Written By: Ray Wendolowski
Stop me if you’ve heard this one before. A buddy of yours gets hired to do some home improvement work for a customer. The customer wants to install marble tile in a bathroom and your buddy is just the man for the job. The tile installation goes well for a bit, but suddenly the customer has a complaint about the color of the tile and refuses to pay. Your buddy stops doing the work since payment has stopped, and the next thing he knows the Sheriff is serving him with a lawsuit seeking damages under the Home Improvement Consumer Protection Act (HICPA) by way of the Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL).
This scenario is a very real possibility for many home improvement contractors, and contractors are often placed in the unenviable position of paying to defend themselves when they have a hiccup occur on the job site. Although it likely isn’t possible to prevent all of these suits from occurring, home improvement contractors can take steps to ensure that they protect themselves from significant exposure in the event they ever find themselves in this position.
HICPA and the UTPCPL work together to allow customers to file a lawsuit against a home improvement contractor for their actual damages or $100, whichever is greater, and the court hearing the lawsuit has discretion to award treble (triple) damages plus attorneys’ fees to a prevailing consumer. As you can see, HICPA and the UTPCPL can be a significant threat to home improvement contractors because of the damages that consumers can seek under the statutes. Knowing the potential risks, home improvement contractors should do everything in their power to ensure they are complying fully with the statutes and not taking unnecessary and preventable risks that will expose them to massive liability.
One of the most important things for a contractor to do is to register as a home improvement contractor in the Commonwealth of Pennsylvania. Once a contractor is registered, they should make certain to place their home improvement contractor number on each of their contracts, advertisements, business cards, and any other communication that will reach potential or current customers. Failing to register is a big problem and can lead to significant exposure. Even if you do something seemingly innocuous, like forgetting to put your number on an ad or a contract form, you could end up being sued by a consumer for a violation of HICPA.
Once you register with the state, you will need to also make sure your contracts comply with the requirements of HICPA and that you do not take actions while on the job that would run afoul of HICPA. The potential violations of HICPA that may be lurking in your contracts are myriad, and I will not attempt to address each of the potential pitfalls that exist. The most common problems are failing to include a right of rescission and requesting a deposit greater than HICPA permits. The right of rescission lets a consumer know that they have a right to terminate the contract, without penalty, within three days of entering the same. If you fail to include the correct language notifying a customer of their right of rescission, you have automatically violated HICPA and exposed yourself to unnecessary liability. You should also be certain not to request a deposit greater than one third of the total contract price, or one third plus the cost of special order materials (meaning materials that are not stock, cannot be returned, and have no other viable use). If you do, you again immediately violate HICPA and will be facing liability you can easily avoid.
If you are a home improvement contractor of any size, you should speak to an attorney to ensure that you are doing everything you can to protect yourself from needless liability under HICPA. An attorney can review your contracts to help give you a better defense to claims for triple a consumer’s actual damages and their attorneys’ fees. If you have questions about whether you may have HICPA violations in your contract or to get guidance about what other actions are not permitted under HICPA, please drop me a line at email@example.com or call me directly at (412) 456-8119. Our firm can give you the advice you are seeking.