Faced with an ever increasing amount of fraudulent activity in the arena of home remodeling, renovations, and other improvements, as well as the growing prevalence of civil litigation disputes in this area, the Pennsylvania General Assembly enacted the Pennsylvania Home Improvement Consumer Protection Act, or HICPA, in late 2008. To the extent the law put in place Substantial new requirements in 2009 with respect to home improvement work in Pennsylvania, it is important that both homeowners and contractors are familiar with HICPA and some its mandates.
As originally publicized by the general media, one of HICPA’s biggest changes was the centralization of home improvement contractor registration. Prior to the implementation of HICPA, Pennsylvania had no statewide registration system for contractors, resulting in an inconsistent web of municipal control of contractors in some areas and little or no regulation elsewhere. Moreover and with some contractors not being formally incorporated, homeowners had little ability to vet contractors in any way.
HICPA now requires all contractors to register with the Pennsylvania Attorney General’s Of. fice and obtain a unique six digit registration number to be employed on all advertisements, estimates, and contracts with customers. Incidentally, while HICPA does exclude the construction of a new home, material sales, appliances, landscaping, and some other items, it does apply to most customary home repair trades such as plumbing and electrical in addition to general home improvement contractOrS. hardly equals affirmation as to the quality of a contractor or its services, a homeowner can perform a quick self-check, determine if a contractor is registered, and have a clear means of complaint with the Attorney General in the event of fraud or other serious misconduct in violation of HICPA or other Pennsylvania law.
Beyond the registration requirement, though, HICPA has attempted to strongly dictate contractual requirements for home improvement work. Namely and in order for a home improvement contract to be enforceable against a homeowner, HICPA requires any home improvement contract to be written, dated, and signed. Beyond the requirement that the contract must be written, HICPA states that all comprehensive terms of agreement between the parties must be contained within the written document itself along with other details to include the approximate starting and completion dates for any work. Moreover, specific information as to the financial terms of the contract must be incorporated, particularly on common so-called “time and materials” based agreement including a mandate that any change resulting in a 10% or higher price difference must be exclusively reflected within a written change order signed by both contractor and homeowner.
Such requirements may seem reasonable, but one must keep in mind that in the past many contractors have employed simple or general estimates of work only, whether signed by the homeowner or not, and rarely documented any change orders during the pendency of project into a signed writing. Essentially, many home improvement contracts traditionally employed prior to HICPA are not compliant with the new law and in some respects accordingly Void.
For this reason, contractors and home tradesmen must be cautious in assuring their contracts are compliant with HICPA. Without doing so, a contractor may risk the ability to pursue certain claims against a homeowner in the event of a non-payment or other default. It is equally important that homeowners look for completeness and detail in a contract, both to assess the contractors general compliance with HICPA and to avoid pitfalls as work proceeds based upon ambiguous or other inaccuracies in terms within an agreement.
Through limited early consideration by Pennsylvania’s appellate courts, it appears that HICPA cannot be used as an absolute defense by a homeowner in refusing to pay for work where no written contract or a contract inconsistent with HICPA exists. To this end, certain equitable relief claims may still be allowed even in the absence of a written contract or a proper written contract. However, a contractor’s historically most robust action, a breach of express contract claim, will fail under HICPA, resulting in lesser recovery of damages. Finally, HICPA gives some additional “teeth’ to homeowners relative to allegations of misrepresentation or fraud by a home improvement contractor. First, a new criminal offense of home improvement fraud was codified and can be prosecuted by a county district attorney or the Attorney Generals office in instances where a contractor knowingly and intentionally deceives someone. Secondly, HICPA purposely provides for civil claims under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law, or UTPCPL, potentially allowing recovery of enhanced civil damages and attorneys’ fees in these cases.
It is likely that future court decisions will further shape the landscape of HICPA and home improvement law in Pennsylvania. Nonetheless HICPA remains moving forward and all home improvements contracts must be scrutinized to ensure compliance.
Thus, should you be considering entering into a home improvement agreement, please contact one of our attorneys and we can assist you in reviewing and implementing a HICPA compliant contract.