Home Improvement Consumer Protection Act
By: Bryan W. Shook, Esquire
717-884-9010
On October 17, 2008, Governor Ed Rendell, signed into law sweeping changes which will forever effect to the way contractors in Pennsylvania conduct business.
Effective July 1, 2009 the following changes will occur:
· Registration
· Who must Register
o Anyone who does the following: Repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting. Construction, replacement, installation or improvement of driveways, swimming pools, pool houses, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, fences, gazebos, sheds, cabanas, certain landscaping, painting, doors and windows and waterproofing. The installation of central heating or air conditioning or storm windows or awnings.
· Who doesn’t need to register?
o If you performed less than $5,000.00 of home improvements during the previous taxable year, you do not need to register, but it is suggested, by our office, that you should register if you anticipate performing more than this amount in the coming years.
o New home builders and building suppliers that do not perform home improvements are exempt from this registration.
· How do I become registered?
o Visit http://www.attorneygeneral.gov to complete the online registration process.
· How much does it cost to register?
o Registration is $50.00 and you must renew your registration every two years.
· Your contractor’s registration number must be used on all advertisements, contracts, estimates, proposals after July 1, 2009.
· Biggest changes
· Three Business Day right to rescission
o Assuming no holidays intervene, here is how this works:
§ Contract signed Monday, the first day after the rescission period is Friday
§ Contract signed Tuesday, the first day after the rescission period is Saturday
§ Contract signed Wednesday, the first day after the rescission period is Tuesday
§ Contract signed Thursday, the first day after the rescission period is Wednesday
§ Contract signed Friday, the first day after the rescission period is Thursday
§ Contracts signed on Saturday or Sunday, the first day after the rescission period is Friday.
· Liability Insurance
o You must carry insurance covering personal injury in an amount not less than $50,000.00 and insurance covering property damaged in an amount not less than $50,000.00
· Your Contracts
o Historically, home improvement contracts in Pennsylvania have been enter into on the handshake principal with generally a short one or two page contract that follows. This is forever changed. For any job with an actual cash value of $500.00 or more, you will have to have a written contract that complies with the requirements of the Pennsylvania Home Improvement Consumer Protection Act.
o Under the new law, any contract that does not meet the requirements of the law will be invalid and unenforceable against the owner. In real-world terms, if you want paid you’ll need a new contract drawn up.
§ The new law requires that a contract include certain specific information such as:
§ The phone number of the Pennsylvania Bureau of Consumer Protection in the Office of the Attorney General
§ Scope of work including specifications
§ Notice of Right of Rescission
§ Start/Completion date
§ Change Order notice
§ Contractor’s registration number
§ Full address of Contractor (not just PO Box)
§ Notice of Insurance
· Deposits/Down Payments
o Under the new law, you will only be able to accept 1/3 of the total contract amount as a deposit/down payment if the total contract sales prices is $1000.00 or more. This must be clearly outlined in your contract as well.
· Arbitration Clause
o If you wish to choose arbitration over court as your legal remedy or as part of your legal remedy should a claim under the contract be brought, the new law requires that the arbitration clause be set forth in a specific manner and requires certain specific language.
· What if I don’t comply?
o Criminal Offense
§ Home Improvement Fraud
§ This is a real offense, which carries the very real risk of jail time.
§ Grading – It can be graded, depending on the circumstances as either a misdemeanor or up to a second degree felony.
o Civil Penalties
§ Any violation of the Act by a home improvement contractor will also constitute a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. As a result, consumers have the potential to recover treble damages (or three times the amount of the consumer’s actual damages) and attorneys’ fees from a contractor found to be in violation of the Act.
§ This means that regardless of the quality of work performed, a contractor could find himself liable for a violating the Act for failing to have a compliant agreement. Even a small violation could make a contractor liable under the Act.
This primer on the new Contractor’s Law was written by Bryan W. Shook, Esquire. Attorney Bryan Shook has thoroughly researched this new law and is available to make sure you and your colleagues are compliant with the new law. On February 2, 2008, Attorney Shook became the first person, in Pennsylvania to copyright a contract that will help you to operate legally under the new law.
Attorney Shook can be reached by email at bshook@shooklegal.com or by telephone at (717) 884-9010.
Don’t be left behind or find yourself not getting paid for jobs because your contract was invalid or you did not register at www.attorneygeneral.gov.