The Pennsylvania Home Improvement Consumer Protection Act (“HICPA”), 73 P.S. § 517.1, is a fairly recent law that substantially impacts the rights and duties of both consumers and contractors. The purpose of the HICPA is to regulate and offer additional guidelines for the transactions that take place between consumers and contractors. It imposes a number of additional requirements upon contractors and sets forth penalties for “Home Improvement Fraud.” Some of the most important requirements by which contractors must now abide include the following:
All contracts must be in writing, be legible and contain:
a. the signature of the consumer or his/her agent;
b. the signature of the contractor or his/her agent;
c. the date of the transaction;
d. copies of all required notices (attached to the contract);
e. the name, address and telephone number of the contractor (PO Boxes are not valid);
f. a description of the work to be performed as well as the materials (this cannot be changed without a written change order signed by both the owner and contractor);
g. estimated start date and completion date;
h. the total price due;
i. the telephone number for the Bureau of Consumer Protection (1-888-520-6680); and
i. contain the contractor’s registration number.
This last requirement can be a source of problems for both homeowners and contractors. Additionally, not only must the contract contain a contractor’s registration number but it must also be displayed on all advertisements.[related]
The Bureau of Consumer Protection, run by the Office of the Attorney General, issues contractor registration numbers. In order to determine whether a contractor is registered and, if so, obtain the contractor’s registration number, homeowners can call the telephone number listed above which must also be listed in all contracts. In order to register with the Bureau of Consumer Protection, contractors must complete an application which may be obtained online or can be requested and mailed with the $50.00 fee to the Pennsylvania Office of Attorney General, Bureau of Consumer Protection, 15th Floor, Strawberry Square, Harrisburg, PA 17120. Registration must be renewed biannually.
The HICPA also criminalizes “Home Improvement Fraud.” Included in the definition of home improvement fraud is the receipt of advance payment by a contractor and the contractor’s subsequent failure to perform or provide the services or materials specified in the contract. If the amount of advance payment taken by the contractor is over $2,000, the act is automatically deemed a third degree felony. If the homeowner is 60 years of age or older, the offense will automatically become a second degree felony. There are additional criminal penalties and prohibited behavior identified in the HICPA. Answers to frequently asked questions can be found on the website of the Pennsylvania Office of the Attorney General.
Although the courts have had few opportunities to interpret the HICPA to date, the Pennsylvania Superior Court has held that an oral contract can be enforced by a contractor if substantial work has been performed and the contractor has been left uncompensated under a theory of quantum meruit.(Durst v. Milroy, 52 A.3d 357 (Pa.Super. 2012). Quantum meruit is an equitable remedy used to provide restitution for unjust enrichment in the amount of the reasonable value of services. Essentially, where no contract exists but denying a party payment for services rendered would be unconscionable, the law will imply that a contract exists. The Pennsylvania Superior Court has applied the same theory to allow payment to a contractor who entered into a written contract with a consumer, performed services pursuant to the contract but failed to register with the Bureau.(Shafer Elec. & Const. v. Mantia, 67 A.3d 8 (Pa.Super. 2013). In essence, a consumer cannot allow work to be performed by a contractor, benefit from that work and then refuse payment altogether by relying on the requirement that the contractor be registered pursuant to the HICPA.
Although the two cases cited above have allowed recovery by a contractor who has not complied fully with the Act, it is in the best interest of every contractor who anticipates performing services in Pennsylvania to abide by the Home Improvement Consumer Protection Act in order to avoid potential legal troubles. It also benefits homeowners to be familiar with the Act so that they know their rights and limitations.