Blog Post  Does your contract pass the test?

How you enter into a home improvement contract matters.  While some may think that a wink and a handshake is sufficient when negotiating a contract for home improvement work, the Home Improvement Contractor Law (HIC) requires that there be a written contract between contractor and homeowner for jobs costing over $1,000.  Best practice suggests having a written contract for every job, every time!  Having a detailed written contract signed and dated by both parties is crucial to formalizing the terms of the agreement and protects both parties should problems arise.

The HIC Law outlines what must be included in home improvement contracts. Before you sign, make sure your contract passes the test by meeting the criteria below. Does it include:

1. A complete written agreement between the homeowner and contractor. Be thorough and detailed to make sure both parties understand the project and their responsibilities.

2. Contractor’s full name(s), address(es), registration number, name of salesperson, if applicable,  date the contract was executed, and signatures of both parties. Work on a project cannot begin before the contract is signed and both contractor and homeowner have a copy! Do not sign a contract with an unregistered contractor!!! Check with our Office if you have questions about a contractor’s registration status.

3. Project start and end dates. (Both parties should make sure that these dates are realistic so as to avoid misunderstanding.)

4. A detailed description of the work to be performed and the specific materials to be used.

5. Total contract price.

6. Payment schedule, complete with dates and the payment amounts in dollars.

Note: an initial deposit cannot exceed one-third of the total price and final payment cannot be demanded until the contract is completed to both parties’ satisfaction. No contract can contain an acceleration clause that would require any part or all of the balance not yet due to be declared due and payable because the contractor deems himself to be insecure.

7. Clear and conspicuous notices stating:
   1. That all contractors and subcontractors must be registered with the Office of Consumer Affairs;
   2. The Homeowner’s 3-day cancellation rights;
   3. All warranties and homeowner’s rights;
   4. A disclaimer notifying the homeowner “Do not sign this contract if there are any blank spaces.”; and
   5. Any lien or security interest on the home as a consequence of the contract.

8. A breakdown or listing of any other matters to which both parties lawfully agree.

9. Any other provisions required by the applicable laws of the Commonwealth.

10. A notice that it is the contractor’s obligation to obtain any necessary permits and that any permits secured by homeowners will exclude them from the Guaranty Fund;

11. An arbitration clause for settling disputes.

Both homeowners and contractors are responsible for ensuring that home improvement contracts are accurate and satisfactory.  Failing to do so could result in administrative fines or the revocation of registration for contractors.  For homeowners, having an incomplete contract, or no contract at all, could prohibit them from being eligible for the Home Improvement Arbitration Program and the Guaranty Fund.

For more information about the required contract terms in a home improvement contract or to download a sample contract, visit our website.