Langsam Stevens & Silver Newsletter May 2009

Anyone who has ever had a bad experience with a contractor they hired for home repairs or improvements will be pleased to hear about Pennsylvania’s passage of the Home Improvement Consumer Protection Act or HICPA. Numerous reports of consumer experiences with fraudulent or unreliable contractors prompted passage of the law, which took effect on July 1, 2009. All contractors need to be familiar with the provisions of HICPA because the Act requires all contractors to make a number of changes to standard home improvement agreements.

Under HICPA, any person or business that provides home improvement services, and that earns $5,000 or more a year from those home improvement services, must register with the Commonwealth of Pennsylvania and provide proof of insurance. The term contractor also includes subcontractors and independent contractors who contract with retailers to provide home improvement work for residential property.

"Home improvement" is very broadly defined in the Act to include any work agreed upon between a contractor and owner that involves "repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting." The Act goes on to include a long list of specific types of work. New home and commercial construction is not included.

Home improvement construction contractors can apply for registration online with the Bureau of Consumer Protection section of the Office of the Attorney General. The website also contains useful FAQs about registration and a list of required information. Among other things, the contractor must submit proof of insurance showing at least $50,000 of personal injury liability coverage and $50,000 of property damage coverage.

HICPA requires that any contract for home improvements (that is a contract for more than $500) will be unenforceable unless it is in writing, is signed by the property owner or agent and by the contractor, and contains all the information required by the Act, including:

the contractor registration number;
the approximate starting date and completion date of the work;
a description of the work to be done, the materials to be used, and a set of specifications (which cannot be altered without a change order signed by both parties);
the total price;
the amount of any down payment and/or money advanced for materials;
names and contact information for all subcontractors;
the Bureau of Consumer Protection’s toll-free number; and
a notice that the owner has a right to rescind the agreement anytime within three days of the date of the agreement.

Even if the three-day rescission period has passed, a contractor can be obligated to refund any amounts paid within ten days of receiving a request for a refund from the owner. The owner is entitled to request a refund if more than 45 days have passed since the specified starting date for the work and no substantial work has actually been performed.

There are also some common, pro-contractor provisions that will, if included in a home improvement contract, allow the owner to void a contract. Such provisions include:

a hold harmless clause;
a waiver of government health, safety or building construction requirements;
a confession of judgment clause;
an assignment of or order for payment of wages; or
a provision that the contractor shall be awarded attorney fees and costs.

Remedies
The Act establishes the crime of “home improvement fraud,” which generally includes making false or misleading statements in connection with a home improvement contract, failing to perform services after accepting any advance payment, misrepresenting himself or his materials, damaging a person’s property in order to induce a contract, or publishing false advertisements.

Violations of HICPA are also considered violations of the Unfair Trade Practices and Consumer Protection Law. A contractor may be liable to a homeowner for triple damages and attorney’s fees incurred by the homeowner if the contractor engages in any of a long list of "prohibited acts."

This has only been a sampling of HICPA provisions. If you have any questions about your rights as an owner in a home improvement contract contact us at hlangsam@langsamstevens.com or (215) 732-3255. If you’re a contractor, we’ll be happy to help you with revising your standard contract to comply with the new requirements of HICPA.