By Angela M. Ward, Attorney
Homes have always been a central part of our lives. They’re a place to gather with family and friends and a retreat at the end of a long day. In recent months, the home has become a place to work and learn as well.
Many homeowners spend thousands of dollars on their homes each year, maintenance projects like a new roof and replacement windows or remodeling work to create a home office or an updated kitchen. While some are fortunate enough to have DIY talents, many choose to hire a contractor to handle their home improvement desires. Consumers trust contractors to do the job well, pursuant to the law and at a fair price.
Most home improvement contractors are aware of their legal obligations and are trustworthy, but some take advantage of their customer’s trust. Their contract may not disclose required information, such as their license number, whether they are using subcontractors on the job and the insurance that they hold that would cover the work. Many contractors make false claims to gain a homeowner’s business then take too much as a deposit and overcharge in general, do shoddy work or no work at all and fail to refund monies paid. Fortunately, Pennsylvania law protects homeowners from such unethical practices. The Home Improvement Consumer Protection Act (HICPA) protects consumers from an array of fraudulent contractor issues, from failure to disclose pertinent information, charging too high a deposit, failing to disclose accurate costs, over-charging for time and/or materials, false advertising, and failing to complete the project.
HICPA protections apply to most types of work on homes and property, including home repairs, replacements, remodeling, demolitions, removals, renovations, installations, alterations, conversions, modernizations, improvements, rehabilitation, and even sandblasting.
It is important that homeowners know their rights under Pennsylvania law, so they understand which important steps they can take to ensure they are working with a reliable contractor. Here are some tips to help homeowners protect themselves from illegal contractor practices:
Don’t use an Unlicensed Contractor for any Home Improvement Issue
Home improvements can be expensive, with major ones costing thousands or even tens of thousands of dollars. It’s natural for homeowners to try to save money however they can. Hiring an unlicensed contractor may be a tempting option since an unlicensed contractor often works at a discounted price. Unlicensed contractors can offer discounts by avoiding some of the costly – but important – requirements that licensed contractors to comply with under Pennsylvania law, such as carrying minimum insurance coverage or using contracts that provide specified consumer protections.
Hiring an unlicensed contractor who doesn’t carry liability or workers’ compensation insurance means the homeowner could be left footing the bill if a worker gets injured on the job or even if the contractor damages the home. Contractors who do not register with the state are also harder to track down should they do sub-par work or skip out on a job.
Here’s one more thing to consider: contractors need a license to secure a building permit; homeowners do not. Hiring an unlicensed contractor means the homeowner must secure any building permit themselves – and consequently carry the legal responsibility should anything go wrong.
Don’t Hire a Contractor on the Spot Because They Offer a Discount
Sometimes, contractors will show up at the front door offering to repair an aging roof or a cracked driveway for a hefty discount. They may say they have leftover materials or another property owner just canceled a job. These contractors typically demand an immediate answer. Make sure your answer is no. Reputable contractors rarely miscalculate the materials they need for a job, use pushy door-to-door sales tactics, or demand a decision on the spot for an unsolicited offer.
There’s also a good chance these last-minute contractors will use low-grade materials and shoddy workmanship or, worse yet, they take the money and never return to do the repairs. Homeowners often fall victim to such scams after a natural disaster, when they are feeling vulnerable and their home is truly in need of repairs.
It’s also risky to have a contractor offer to handle the insurance claim for the homeowner. Once a disreputable contractor receives the insurance payout they either skip town or do subpar work and keep the profit. Even if the contractor seems trustworthy, never make a decision on the spot without doing some research first.
Don’t pay a Contractor in Cash
While asking for a payment in cash is not illegal, it should raise a red flag for homeowners. Contractors who work on a cash-only basis may not be paying taxes. Failing to pay taxes doesn’t necessarily affect the consumer, but it may be a sign that the contractor is willing to use other questionable practices to save a buck, like failing to pay for insurance. It could also be a sign of financial instability. A cash-strapped contractor could be using funds earmarked for one project to pay for another.
Paying with cash also deprives the homeowner of a paper trail. A check or credit card offers additional proof of payment. If paying by check, be sure to detail specifically what the payment is for in the check’s memo section. When possible, use a credit card to pay a contractor. Credit cards often offer liability protection in cases of consumer fraud and allow homeowners to cancel or withhold payment if the contractor’s services are in question.
Beware of Contractors who ask for a lot of Money Upfront
It’s not unusual for contractors to request some payment upfront, especially if the project requires ordering special custom materials, like cabinets or ceramic tile. Legitimate contractors typically purchase other commodity materials, such as lumber, on the account.
In Pennsylvania, it is illegal for contractors to ask for a down payment of more than one-third the total cost of the project – or one-third plus the cost of any specialty materials. The remainder of the payments should be on a schedule tied to major milestones in the project. If a contractor illegally estimates the cost of specialty materials, or intentionally misrepresents an item as a special order, the contractor is committing home improvement fraud under Pennsylvania law.
Contractors who ask for too much money upfront may be on a shaky financial footing or may just take the money and run. Additionally, these contractors may do shoddy work, knowing it will be harder for the homeowner to fire them when they’ve already invested thousands of dollars in the project.
Get a Written Contract – Pennsylvania law Requires it
Obtaining a contract, in writing, before any work begins is one of the most important ways homeowners can avoid the pitfalls of illegal estimating practices. Verbal quotes and agreements are problematic. Should a contractor decide to charge more or use inferior materials, it is difficult for a homeowner to seek compensation without written evidence. In fact, under the Home Improvement Consumer Protection Act, a home improvement contract is not valid or enforceable unless it is in writing. HICPA also outlines the information a valid written contract must contain, including a start and completion date for the project, the names and addresses of all contractors and subcontractors, a detailed description of the work and the required materials, and prices. The written contract must also include a provision that the final cost cannot exceed the initial cost estimate by more than 10 percent unless there is a change order in writing.
Don’t Accept Anything Less Than What’s Agreed Upon in a Written Contract
A home improvement contractor may be breaking the law if they fail to use appropriate or specified materials in the written contract. In the case of illegal estimating, the contractor will quote one price then use less expensive materials without reducing the project cost.
All home improvement contracts should include a scope of work in writing that details the work to be done along with an itemized list of all materials and services and their costs. For a renovation project, for example, if the homeowner and contractor discuss fixtures of a particular quality, those specific details should appear in the written contract. Without that written guarantee, a contractor might install fixtures of lesser quality or claim that the desired fixtures will cost extra. A homeowner should never accept less than agreed upon in a written contract.
Contractors who violate the Home Improvement Consumer Protection Act are liable for the consumer’s damages, meaning homeowners can recover all costs, the amount required to complete the job in the way it should have been, the amount overpaid to contractor, interest and attorney fees, and in cases where fraud can be shown, the consumer is up to three times its actual damages.
Lancaster County homeowners who have been damaged by a contractor who is violating the requirements of the home improvement law should contact the Law Offices of Going and Plank in downtown Lancaster for a review of their case.