When scam artists flooded the construction industry in the early 2000s, Pennsylvania fought back in 2009 and established its Home Improvement Consumer Protection Act. Under HICPA, the state requires registration of contractors doing any work over $500 on a private residence and is far-reaching in its scope of contractors, subcontractors and independent contractors that must register. Even though the act has only been on the books since 2009, it already has been amended twice, the latest coming in 2014. It likely will see more changes in the future. Though there are a multitude of specific instructions and conditions contained within the HICPA regulations, keep these five things in mind when working to comply with HICPA in Pennsylvania:
1. All contractors are required to register and must provide a multitude of information. That information includes:
- A complete description of the type of the contracting
- Disclosure of criminal convictions for fraud, theft, and crimes of deception, bankruptcy filings, and civil judgments in the past decade related to home improvement transactions
- Whether the contractor has ever previously been suspended by a government or disqualified from public funded contracting
- Proof of liability insurance
2. With the act came a new criminal offense – home improvement fraud. A contractor could face the charge if there is proof of false representations of an agreement for home improvement services, taking advance payment but failing to provide the services or materials and misrepresenting an item as special order material or misrepresenting the cost of special order material.
3. The validity of all contracts is largely dependent on whether the contract satisfies certain requirements, which include that all contracts be legible, signed by both parties, contain all contractor contact information, give an approximate start and completion date, a total sales price due, the names of all subcontractors with contact information, along with other requirements.
4. Document all change orders – both from the contractor and from the consumer. Make sure both parties agree on and understand the ramifications of the change order. To comply with the state’s contract requirements, both parties must sign any change order.
5. Consumers aren’t the only ones protected under the act. State courts have held that if a construction contract is voided, invalid or unenforceable, contractors can pursue a claim for the “reasonable value of the services.”
If all of this doesn’t convince you to comply with contract requirements, consider that staying within the bounds of the act will help you avoid civil enforcement by the attorney general, will allow for recovery of full contract damages, and will make collection easier. If the contract is invalid, unenforceable, or voided, so are any supplemental provisions. Because HICPA makes violation of any of its provisions a violation of the Unfair Trade Practices and Consumer Protection Law, plaintiffs could seek damages and attorney fees for a breach of HICPA. All home improvement contractors should simply stay within the confines of HICPA. Be sure you register your company. Use compliant contracts and clear, detailed plans, as many disagreements with consumers involve a misunderstanding about what is being done. Stick to those plans, and use written change orders when appropriate. If the owner requests a change, document it with a written change order including price adjustment signed by all parties.