On October 17, 2008, Pennsylvania passed the Home Improvement Consumer Protection Act (HICPA) which provides for the registration of certain contractors with the Bureau of Consumer Protection of the Pennsylvania Attorney General; regulates the form and content of home improvement contracts; prohibits certain acts; and provides for penalties for violations of the act. This new act is designed to help protect consumers who hire home improvement contractors above and beyond those set forth in Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. This act shall be effective and enforceable on July 1, 2009.

APPLICATION OF NEW LAW:

The HICPA shall apply to all contractors (including subcontractors and independent contractors) that own or operate a home improvement business and perform services at private residences whose revenue exceeds $5,000.00 on an annual basis.

Home improvements shall include repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting. It shall also include the 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, painting, doors and windows and waterproofing and the installation of central heating or air conditioning or storm windows or awnings.

Home Improvements shall not include the construction of a new home, the sale of goods or materials by a seller who does not perform, directly or indirectly, any work related to the installation or application of the goods or materials and the majority of work performed by a landscaper. The exceptions to this rule are any item listed in above paragraph or the placement of retaining walls, fountains or drainage systems.

REGISTRATION:

All contractors must register with the Bureau of Consumer Protection (the ‘Bureau’) in the office of Consumer Protection if a contract is for $500.00 worth of work or greater and the home improvements are for a consumer in their private residence or their surrounding property. The information on the application depends on the individual applicant and the structure of their individual business (Partnership, Corporation (in or out-of State) or Joint Venture). Generally, the information requested by the Bureau shall be for the ten (10) year period prior to the time of registration. The Bureau may also request additional information prior to the last ten (10) years or request a clarification of the information provided by the applicant.

An applicant must report if they are registered or licensed in any other state or political subdivision. In addition, an applicant shall report any disciplinary action taken in another jurisdiction. In the event such disciplinary action occurred after the initial application, the applicant must report such action on the biennial registration application or within ninety (90) days of final disposition, whichever is sooner.

The information required on the application generally includes the following: name, date of birth, address, telephone, driver’s license number, name and address and phone number of the business, social security number and all previously used business names and addresses used by the applicant.

The Bureau also requires a complete description of the contracting business and whether the applicant has ever been convicted of a criminal offense related to a home improvement transaction, fraud, theft, crime of deception or a crime involving fraudulent business practices, as well as a statement whether the applicant has ever filed a petition in bankruptcy or within the last ten (10) years received a final civil judgment entered against the applicant or businesses in which the applicant held an interest that was related to a home improvement transaction.

In addition, the applicant must disclose whether the applicant’s certificate or a similar certificate or license issued by another state or political subdivision thereof has ever been revoked or suspended. In the event the applicant’s certificate or similar certificate or license has been revoked or suspended, the applicant must provide the current status of the certificate or similar certificate or license. The statement required by this clause shall include the same information with respect to any other business in which the person making application has or has ever had an interest.

The Bureau also requires disclosure if within the last ten (10) years the applicant has ever been suspended or debarred from participating in any Federal, State, Local or Not-for-Profit program through which the public funding or other assistance is provided to owners for home improvements.

RENEWAL OF CERTIFICATION:

All contractors must renew there certificate every two (2) years.

APPLICATION FEE:

There is a $50.00 fee for each application for a certificate or renewal of a certificate. Upon receipt of the application and fee the Bureau shall issue a registration certificate identifying the name and address of the business and a registration number.

PROOF OF REGISTRATION:

After July 1, 2009, all contractors must include their registration number on all advertisements distributed in Pennsylvania including, but not limited to contracts, estimates and proposals.

HOME IMPROVEMENT CONTRACTS:

The HICPA regulates or mandates the form and content of home improvement contracts. In the event the contracts do not conform to the specific requirements of the act, the contract shall be considered invalid and unenforceable against the home owner.

1. Requirements of Home Improvement Contracts.

• In writing;
• Contains the home improvement contractor’s registration number;
• Signed by the owner and the performing contractor;
• Contains the entire agreement between the owner and the contractor;
• The date of the transaction;
• The name, address and telephone number of the contractor (a post office box is not acceptable and does not constitute an address);
• Contains the approximate starting date and completion date.
• Contains a description of the work to be performed, the materials to be used and a set of specifications that cannot be changed without a written change order signed by the home owner and performing contractor.
• Contains the total sales price due under the contract; including the amount of any down payment plus any amount advanced for the purchase of special order materials. The amount of the down payment and the cost of the special order materials must be listed separately;
• Contains the names, addresses and telephone numbers of all subcontractors on the project known at the date of signing the contract (a post office box is not acceptable and does not constitute an address);
• Maintain liability insurance in an amount not less than $50,000 and insurance covering property damage in an amount not less than $50,000;
• Contains the toll-free telephone number of the Bureau;
• Contains a Notice of the Right of Rescission (three business days from date of signing);
• Copy of contract must be provided to home owner at execution, without charge; and
• Contract may include an Arbitration Clause (must meet specific requirements as provided in the act).
• Contractor may not receive a deposit in excess of one-third (1/3) of the total price of the contract, which includes the cost of special order materials for a contract in excess of $1,000.00

