The Home Improvement Consumer Protection Act – A Primer

With spring come the myriad signs popping up in our neighbors’ yards advertising the services of the contractor who put on their new roof, new deck, new driveway, new kitchen, or whatever other home renovation project they’ve recently undertaken. It’s always refreshing to have an update and most of us are happy to trust the professionals we hire to get the job done right. But we also all know some horror story of a never-ending project, contract disputes, cost overruns, faulty work, and so on.

Over 10 years ago, in 2008, Pennsylvania passed the Home Improvement Consumer Protection Act (HICPA) which created a statutory framework to protect homeowners from unscrupulous home improvement contractors, and which goes beyond the consumer protections set forth in Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. HICPA placed significant new requirements on home improvement contractors in terms of how they conduct business, including mandating certain terms of their customer contracts, dictating how they accept payment from customers, and requiring all home improvement contractors to register with the state.

This consumer-friendly law has made it easier for homeowners to avoid being scammed or otherwise subjected to unscrupulous practices which may damage their home, and their bank account. HICPA further created a new crime for home improvement fraud, and also gave homeowners powerful new civil remedies in court to sue contractors who violate the law, including the ability to collect treble (i.e. tripled) damages and attorneys’ fees if they prevail in their claims. HICPA provides:

• All home improvement contractors to register their business with the Pennsylvania Attorney General and to receive an identification number. Registration is an easy process that can be completed online, but failure to register is a violation of HICPA. A contractor is required to include its registration number on all estimates, contracts, and advertising.
• Strict requirements regarding the provisions which must appear in contracts with homeowners. HICPA also has deemed certain other provisions as unenforceable against the homeowner. For instance, the contract must be in writing, must be signed by both the contractor and the homeowner, must contain an approximate start and completion date, and must include a notice describing the homeowner’s right to rescind the contract within three business days. Moreover, “legalese” which was once ubiquitous in home improvement contracts – such as a hold harmless clauses, confession of judgment provisions, jury trial waivers, and waivers of state and local health, life, safety, and building codes – are now deemed to be unenforceable.
• Specific practices now deemed to be illegal. For example, a contractor may not accept a down payment from a customer before a contract is signed. Additionally, a contractor may not deviate from the original plans for the project in any material way without a written and signed change order. And for any project exceeding $5,000, a contractor may not accept more than 1/3 of the contract price as a down payment.

HICPA applies to contractors doing over $5,000 of home improvement business annually, regardless of a single project’s size. Further, “home improvement” is defined broadly to include:

• A contractor who is engaged in work such as repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation, or sandblasting; and
• Contractors who are involved with the construction, replacement, installation or improvement of driveways, swimming pools, solar energy systems, pool houses, garages, roofs, siding, insulation, security systems, flooring, patios, fences, gazebos, sheds, cabanas, painting, doors, windows, waterproofing, installation of central heating or air conditioning, and installation of storm windows, or awnings.

Notably, HICPA does not generally apply to landscaping services, unless the landscaper is involved in the construction, replacement, installation, or improvement of any of the foregoing. Specifically, landscapers will fall within the purview of HICPA if they are involved with lighting systems, non-decorative fences, concrete walkways, windows, doors, and the installation of retaining walls, fountains or drainage systems. It is likely that HICPA will apply to landscapers, as many landscaping businesses perform a variety of the above services for their customers.

For consumers, which contractors are governed by HICPA is just as important as those who are not. Despite the broad definition of “contractors” who must register with the Bureau, there are some exemptions. For example, any individual that sells his services for commercial or business use is exempted from the registration requirement, as is new home construction. In addition, someone who sells appliances, such as stoves, refrigerators, freezers, or room air conditioners, is not required to register. Finally, a home improvement retailer that has a net worth of more than $50,000,000, such as Home Depot and Lowe’s, does not need to register.

The definition of what constitutes home improvement fraud includes what many think of as fraud: misrepresenting the true name of the salesperson, contractor or business; damaging a person’s property with the intent to induce the consumer into purchasing home improvement services; misrepresenting the cost of materials; altering an agreement, mortgage, etc.; or publishing a false advertisement. However, as noted above, receiving an advance payment for home improvement work and failing to complete the work when specified in the contract and not returning the payment, is now included in the definition of home improvement fraud.

When undertaking a home improvement project, be sure to carefully vet all contractors and ensure that you understand all provisions of the contract (and do be sure to have a contract). If you have any concerns during the course of the project, address them immediately and follow up discussions in writing. If you have any concerns about a project or proposed project, do not hesitate to consult with an experienced attorney to ensure as smooth a renovation or improvement as possible. Contractors should similarly consider engaging an attorney to make sure that their contracts meet all the requirements of Pennsylvania law.