or obligation, if the consumer gives a proper notice within three business days without giving a reason after the buyer signs the contract. In order to cancel, the buyer must give the seller written notice of the buyer's intention not to be bound by the contract. This cancellation right is created by the Home Solicitation Sales Act, whose purpose is to “protect consumers against pressure to make an immediate purchasing decision when a salesperson appears at their home, or where the sales pitch is given at a non-business location.” The three-day rescission period as specified under the home improvement act can be waived under specified conditions, including a disaster/emergency.

Under CC § 1689.7, a seller is required to provide the purchaser with specified information about the contract including information about the three-day cancellation period. Consumers are informed that if they can cancel the contract, they are entitled to a refund of the payment form within 10 days of the receipt of the cancellation notice. Consumers are also informed that they are required to make any delivered materials available to the seller in the same condition as when delivered, and the seller is required to pick up the materials within 20 days. If the seller does not pick them up, the purchaser may retain the materials, and if the purchaser does not make them available, the purchaser is then responsible for the obligations specified under the contract.

In the home solicitation contract requirements for the three-day right to cancel policy, it does not specifically prohibit the installation of other products subject to a home solicitation contract similar to the prohibition for the installation of, or delivery of materials for, water treatment devices.

In addition, federal law also mandates a cooling off period (three-days) for sales at consumers’ homes. Under federal rules, door-to-door solicitors are required to provide consumers with both an oral and written notice about the buyer’s right to cancel/rescind the contract within three days.

Under the proposed provisions of this bill, if a water treatment device was installed prior to the end of the three-day cancellation period, and the consumer decides to cancel the contract, the bill requires the contractor to be responsible for all costs in removing the installed water treatment device or other materials.

1. Arguments in Support. The Pacific Water Quality Association and Water Quality Association write in support, “Specifically, this bill would amend Section 17577.3 of the [BPC] to simply remove the provision that prohibits the installation of any water treatment device during the three-day right to cancel period. The legislation still preserves the right of the purchaser to cancel the purchase during the three days and requires the seller to be responsible for all costs in removing the water treatment device.”

The California Retailers Association writes in support, “the legislation still preserves the right of the purchaser to cancel the purchase during the three days and requires the seller to be responsible for all costs in removing the installed water treatment device.”

Impact Water Products, Heritage Well Service, and Quality Home Services, writes in support, “This bill does a good job of balancing consumer protections with the need to allow legitimate business to provide immediate access to safer water by installing water treatment systems.”

The Plumbing-Heating-Cooling Contractors Association and the San Diego, Southern California and Central California Chapters of Associated Builders and Contractors writes in support, “This bill balances consumer protection with the need to allow legitimate business to provide immediate access to safer water by installing water treatment systems in homes during the rescission period.”

1. Prior Related Legislation. AB 119 (Committee on Environmental Safety and Toxic Materials, Chapter 403, Statutes of 2013) revised the criteria and procedure for certification of water treatment devices for which a health or safety claim is made and required each manufacturer that offers for sale in California one of those water treatment devices to submit specified information.

AB 2348 (McCorquodale, Chapter 1053, Statutes of 1988) revised the law on the sale, lease or rental of water treatment devices and deemed any contract for a water treatment device to be considered a “home solicitation contract” as specified in CC § 1689.5, and made that contract subject to the specific provisions of a home solicitation contract found in CC § 1689.5 through 1689.13, among others.

1. Policy Question: Does this bill roll back consumer protections? The prohibition on the installation of a water treatment device system until the contract rescission period expires provides consumers additional time to conduct further research to determine whether or not the purchase and installation of a water treatment device is right for them. By allowing the installation to occur before the rescission period ends, consumers may feel obligated to keep the system, as the cost and time to uninstall the device may be burdensome. While consumers who purchase these systems are made aware that they must make the materials available for return within a specified time frame, the seller and installer of a water treatment device determines when the actual device is uninstalled, which may not be a convenient time for the purchaser. The potential logistical and practical challenges related to the removal of the device may be a deterrent for purchasers to cancel a contract. The Author may wish to consider including a timeframe by which the water treatment device must be un-installed if a consumer chooses to exercise the cancellation provisions.

Although this bill requires the contractor to be responsible for removing a water treatment device and all related materials if the consumer decides to cancel the contract, the bill does not specify who is responsible for any potential repairs that may be necessary as a result of any damages associated with the installation and subsequent uninstallation. Also, this bill specifies that a contractor is responsible for the costs associated with the removing the device, but it is currently unclear if the installation is always performed by a licensed contractor. The Author may wish to clarify who is responsible for damages incurred when a water treatment device is uninstalled and may wish to clarify whether the uninstallation must be performed by a licensed contractor.

NOTE:

Double-referral to Senate Committee on Judiciary.

SUPPORT AND OPPOSITION:

Support:

Pacific Water Quality Association (sponsor)

California Retailers Association

Heritage Well Service

Impact Water Products

Plumbing-Heating-Cooling Contractors Association of California

Quality Home Services

San Diego, Southern California and Central California Chapters of Associated Builders and Contractors

Water Quality Association

Opposition:

None on file as of April 3, 2018.

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