2. Voidable clauses. If a home improvement contract contains any of the following clauses, the home improvement contract shall be voidable by the home owner:

• A hold harmless clause;
• Waiver of Federal, State or local health, life, safety or building code requirements;
• Confession of judgment clause;
• Waiver of any right to a jury trial in any action brought by or against the owner;
• Assignment of or order for payment of wages or other compensation for services;
• Contains a provision by which the owner agrees not to assert any claim or defense arising out of the contract;
• Contains a provision that the contractor shall be awarded attorney fees and costs;
• Contains a clause by which the owner relieves the contractor from liability for acts committed by the contractor or the contractor’s agents in the collection of any payments or in the repossession of any goods;
• Waiver of any rights provided under this act;
• Contains a provision providing for the automatic or recurring renewal of any provisions of the agreement, unless:
• 1. (a) the contract establishes a procedure by which the home owner can choose not to renew the provision or provisions, thereby avoiding any new fees or charges, by providing written notice to the contractor via first class mail postmarked no later than three business days prior to any renewal;

  (b) such procedure is clearly and conspicuously disclosed in the agreement; and

  (c) the contract includes a provision requiring the contractor to notify the home of any automatic or recurring renewal, and the home owner’s option to cancel such renewal, by mail not earlier than 20 days and not later than ten days prior to the date of any such renewal.

3. Home improvement retailer contracts. A home improvement retailer having a net worth of more than $50,000,000 or an employee of that retailer that does not perform home improvements shall comply with the provisions of this subsection. No home improvement contract issued by a home improvement retailer having a net worth of more than $50,000,000 or an employee of that retailer shall be valid or enforceable against a home owner unless the contract:

• Is in writing;
• Contains the name, address and telephone number of the retailer;
• Contains the name of the person signing the contract on behalf of the retailer and the person’s position with the retailer or the person’s authority to sign the contract;
• Contains the signature of the owner, the owner’s agent or other contracted party; and
• Contains the entire agreement between the owner and the contractor;
• The date of the transaction;
• Contains the approximate starting date and completion date.
• Contains a description of the work to be performed, the materials to be used and a set of specifications that cannot be changed without a written change order signed by the home owner and performing contractor.
• Contains the total sales price due under the contract; including the amount of any down payment plus any amount advanced for the purchase of special order materials.The amount of the down payment and the cost of the special order materials must be listed separately; and
• Contains Right of Rescission, copy is provided to owner at execution and without charge, and does not contain any voidable clauses as set forth above.

CIVIL AND CRIMINAL PENALTIES

A person commits an offense of home improvement fraud if the person makes a false or misleading statement, misrepresents or conceals the contractor’s identifying information, damages a person’s property to solicit that person to enter into an agreement for home improvement services, receives any advance payment for performing home improvement services or materials and fails to perform or provide services or materials when specified, misrepresents himself or another as a government employee, misrepresents the type or cost of a special order item, alters a home improvement contract without the consent of the consumer or directly or indirectly publishes a false or deceptive advertisement.

A violation of the above listed items constitutes a felony in the third degree if the amount involved in the excess of $2,000.00 or a misdemeanor of the first degree if the amount is $2,000.00 or less. The exception is if the contractor receives any advance payment for performing home improvement services or materials and fails to perform or provide services or materials when specified; the violation constitutes a felony in the third degree if the amount involved in the excess of $2,000.00. In addition, if the consumer / victim is 60 years of age or older, the grading of the offense shall be one grade higher than specified. In the event a person commits a second or subsequent offense, the offense shall constitute a felony of the second degree regardless of the amount involved. In addition the court may revoke or suspend the certificate of registration. A person may petition the court for reinstatement after a period of five (5) years.

A contractor must refund the amount paid for a home improvement within ten (10) days of written notice if no substantial portion of the contracted work has been performed at the time of the request and more than forty-five (45) days have elapsed since the start date specified in the contract. In addition, a contractor may not receive a deposit in excess of one-third (1/3) of the total price of the contract, which includes the cost of special order materials, for a contract in excess of $1,000.00.

A violation under this act shall be considered a violation under the Unfair Trade Practices and Consumer Protection Law.

ADDITIONAL RULES AND REGULATIONS:

The Bureau may adopt additional rules and regulations necessary to carry out this act.

PREEMPTION OF LOCAL REGISTRATION:

Registration under this act shall preclude any requirement of the payment of a fee or registration or licensing of any home improvement contractor by any political subdivision. However, registration under this act does not preclude a political subdivision to require building permits and local enforcement of the building code. In addition, this act also does not affect local regulations or standards for liability insurance adopted by a municipality.

EXEMPTIONS:

The act shall not apply to the Commonwealth of Pennsylvania or any of its political subdivisions and the Federal Government.

MISCELLANEOUS:

This new act is designed to provide basic protections to consumers looking to renovate their homes. However, the new act also places significant burdens, costs and restrictions on contractors, including but not limited to registering with the Bureau and revising the form and content of their existing contracts.

As a result of these new requirements for contractors it is encouraged that all contractors seek legal counsel to review the information required by the Bureau and to revise or update existing contracts.

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