Home inprovement contracts: Having a license is not enough
Most contractors are aware of the need to obtain a home improvement license to do work on residences in New York City or they may be barred by public policy from obtaining payment for the work done and can be held liable for up to treble damages to the homeowner.
See New York City Administrative Code § 20-385 et seq., hereinafter referred to as the “Code”.
This law has resulted in many contractors facing significant financial losses caused by their failure to comply. There is virtually no defense to the failure to have a license and doing any home improvement work in New York City which is defined as
“construction, repair, remodeling, or addition to any land or building used as a residence. This includes, but is not limited to, the construction, replacement, or improvement of basements, driveways, fences, garages, landscaping, patios, porches, sidewalks, swimming pools, terraces, and other improvements to structures or upon land that is adjacent to a home or apartment building.”
The homeowner may be an owner of a private home, condominium unit owner, a tenant or any other person including partnerships, corporations, companies, firms, trade groups and associations.
What is not as well known by contractors whose work falls within the category of home improvement, are the terms and requirements that must be contained in the contract they sign with the homeowner.
A licensed contractor who fails to include all of these points in his contract faces penalties including, among other things, non-enforceability of the contract and possible suspension of its license by the Department of Consumer Affairs.
Here is a current listing of items required:
· The date of the transaction, the contractor’s name, office address, telephone number, and license number; and the salesperson’s name and license number.
· The approximate dates, or estimated dates, when the work will begin and be substantially completed, including a statement of any contingencies that would materially change the approximate or estimated completion date. In addition to the estimated or approximate dates, the contract should also specify whether or not the contractor and the owner have determined a definite completion date to be of the essence.
· A description of the work to be performed; the materials to be provided to the owner, including make, model number, or any other identifying information; and the agreed upon consideration for the work and materials.
· A notice to the owner purchasing the home improvement that the contractor or subcontractor who performs on the contract and is not paid may have a claim against the owner which may be enforced against the property in accordance with the applicable lien laws.
· If the contract provides for one or more progress payments to be paid to the home improvement contractor by the owner before substantial completion or the work, a schedule of such progress payments showing the amount of each payment, as a sum in dollars and cents, and specifically identifying the state of completion of the work or services to be performed, including any materials to be supplied before each such progress payment is due. The amount of any such progress payments shall bear a reasonable relationship to the amount of work to be performed, materials to be purchased, or expenses for which the contractor would be obligated at the time of payment.
· Any advertised representation including, but not limited to, any charge, guaranty, or warranty shall be clearly stated and made a part of the home improvement contract.
· A clause wherein the contractor agrees to furnish the buyer with a certificate of Workers’ Compensation Insurance prior to commencement of work pursuant to the contract.
· A clause wherein the contractor agrees to procure all permits required by local law.
· In immediate proximity to the space served in the contract for the signature of the buyer, in boldface and a minimum size of 10 points, a statement in the following form:
YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION, SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT.
If a contractor is unsure as to the requirements or the applicability of the law, it is much cheaper and prudent to consult an attorney well versed in this area rather than face the possibility of an unenforceable contract, damages and loss of license.
Howard M. Rubin is a partner at the New York law firm of Goetz Fitzpatrick LLP. He practices primarily in the areas of construction, contracts and real estate brokerage.
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