In counseling home improvement contractors on the form and content of their contracts, I have developed a Top Ten Contract Drafting Tips List. Although you cannot draft the perfect contract to prevent a lawsuit, these tips are useful to help minimize the risk of litigation and the potential exposure your business may face. The seventh tip in this continuing series is to register as a home improvement contractor in your state and conform your home improvement contracts to the state laws.
Each Northeast Spa and Pool Association ("NESPA") state requires home improvement contractors such as swimming pool industry professionals to register with its consumer affairs agency. The states require registration to promote uniform compliance with home improvement laws and to protect customers from dishonest contractors. However, the NESPA state laws each impose different requirements on industry members after they have registered.
All NESPA state laws universally require home improvement contractors to include their registration number on their contracts and advise customers that they have three days to cancel the contract. New Jersey and Pennsylvania also require the contractor to identify the phone number of the states' consumer affairs divisions in their contracts and provide insurance policy information to the customer. Both states require contractors to place their registration number on all correspondence, change orders and advertisements, with the Garden State requiring contractors to place the number on commercial vehicles as well. The laws depart after these shared requirements. A combination of New Jersey's Home Improvement and Contractor Registration Acts, the Pennsylvania Act is much broader. Beyond what is found in the New Jersey statutes, the Pennsylvania Act prescribes how enforceable arbitration provisions are to be drafted and restricts certain provisions (e.g., the customer cannot agree to pay attorneys' fees and costs). Further, Pennsylvania law requires contractual notice provisions that alert customers about their cancellation rights, while New Jersey law does not.
New York's registration laws are county based. Rockland and Putnam County regulations require contractors to identify their home improvement registration numbers and start and completion dates for construction on the contract. New York City law does as well. The registration number must be posted or displayed at the contractor's business offices and on its commercial vehicles. Connecticut law mirrors the other NESPA state laws - the contract must contain the contractor's certificate number.
Swimming pool professionals must carefully review these laws to ensure their contracts and business practices comply with them, especially if they do business in more than one state. While compliance with the law is the most direct benefit of registration, an indirect but equally important benefit is the free advertising associated with demonstrating to customers that your company complies with the law.