As most home improvement contractors are aware, registration is now in progress for
compliance with the new Home Improvement Consumer Protection Act, scheduled to go
into effect by July 1, 2009. As noted in previous articles, the Act is broad-reaching and
requires contractors involved in a wide range of home improvement activities to register
with the Commonwealth and comply with various requirements.
The new Act also contains specific requirements regarding the contractual relationship
between a contractor and a homeowner. These requirements include:
• The contract must be in writing and must contain the contractor’s registration
number;
• The contract must be signed by the homeowner and the contractor (or the
contractor’s salesperson on behalf of the contractor); and
• All notices and attachments that are claimed to be part of the contract must be
physically attached to the contract.
In addition, a variety of specific terms must be in each contract, including the date of
transaction; name, address, and telephone number of the contractor; the approximate
start and completion dates of the home improvement work; as well as a description of the
work, materials, and specifications for such work.
Further, there must be a total sales price, including a specific down payment amount.
Note that the Act is specific as to what percentage of the total sales prices the down
payment may be. If there are special order materials, any specific cash advances for
purchase of those materials must be described and delineated.
The contract must contain identifying information on all subcontractors on the project
and further specify that liability insurance coverage will be carried by the contractor as
well, which cannot be less than $50,000.
Additionally, the contract should contain the public access toll-free number for the
Attorney General’s Office of Consumer Protection and legal language relative to a
consumer’s right of rescission of the contract within a three-day period, which is
mandated for consumer contracts in Pennsylvania.
There are a number of provisions that cannot be included in the contract. If the contract
contains those terms, the contract will be considered void. Examples of these provisions
include hold harmless clauses, confessed judgment clauses and clauses entitling the
contractor to an award of attorney’s fees and costs. Furthermore, if the contract contains
an arbitration clause, the Act details certain requirements that the clause must meet such
as 12-point boldface type and a separate page for the clause, in addition to other specific
requirements. Depending upon the specific contract, there are other provisions that
are no longer permitted under the Act and will result in voiding of the contract if those
provisions are contained within the contract.
Currently, there are form contracts available through industry organizations. These
contracts represent a valid starting point for contracts to be compliant with the new
Act. However, contractors may want to tailor these contracts to be more specific to
their business needs. Contractors may also want to use their own contracts but should
ascertain that their contracts are compliant with the Act.
For assistance in ensuring that your contract complies with the Act and serves the needs
of your specific business while protecting your rights to the extent possible, please
contact Ronald Pollock or Maria Di Stravolo Elliott in our firm’s Construction Law
Group.
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Construction Law Alert Update: Do Your Contracts Comply with the Home Improvement Consumer Protection Act?
05/18/2009
