The #1 Mistake Contractors Make Under HICPA: Not Using a Legally Compliant Contract

Contractors lose leverage—and payment—every day in Pennsylvania for one avoidable reason: using a home improvement contract that does not comply with the Home Improvement Consumer Protection Act (HICPA). Below is a concise roadmap to (1) mandatory HICPA contract elements, (2) prohibited clauses that void the owner’s obligations, and (3) how missing language can derail your right to be paid.

To be valid and enforceable against the owner, a home improvement contract must include all of the following:

Writing, Signatures, and Registration:
The contract must be in writing, legible, and include the contractor’s HICPA registration number. It must be signed by the owner (or authorized agent) and the contractor (or salesperson).

Complete Agreement and Key Disclosures:
The contract must contain the entire agreement between the parties, including attached copies of all required notices; it must state the date of the transaction; it must list the contractor’s name, address (not a P.O. Box alone), and telephone number; and it must provide the approximate start date and completion date.

Scope, Specs, and Change Orders:
The contract must describe the work, the materials to be used, and include specifications that cannot be changed without a written change order signed by both the owner and contractor.

Price Structure:
The contract must include the total sales price or, if using time-and-materials, a compliant time/management provision. For time/management, the contractor must give an initial written cost estimate before work starts; the contract must state (a) the dollar value of the initial estimate, (b) that costs may not exceed 10% above that estimate; (c) the total potential cost including the 10%; and (d) that any increase beyond that requires a signed written change order.

Down Payments and Special Order Materials:
The contract must itemize the down payment amount and any amount advanced for special order materials, listed separately.

Known Subcontractors:
The contract must include the names, addresses (not a P.O. Box alone), and telephone numbers of all subcontractors known at signing.

Insurance Disclosure:
Except as otherwise provided, the contractor must agree to maintain at least $50,000 in personal injury liability insurance and $50,000 in property damage insurance, and must identify the current amounts of coverage at signing.

Bureau Toll-Free Number and Right to Cancel:
The contract must include the Attorney General Bureau of Consumer Protection’s toll-free telephone number. It must include a notice of the owner’s three-business-day right of rescission. A completed copy including all required notices must be delivered to the owner at execution without charge.

If your agreement contains any of the following, the owner can void the entire contract—instantly jeopardizing your payment rights:

• Hold harmless clause;
• Waiver of Federal, State, or local code requirements;
• Confession of judgment clause;
• Waiver of the right to a jury trial;
• Assignment or order for payment of wages or other compensation;
• Owner’s agreement not to assert any claim or defense arising out of the contract;
• Provision awarding contractor attorney fees and costs;
• Clause relieving the contractor from liability for acts in collecting payments or repossessing goods;
• Waiver of any HICPA rights;
• Automatic or recurring renewal; or
• If included, Arbitration must satisfy strict format and consent requirements or it is voidable.

Why Missing Language Can Invalidate or Undermine Payment Claims:

HICPA states no home improvement contract is valid or enforceable against an owner unless it contains all required items listed in the statute. For time/management work, exceeding the initial estimate by more than 10% without a signed written change order violates HICPA’s mandatory cap and change-order requirements, undermining recovery above the cap.

Material deviations from plans or specifications without a written, signed, and dated change order with price changes violate HICPA’s change-order rule. Inserting any prohibited clause makes the contract voidable by the owner, enabling the owner to unwind obligations and resist payment. Demanding or receiving payment before obtaining a signed contract, or taking deposits over one-third of the contract price (plus special order materials, if applicable) on projects over $5,000.00, violates HICPA and invites defenses and enforcement exposure.

HICPA also preserves a contractor’s right to recover the reasonable value of requested services in equity where the contractor has complied with subsection (a) and a court finds it inequitable to deny recovery. If your contract does not meet subsection (a), you may forfeit even this fallback argument.

Bottom line, under HICPA, the contract is your payment engine—and your Achilles’ heel if it is noncompliant. Build and use a HICPA-compliant template for every project, and rigorously manage change orders and deposits. That one discipline protects enforceability, preserves leverage, and keeps your right to payment intact. An experienced attorney can help with drafting and interpreting contracts, among other issues which arise as a contractor. Improve your chances of successfully collecting your receivables with a lawyer on your side.