You’ve purchased your house, and you decide you want to make a home improvement. Maybe you want to install a patio, an in-ground pool, a hardwood floor, a white picket fence, or a nice granite countertop. You meet a contractor, and you like him. You enter into a handshake agreement, and he starts right in on the work.
Your contractor just broke the law.
Under the Home Improvement Act, General Statutes §20-418, et seq., (the “HIA"), the contract must be in writing. That means a lot more than a written estimate that both parties sign off on.
Under the HIA, a “home improvement" is almost every type ofrepair, replacement, remodeling, alteration, conversion, modernization, improvement or rehabilitation of an existing house. The HIA does not cover new home construction (the New Home Warranty Act does), nor does the HIA cover the sale of appliances or materials alone.
If the repair falls within the broad definition of a “home improvement," the contract must:
(1) be in writing describing the work (all change orders must also be in writing);
(2) include the following dates: (a) the date it is signed; (b) the date the work will begin; (c) the date the work will be completed; and (d) the date by which the homeowner may cancel the transaction;
(3) include a Notice of Customer’s Right to Cancel within three business days (in Connecticut, Saturdays are business days), and that notice must be attached to the contract and in duplicate;
(4) include a written statement, in boldface type (at least 10 points) describing the fact that there is a right to cancel pursuant to an attached notice;
(5) be signed and dated by the contractor and the customer;
(6) have a duplicate copy for the customer to keep; and
(7) be entered into by a licensed home improvement contractor.
If any of the foregoing elements are not in the contract, it violates the law. Surprisingly, many licensed contractors, who should be careful and cognizant of the requirements of the law, often are not.
As stated, the contract requires a three-day right of rescission. When a contractor does work within the rescission period, and the customer rescinds in an appropriate manner, the contractor cannot recover for any work it performed. Additionally, the homeowner has the right to demand that the contractor put the house back into the shape it was before the work had commenced.
If the work is performed, but the contract was invalid because it did not contain one of the requirements listed above, the contractor may neither bring a successful suit for damages, nor foreclose a mechanic’s lien on the property. Any mechanic’s lien filed would be dischargeable by order of the court.
Moreover, if the contract fails to comply with the Act, the contractor cannot recover for any unjust enrichment that is a windfall to the homeowner.
Note, however, that there are a few exceptions. If the homeowner, as part of a scheme to obtain free work from the contractor, attempts to repudiate the contract because of the contract’s noncompliance with the HIA, the homeowner may still be on the hook. That is because if the homeowner acted in bad faith, he should not be allowed to benefit by his own wrongdoing. Some examples of this would be encouraging the contractor to immediately commence working in the rescission period, or inducing the contractor into noncompliance by some trick or deception. The bad faith exception is a matter of factual proof at a trial.
Next, if a contractor enters into an invalid contract with the homeowner, but he has a subcontractor who is unpaid, it is possible, under a line of cases, for the subcontractor to successfully place a mechanic’s lien on the property in order to secure payment of his fee.
Finally, it is quite possible to waive compliance with the HIA. This happens frequently. Many homeowners hire people to work on their homes without a written agreement at all. Very often these people are not be licensed contractors at all. Nevertheless, they do fair work for a fair price and the homeowner chooses to pay for it. If the homeowner, knowing of his rights under the HIA chooses to enter into such an agreement, and pays for the work, he will probably not be able to sue the contractor back for the money after the end of the contract, despite the contractor’s noncompliance with the HIA.
Even though an unlicensed contractor might do acceptable work, it is always better to do business with a licensed contractor. This is chiefly for a few reasons: (1) there a likelihood that he will perform at a higher level, (2) there is oversight by the Department of Consumer Protection, through which he is licensed, (3) there is a greater likelihood that he will carry the proper insurances, and (4) if a consumer suffers loss or damage because of the contractors work or failure to work, he is able to look to the Home Improvement Guaranty Fund.
All licensed Home Improvement contractors must contribute to the Home Improvement Guaranty Fund annually. If a homeowner sustains such damage while dealing with a licensed contractor, and obtains a judgment of at least $8,000, which is uncollectible, the fund provides restitution up to $15,000 for the aggrieved consumer. While this might not make some consumers whole, it is substantial restitution for many, and a big reason to work only with licensed contractors.