By Angela M. Ward, Attorney
If you’re considering home improvement, you know it can cost a bundle. Pennsylvanians are paying more than ever for renovations. The 2022 Houzz & Home Survey found that American homeowners plan to spend $15,000 in the coming year to renovate their houses. This represents a 50 percent increase compared to the previous three years.
With so much money at stake, it’s smart to be wary of dishonest contractors. Unfortunately, home improvement scams are common. Some workmen use cheap materials, ignore building codes, or even run off with a deposit never to return.
That’s why it is so important to understand how the law provides recourse when builders try to scam customers. Pennsylvania’s Home Improvement Consumer Protection Act (HICPA) specifies many requirements for an enforceable home improvement contract and describes acts that violate the law, which would warrant the consumer’s recovery of repair costs, attorneys fees, court costs, and up to three times the actual repair costs.
The best way to protect against scams is to be informed. Here are three common strategies to protect against fraud.
Insist on a Contract
Most homeowners must eventually use a new contractor for some or all of their renovations. However, even if friends or family recommend the worker, it’s essential to ensure that any project starts with a written contract.
Under HICPA, every job must have a contract that provides the consumer with information about the contractor, any sub-contractors, the starting and ending dates, and plans that describe the job. These legal documents protect property owners against illegal activity. That’s why, no matter how well the consumer knows the contractor or how highly they come recommended, it’s wise to insist on a detailed contract that satisfies the HICPA requirements, especially before paying any deposit.
Under the Pennsylvania Home Improvement Consumer Protection Act, contractors cannot request more than 33 percent of the total cost upfront for projects over $1,000 (plus the price of specialty items).
Once the property owner has a contract in hand, it’s important to check the builder’s licensing status online. All licensed contractors in Pennsylvania are listed in the Attorney General’s database. These builders have met the HICPA requirement for registration, have provided proof of insurance and must operate in good standing to maintain their licensed status.
It’s also wise to verify your contractor’s information. Make a call to the phone numbers listed for the company in phone books or online–don’t rely on the honesty of a business card. Lying about employment or professional affiliations is one way dishonest builders are able to steal deposits, leave work unfinished, or otherwise cheat the consumer.
In short, once a solid contract is in hand, and the customer has verified their contractor’s identity and legal standing, they are laying the groundwork for a successful remodeling project.
Watch for Illegal Increase in Scope
Another reason to insist on a detailed contract is to prevent dishonest workers from finding ways to increase charges throughout the project. For example, without a legal agreement in place, some contractors will do additional work without pre-approval and charge for it, increasing the size of the project. Other builders will swap out materials, using less expensive options while still charging markups on more costly materials. Another common issue is charging more for projects that take longer than expected without being clear about the reason for the overages. HICPA makes it illegal to change the terms of the contract without a written change order signed by the contractor and the consumer.
Homeowners can minimize disagreements about the contractor’s responsibilities by starting with a clear scope of work and contract. The agreement should spell out the type of work that will be done, the cost of supplies, descriptions of materials, and a timeline. For example, if a specific type of granite is desired for countertops, it should be listed in the scope of work. Contractors should document the amount of granite required, how much it costs, and how much labor is needed to install it. Putting everything in writing before the project begins is a smart way to guard against low-quality installations, switched materials, or unexpected add-ons.
In most renovations, a few mid-project changes are normal, and sometimes they mean extra costs for the remodeling company in labor and materials. However, by law, any deviations from the original plan, even if requested by the homeowner, require a change order signed by both the customer and the contractor.
Beware of Discounts for Cutting Corners
Some contractors will offer discounts if a customer doesn’t require a license. Or they offer a lower price if the homeowner obtains building permits. Consider these warning signs.
Many builders will offer excuses when pressed. But don’t believe any builder’s claim that registration is optional. In Pennsylvania, the law requires contractors who perform at least $5,000 worth of home improvements to register with the State Attorney General’s office. All that is necessary for registering is a $50 fee and proof of insurance.
Licensed contractors must carry insurance. If a consumer works with an uninsured remodeling company, that property owner becomes liable for injuries. In fact, if an uninsured contractor or their employee is injured on the job, the property owner can end up paying for their medical expenses.
Builders need to be licensed to obtain building permits. That’s why unlicensed contracts will ask the homeowner to take care of permits. However, whoever obtains the permit, the contractor or the homeowner, also assumes liability for the project. Again, a homeowner could end up paying for worker injuries or damage to their property.
Some contractors will press for cash up front, saying it’s needed to get started or that they offer a cash discount. Don’t fall for it. Builders who rush decisions are often trying to get cash in hand before the homeowner has a chance to verify their identity. Always check your contractor’s information. Make sure they are who they say they are. Call the phone numbers listed for the company in phone books or online–don’t rely on the honesty of a business card. Disreputable workers sometimes assume the identity of other people or companies to make it easier to steal deposits, leave work unfinished, or otherwise cheat the consumer.
Don’t Tolerate Illegal Contractor Practices
Homeowners who feel cheated by contractors should hire a qualified home improvement attorney. If you think your contractor has failed to honor their word or acted dishonestly, contact Going and Plank’s experienced Lancaster County attorneys to learn more about your legal options.
Want to find out more about contractor scams and homeowners’ rights? Check out these articles:
Or click here to discover an even wider range of legal topics in our legal blog.