Pennsylvania’s Home Improvement Consumer Protection Act:
What Pennsylvania’s New Contractor Registration Law Means for Your Business
On July 1, 2009 the Home Improvement Consumer Protection Act (“HICPA”) took effect.
Registration Requirements:
The HICPA requires that all contractors who perform home improvement services in the state of Pennsylvania be registered with the Bureau of Consumer Protection in the Office of Attorney General. Any contractor who performs more than $5,000 in home improvements per year, (except for mega-retailers with a net worth of over $50 million) must register if they perform or offer to perform the following services:
• Repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting.
• Construction, replacement, installation or improvement of driveways, swimming pools, pool houses, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, fences, gazebos, sheds, cabanas, landscaping work (except work performed under the Plant Pest Act), painting, doors and windows and waterproofing.
• Without regard to affixation, the installation of central heating, air conditioning, storm windows or awnings.
The HICPA exempts certain types of contractors from the registration requirement; for example, those who exclusively build new homes, convert existing commercial structures to residential or noncommercial structures, or who provide certain emergency work.
Home Improvement Contract Requirements and Limitations:
The HICPA places specific requirements on home improvement contracts. For example, no home improvement contract shall be valid or enforceable against an owner unless the contract:
• is in writing, is legible, and includes the contractor’s registration number;
• is signed by both the owner and the contractor;
• contains the date of the transaction;
• contains the name, address (a P.O. Box is not sufficient), and telephone number of the contractor;
• contains an estimated starting date and completion date;
• includes a description of the work to be performed, the materials to be used, and a set of specifications which cannot be changed unless there is a written change order signed by both the owner and the contractor;
• states the sales price due under the contract;
• lists the amount of any down payment;
• meets minimum insurance requirements; and
• expressly allows an owner to cancel the contract within 3 days of signing.
Further, the HICPA sets out specific regulations regarding arbitration clauses, all of which must be met in order for an arbitration provision to be enforceable. Finally the HICPA prohibits numerous popular contractual clauses such as “hold harmless agreements” and provisions awarding attorney’s fees and costs. In fact, if a contract contains any of the prohibited clauses, the owner may void the contract.
Penalties for Violations of HICPA:
A violation of HICPA is construed as a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law which carries serious civil penalties including the possibility of treble damages, where an owner can be award three times the amount of the actual damages suffered. Further, violations of HICPA’s fraud provisions are criminal offenses which can range from a misdemeanor to a felony. HICPA violations can also result in the revocation of your registration, meaning a loss of your ability to earn a livelihood.
The GOOD NEWS:
While the implantation of HICPA requires additional work on the part of home improvement contractors, the good news is that the experienced construction law attorneys at Goldberg Katzman, P.C. are ready to help your business take the necessary steps to fully comply with the new law. Goldberg Katzman, P.C. provides a full-service approach to ensuring that your business will not be affected by the HICPA. Services include:
helping you register your business;
reviewing and drafting contracts to comply with the new provisions; and
evaluating your current business practices to ensure compliance.
In addition, our full-service firm can provide related services in business planning and formation, help securing payment, contract drafting and review, employment matters, and all forms of litigation.