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Compliance With On July 1, 2009, the Home Improvement Consumer Protection Act became effective throughout Pennsylvania. This new law will undoubtedly change the way contractors do business with homeowners in Pennsylvania. Plain and simple, this law is going to make it generally more difficult and expensive for contractors to do business in the Commonwealth of Pennsylvania and if a contractor fails to comply with the law there can be some harsh consequences, including the imposition of civil and criminal penalties, possibly the inability to enforce contracts with customers, and even problems getting paid under those contracts, etc. This law is a “no nonsense” consumer protection law and the contractor is at a severe disadvantage in dealing with residential customers unless the contractor knows what to do and how to comply with the law. Contractors - What You Need To Do And Why I. REGISTRATION OF CONTRACTORS As of July 1, 2009, all “contractors” must be registered with the Office of the Attorney General (of Pennsylvania). A link describing the registration process with instructions to do so online can be found at this link: http://www.attorneygeneral.gov/hic.aspx A brief review of the online registration form will make it clear to any contractor that this is a “no nonsense” law. II. CONTRACTS WITH CUSTOMERS Also as of July 1, 2009, in addition to registering with the Office of Attorney General, home improvement contractors must also use contracts meeting the requirements of the Home Improvement Consumer Protection Act. For the specific requirements of the law indicating what the contract must contain click here. Failure to comply with the Home Improvement Consumer Protection Act can lead to civil and criminal penalties. The Home Improvement Consumer Protection Act also incorporates into it certain provisions of the Pennsylvania Unfair Trade Practices and Consumer Protection Law that also must be complied with. A. Under the PA Home Improvement Consumer Protection Act - If a proposed contracting job is subject to the act, then a contractor has to comply with the PA Home Improvement Consumer Protection Act and use a specially worded contract that not only gives the customer a 3 day right of rescission but it also must contain a whole host of other terms that comply with the law. While there are some limited exceptions to the law, compliance with the law and use of a specially worded contract is almost always necessary: 1. If the price of the job is over $500; and 2. If the job constitutes a “home improvement” at a “private residence”. B. Under the Unfair Trade Practices and Consumer Protection Law - If a job is subject to the Unfair Trade Practices and Consumer Protection Law, the contractor must also use a specially worded contract that provides the customer with a 3 day right of rescission and contains other required terms. Generally speaking, compliance with the law and use of a specially worded contract is almost always necessary: 1. If there is a furnishing of “goods and services” having a sale price of $25 or more; and 2. If this is as a result of, or in connection with, a contact with or call on the buyer at his residence. Based on current interpretations of the Unfair Trade Practices and Consumer Protection Law, if a contractor comes to a residential home to do any type of work on the home for $25 or more, there must be compliance with the law and use of a special contract. While the requirements of the Unfair Trade Practices and Consumer Protection Law are a little less involved than those in the Home Improvement Consumer Protection Act, there seems to be little (if any) benefit in having a different contract made up for smaller jobs under the Unfair Trade Practices and Consumer Protection Law, since a contract that fulfills the requirements of the PA Home Improvement Consumer Protection Act also appears to fulfill the requirements of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. From this perspective, and for simplicity, we feel contractors should just use a contract that fulfills the requirements of the PA Home Improvement Consumer Protection Act for all jobs $25 or over, unless the job involves a “bona fide emergency” (see below) where the customer signs an Emergency Work Authorization and is furnished with an up front total cost estimate for the goods and services to be provided to remedy the emergency. C. Exception for “bona fide emergency” work - It appears that the only exception to the requirement to use a 3 day right of rescission contract in Pennsylvania is in the case of a “bona fide emergency”. In the case of a “bona fide emergency”, goods and services can be provided as long as the customer signs an Emergency Work Authorization and is furnished with an up front total cost estimate for the goods and services to be provided to remedy the emergency. This “bona fide emergency” exception is a limited exception and is only applicable when the emergency situation “renders or has the capability to render the residential real property uninhabitable”. D. No More "Time & Material" Jobs – A plain reading of the statutes seems to indicate that "time & material" contractor jobs are no longer realistically possible and may not be recognized by the law when it comes to residential home improvements. This is so under both the Home Improvement Consumer Protection Act or the Unfair Trade Practices and Consumer Protection Law, as both laws appear to require written agreements that specify (in advance of any work being done) a specific total price for the job to be done. III. FREE HICPA CONTRACTS PA Home Improvement Contract (Basic Form) – Click Here To View Emergency Work Authorization (Basic Form) – Click Here To View Disclaimer: While the above forms have been drafted bearing in mind the Pennsylvania law, these are provided as free samples only and are not meant to convey specific legal advice to you for your situation. In some cases the use of these forms may be inappropriate. In every case, if you intend to use these forms, you should consult an attorney to make certain the use of these forms is appropriate for your situation. IV. LINK TO THE HOME IMPROVEMENT CONSUMER PROTECTION ACT While the above discussion merely highlights certain aspects of the law, the full text of the law can be viewed by CLICKING HERE. V. NEED TO CONSULT AN ATTORNEY As a contractor, and if you are serious about your business, it is strongly urged that you consult with an attorney to review your business and the requirements of the law as it affects your business. Due to the passage of this new law, “the rules have changed” and if you do not know or understand these rules, you can be at a severe disadvantage in conducting your day to day business affairs. Robert Whitley, Esq. |
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