Home Improvement Compliance Guide for Contractors & Consumers--Rights, Obligations & Remedies

Ira S. Newman

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New York State Law Applicable to All Counties

NEW YORK STATE LAW - APPLICABLE TO ALL COUNTIES RELEVANT LAWS: o New York Lien Law ?71-a o New York General Business Law Article 36-A, "Home Improvement Contracts," ??770-776 o New York Uniform Commercial Code, ?2-718 o The following rules regarding receipt of payments and mandatory language in Home Improvement Contracts apply statewide, regardless of county. Escrow Requirements o All payments received by a home improvement contractor before all work is complete (for example, under a graduated payment schedule) must be deposited within five (5) business days into an escrow account in a "bank, trust company, savings bank, or state or federal savings and loan association, located in the state." NY Lien Law ?71-a(4)(a). o A business day is any day of the week except Sunday, and except major holidays e.g., Christmas.

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State-Wide Requirements for Home Improvement Contracts

State-wide requirements for Home Improvement Contracts: All Home Improvement Contracts in any jurisdiction in the State of New York, must be in writing, and must be signed by "all parties to the contract," meaning the homeowner or homeowners, on one hand, and an authorized representative of the Home Improvement Contractor, on the other hand. hand. o All Home Improvement Contracts in any jurisdiction in the State of New York, must contain the following items, as per NY General Business Law, Art. 36-A, ?771(1) : o a. "the name, address, telephone number, and license number, if applicable, of the contractor." o Best Practice Tip: When entering into contracts in different counties, make sure that the Contract entered into in each respective county contains the corresponding license number issued by that county. In other words, a contract for work in Westchester County must have the Westchester County license number, and not, for example, the Nassau County or NYC license number.

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New York City Laws- Applicable To All Five Boroughs

Best Practice Tip: New York City has by far the most comprehensive and thorough set of rules and regulations governing Home Improvement Contractors and Home Improvement Salespersons. Nassau, Suffolk, and Westchester Counties impose their own rules, but those are not quite as detailed as the New York City rules. It would be best practice to follow New York City rules wherever you do work (don't forget to obtain proper license from each county or other jurisdiction), since they provide the most protection to the consumer, and following New York City rules would ensure compliance with most, if not all, rules of the other Counties. o New York City requires that all Home Improvement Contractors and all Home Improvement Salespersons have a valid license. o Home Improvement Contractor and Home Improvement Salesperson licenses are administered by the NYC Department of Consumer Affairs (DCA). Applicants for a license must be fingerprinted and may be subject to a background check.

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Homeowners' Cancellation Rights under New York City Law and Rules:

o Statute Summary: Except in an emergency-repair situation, when the homeowner engages the home improvement contractor and not the other way around (and when the homeowner provides the home improvement contractor with a handwritten statement describing the emergency and specifically waiving a right to cancellation), all other customers must be provided with a written notice that they have a right to cancel the contract until midnight of the third business day after the day on which the homeowner signed the contract. NYC Code, ?20-394.1. o The home improvement contractor must give oral notice to the homeowner of the homeowner's right to cancel. o Best Practice Tip: No work should be done on the contract until after the time for the homeowner to cancel the transaction has passed. o Best Practice Tip: THIS IS VERY IMPORTANT! - YOU CANNOT ENGAGE IN ANY ACTIVITY WHICH MAY BE PERCEIVED AS SOLICITING ON BEHALF OF ANY FINANCING COMPANY OR LENDING INSTITUTION, WITHOUT FULL DISCLOSURE.

