Home improvement contractors in Pennsylvania are subject to regulation. Homeowners often get confused about when the new law, known as the Home Improvement Consumer Protection Act (“HICPA”) applies.  Here is an excerpt from some Continuing Legal  Education materials we recently published that deals with this ACT. It is in outline form.  If you have more questions call us.

HICPA (the Home Improvement Consumer Protection Act 73 P.S. ¶ 517.1 et seq)

  1. The Requirement of Registration – section 517.4 requires registration for anyone who performs home improvement work.
  2. Home Improvement Contracts. The law provides that a home improvement contract is not valid and not enforceable unless:
    1. It is in writing and contains the contractor’s registration number.
    2. It is signed by the owner and the contractor.
    3. It contains the entire agreement between the parties and has all required notices attached.
    4. It contains the date of the transaction.
    5. It contains the name, street address (no P.O. Box numbers), and telephone number of the contractor.
    6. It contains the approximate starting date and completion date.
    7. It includes a description of the work, materials to be used and set of specifications which cannot be changed unless signed off on by the parties.
    8. It contains the total sale price.
    9. It contains a statement of the down money plus advances for purchase of special order materials. (Note deposits cannot exceed 33.33%)
    10. It includes the name, street address and telephone number of all subcontractors known as the date of signing.
    11. It obligates the contractor to maintain liability insurance with fixed limits.
    12. It contains the toll-free telephone number for the Bureau responsible for registration.
    13. It includes a notice of right of rescission for a period of three business days.
  3. Additional provisions for home-improvement contracts:
    1. contracts which contained an arbitration clause must meet certain requirements including:
      1. the text must be in capital letters
      2. the text shall be printed in 12 point
      3. the text must appear on a separate page of paper from the rest of the contract.
      4. The text must contain a separate line for each of the parties to sign.
      5. The arbitration clause cannot be a one-way street.
      6. The text must clearly state where the decision of the arbitration is binding or whether or not it can be appealed to Common Pleas.
      7. The clause shall state whether the facts of the dispute and the decision are confidential.
    2. Voidable clauses. If any of the following clauses are in the contract the owner may elect to void the contract:
      1. a hold harmless clause
      2. a waiver of federal, state or local health life, safety or building code requirements.
      3. A confession of judgment clause (note this does not get you around other provisions in the law barring confession of judgment clauses and consumer transactions.)
      4. An assignment of wages or other compensation for services.
      5. A provision by which the owner agrees not to assert any claim or defense arising out of the contract
      6. a provision that the contractor shall be awarded attorney’s fees and costs
      7. a clause which relieves the contractor from liability for acts committed in the collection of payments or repossession of goods.
      8. A waiver of any rights under HICPA
      9. automatic renewal provisions.
  4. Criminal Provisions – Home Improvement Fraud  It is a crime to engage in certain actions, enumerated below.  Where the dollar value exceeds $2,000.00, the grading is FELONY 3.
    1.  False or misleading statement to induce a contract
    2.  Receiving an advance payment and failing to perform.
    3.  Concealing the real name of the contractor.
    4.  Damaging property in order to induce the need for more work.
    5.  Misrepresenting ones self as connected with government or a utility.
    6.  Misrepresenting that an item is special order or misrepresenting the cost of a special order item.
    7.  Altering a home improvement contract without the consent of the consumer.
    8.   Publishing false or deceptive advertisements.
  5.  Prohibited Acts.  In addition to the criminal acts, the following are prohibited:
    1.  Failing to register.
    2.  Failing to pay refunds under certain conditions including where no work has been done or more than 45 days of elapsed is the start date.
    3.  Promoting a certificate of occupancy as proof of performance when the document is false or performance is incomplete.
    4.  Using a completion certificate when you know or have reason to know the document or proof is false and it is used to secure funds either from the homeowner or a lender.
    5.  Abandoning or failing to perform without justification.
    6.  Deviate from or disregard plans and specifications.
    7.  Participating in the financing of a home improvement contract with knowledge that a monetary obligation will be created in excess of the actual price of the contract.
    8.  Advertising to perform home improvement services if you do not intend to perform the work at the charges advertised are offered.
    9.  Demanding or receiving a payment before the contract is signed.
    10.  Where the contract is for more than $1000, receiving a deposit in excess of 1/3, plus the cost of special order items.
    11.  While acting as a salesperson, failing to turn money over to the contractor.
    12.  After entering into a contract, changing the name of the contractor’s business, liability insurance information or address or any other identifying information in a fraudulent or deceptive manner likely to cause confusion or misunderstanding without advising the owner in writing.
  6.  Unfair Trade Practices and Consumer Protection Law (UTPCPL). A violation of any of the provisions of HICPA is a violation of the UTPCPL. Treat it as though it were item xxii in the list of unfair trade practices. UTPCPL allows a recovery for treble damages (up to three times the amount of actual damages) or $100 per violation, whichever is greater.  Another remedy allowed by the UTPCPL is reasonable attorney’s fees, which may be awarded in addition to any other award, and which may be substantial.
  7.  Contractor’s Saving Provision    Section 517.7 (g) of HICPA provides that nothing in the act shall preclude a contractor who has complied with subsection a, setting forth those items required to be in a contract, from recovering based on the reasonable value of the services performed. This section has recently been reviewed by the Superior and the Supreme Court, and rewritten. A simple reading of the language indicates that if you can’t enforce the contract, you can bring an action for unjust enrichment, providing you have a contract you can enforce. This obviously makes no sense.
  •  In Durst v. Milroy Gen. Ctr  52 A 3d 357 (2012 Pa. Super) the homeowner filed preliminary objections to bar a quantum meruit claim by a contractor who had an oral contract in violation of HICPA.  The Superior Court held “that quasi-contract theories of recovery survive the HICPA.”  The Durst decision was based on the fact that the clear language of the statute did not prohibit a quantum meruit claim.
  •  In Shafer Electric v. Mantia,  67 A.3d 8 (Pa. Super 2013)  the Superior Court followed Durst and held that a reading of the wording of the statute led to an absurd result which violated general principles of PA law. In this case, this panel of the Superior Court based its decision on statutory construction.
  •  In  Shafer Electric v. Mantia  96 A.3d 989 (Pa. 2013),  the Supreme Court affirmed a decision of the Superior Court, on the basis of the holding in Durst v. Milroy, 52 A.3d 357 (2012 Pa. Super.), which held an action for unjust enrichment is available to a contractor even where there is no written contract complying with HICPA.  The Court got to the same result as the Superior Court, but not for the same reasons. The Shafer Electric holding is essentially consistent with the Restatement (Third) Restitution and Unjust Enrichment, sections 31 – 36 which address the subject of awarding restitution to a performing party who has no claim under his or her contract

 

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