Home Improvement Contractor Legislation

PENNSYLVANIA ENACTS EXPANSIVE

HOME IMPROVEMENT CONTRACTOR LEGISLATION

Pennsylvania has now enacted, effective July 1, 2009, an extremely significant piece of legislation impacting the home remodeling/improvement/repair industry. While frequently referred of in terms of the Home Contractor Registration Act, the Pennsylvania Home Improvement Consumer Protection Act ("Act") encompasses many other significant facets of how home improvement contractors conduct business with residential customers providing both civil and criminal penalties for violations of the Act. The purpose of this article is to but notify the reader of the primary elements of this Act which will require each home improvement contractor to carefully review the entire Act with their private attorney and/or in conjunction with subsequent information and materials presently planned to be distributed by the Pennsylvania Builders Association ("PBA") in early 2009.

As with all legislation, close attention must be first given to the definitions contained in the Act to, of course, include who and who is not a home improvement contractor and what home improvement transactions are excluded from the Act. Generally speaking, any remodeling/improvement/repair work with a cost to the homeowner of more than $500 is a home improvement as defined by the Act and any contractor with more than $5,000 in business annually from home improvement work, as defined in the Act, is required to follow the registration, advertisement and contractual compliance provisions which are specific, numerous and mandatory. It is noted that home improvement does not include the construction of a new home, sale, or construction of services furnished for commercial business use or takes place somewhere other than at a private residence. The sale of movable appliances are likewise exempt from compliance with the Act.

Contractor Registration

Before July 1, 2009, all home improvement contractors as defined in the Act must register with the Bureau of Consumer Protection, Office of Attorney General of the Commonwealth of Pennsylvania. The Act sets forth a listing of the information that will be required in the home improvement contractor registration. It is assumed that forms will be available well in advance of the deadline by the Bureau of Consumer Protection and the PBA has created a task-force to develop forms and provide guidance for compliance with the Act. Briefly, a detailed identification of all business owners is required, all prior business names and addresses of any home improvement businesses operated by each such officer, manager or general partner for the previous 10 years, detailed information concerning any criminal convictions or business suspensions, and proof of liability insurance covering personal injury in an amount not less than $50,000 and insurance covering property damage caused by the work of a home improvement contractor in an amount not less than $50,000 to list but several. Once registered, a registration number will be issued which number must appear in all advertisements, business cards, contractor estimate/proposal contracts issued by the home improvement contractor after July 1, 2009.


Contract Requirements

The Act also mandates that all home improvement contracts to be valid and enforceable must be in writing, signed by the parties and contain the entire agreement between the parties to include approximate starting and completion dates, all financial terms/arrangements, identification of all subcontractors to be used, insurance information and must contain a three (3) business-day right of rescission as provided in the Unfair Trade Practice and Consumer Protection Law regardless of where the contract is signed to name but a few of the requirements to be contained in and/or applicable to home improvement/remodeling/repair contracts. The homeowner must be given a copy of the signed contract. While arbitration provisions may be included, there are specific requirements concerning how the arbitration language must be presented in the written contract. Equally significant, are the provisions which are mandated not to be contained in the home improvement's contract to include, for example: confession of judgment provision, waiver of any legal rights, codes, statutes or regulations, award attorneys fees in favor of the contractor, and automatic contract renewal provisions to again name but a few.

Penalties

The Act contains two distinct penal sections, both civil and criminal. The Act establishes the crime of "home improvement fraud" as defined in the Act which, depending on the amount involved, age of the homeowner and other factors cited in the Act could constitute a misdemeanor or felony of a varying degree. In addition, license suspension for a period of up to five (5) years may be imposed by court order. A separate section provides for violations of the Act itself and that such will constitute a violation of the Unfair Trade Practices and Consumer Protection Act which, in turn, contains potential penalty of actual and treble punitive damages plus legal fees plus up to a $5,000 fine, payable to the Commonwealth. Prohibited acts can include for example, failure to register, failure to refund the amount paid for a home improvement contract within 10 days of acceptance and execution of a return receipt containing original request for refund when no substantial portion of work has been performed and more than 45 days have lapsed since the starting date specified in the contract, failure to timely perform the home improvement contract without justification, deviation and disregard of plans and specifications in any material respect, charge and receipt of a deposit in excess of one-third the contract price for home improvement in which the total price is more than $1,000, and otherwise failure to contract in accord with the Act, to cite but several examples.

As previously stated, it is understood that the Pennsylvania Builders Association is creating a task force to assist/educate home improvement contractors with regard to compliance with the Act which may include creating a model contract for member use which is assumed will be approved by the Bureau of Consumer Protection. However, by virtue of the nature of this legislation, all home improvement contractors should contact their legal counsel well in advance of the July 1, 2009, implementation date. Complete copies of the Act may be obtained from the HBA. The availability of HBA and PBA support compliance with the Act and avoiding any dangerous pitfalls is another membership service to underscore with potential new members.

James R. Clippinger, Esquire, CALDWELL & KEARNS, P.C