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Requirements for a Home Improvement Contract in New York City:

A "model contract" that is approved for use by the City of New York can be found online, at the URL http://www.nyc.gov/html/dca/downloads/pdf/hiccontractshort.pdf. Please review it carefully and use it as a model / template for future contracts in New York City. Best Practice Tip: As a reminder, because New York City rules are so comprehensive, detailed, and "complete," compliance with New York City rules even outside of the Five Boroughs will go a long way toward ensuring compliance with the rules of the neighboring jurisdictions. Every home improvement contract in New York City must be in writing, signed by all parties to the contract, and the home improvement contractor or salesperson must provide to the homeowner a fully completed and legible copy of the entire agreement in plain English and any other language (e.g., Russian, Spanish, etc.) to that extent that other language was "principally" used in the oral negotiations and presentation.

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Duties of Contractors under New York City Rules, Title 6, ?2-223:

o The Home Improvement Contractor must secure each and every permit, license, certificate or occupancy, etc. o The Home Improvement Contractor must maintain copies of all accounting books, copies of contracts, and other transaction records, for a period of six years. o All payments from customers must be treated as trust funds, to be applied towards expenses involved in the customer's particular project, and not for unrelated expenses. o Except for emergency situations, as referred to above, DO NOT do any work, or deposit any customer payments, except in escrow, and DO NOT make any deliveries to the customer's property until the three-day period for the customer to cancel the contract has expired. BEST PRACTICE TIP: On any advertising or promotional website, list the name of your company "as licensed," and list all your license numbers, at the top, in a clear and conspicuous manner.

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Nassau County - Summary Of Rules, Prohibited Acts, And Best Prractices

RELEVANT LAWS: o Nassau County Administrative Code, Title D-1, Article 1, ??21-11.0 through 21-11.16 o Rules and Regulations Relating to the Home Improvement Business, promulgated by the Nassau County Office of Consumer Affairs. Generally: o Home Improvement Contractors must be licensed in Nassau County. o Nassau County does not have a separate license category for Home Improvement Salespersons, but "any person who owns or operates a home improvement business or who undertakes or offers to undertake to perform any home improvements in Nassau County" must have a Home Improvement Contractor license from the County (emphasis added). Nassau County Administrative Code, Title D-1, ?21-11.1(2). o Just like in NYC, a Nassau County home improvement contractor license does not exempt people and businesses from having to obtain craft or professional licenses specifically provided for by the State or the County, such as electricians, plumbers, etc. ?21-11.3

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Suffolk County Rules, Regulations, And Best Practices:

RELEVANT LAWS: o Suffolk County Administrative Code, Chapter 563, "Licensed Occupations," Article II, "Home Improvement Contractors" ?? 563-1 through 563-23 Generally: o All home improvement contractors doing business in Suffolk County must be licensed in that County. o All licensees must maintain a "brick and mortar" place of business within the State of New York. o All licensees must provide to the County a copy of their Workers' Compensation and other insurance certificates. o All advertising for home improvement contractors in Suffolk County must contain the Suffolk County license number of that contractor. o All home improvement salespersons must have an "identification card" issued by the County. o In Suffolk County, a salesperson can work for more than one home improvement contractor, so long as the name of each contractor is stated clearly on his County-issued identification card.

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Weschester County - Summary Of Rules And Regulations

RELEVANT LAWS: o Westchester County Consumer Protection Code, Articles IV, XVI, XIX, XXVI o Westchester County Administrative Code, Article VIII Generally: o Westchester County requires home improvement contractors to have a license, but not home improvement salespersons. o A home improvement contractor license in Westchester County is not transferrable or assignable. o Westchester County Code ?863.111, requires a home improvement contractor to: o "conspicuously set forth in any contract, order form, receipt or other written memorandum a date to commence and a date to complete the performance of the service" and o "commence and complete the performance of the service on the date or dates agreed upon with the consumer, unless: o 1) the consumer is notified in writing, or by oral communication confirmed in writing within one (1) day of the delay and the revised date of commencement and/or completion; and o 2) the consumer agrees to the revised dates."

Additional Resources

THE HOME IMPROVEMENT COMPLIANCE GUIDE-WHAT YOU,THE CONTRACTOR AND CONSUMER NEED TO KNOW

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