Every home improvement contractor should have an agreement drafted by an attorney that he or she can use when taking on a new client or project. The contract should specify the terms of the agreement with the client and set the parties’ expectations for the project. While the terms included in construction contracts are specific to each business, the purpose of the contract remains the same: minimize your business’s risk should a dispute arise. Particular to this blog post, the first thing that home improvement contractors should consider to minimize risk is ensuring that the company’s contracts comply with Pennsylvania’s Home Improvement Consumer Protection Act (“HICPA”).

Does the HICPA Apply to All Contractors?

Pennsylvania passed the HICPA to safeguard consumers from unfair trade practices by home improvement contractors. The HICPA only applies to companies that complete projects in Pennsylvania valued in excess of $5,000 and only applies to home improvement contractors. Home improvement contractors provide services including, but not limited to, interior remodeling and renovation, exterior remodel and renovation (which includes work on garages, porches, and roofs), and the installation of swimming pools. Conversely, the HICPA does not apply to landscape companies (unless they construct retaining walls).

What Should be Included in my Contracts?

If the Act applies to your business, you must register as a home improvement contractor with the Attorney General’s office and abide by certain requirements contained in the Act. Namely, your contract with homeowners must be in writing and must contain at least the following: your company’s home improvement contractor registration number, your company’s name, address, and telephone number, a description of the work to be completed, and approximate start and completion dates. Your contract must also include a right of rescission, which permits the homeowner to cancel the contract within three (3) business days for any reason.

Your contract should contain a statement of work, which lists the total sales price of the agreement and materials to be used. Your company must also carry at least $50,000 in property damage and bodily injury insurance coverage. And lastly, if you require the homeowner to make a down payment, it should not exceed one-third of the total contract price (plus any amount advanced for special order materials – which should be listed).

There are also certain provisions that must be excluded from a home improvement contract otherwise the agreement may be voidable by the homeowner. Those terms include hold harmless clauses, confession of judgment clauses, and clauses alleging to waive any right provided to the consumer under the HICPA.



What if my Company Doesn’t Comply with the HICPA?

Failure to abide by the Act can result in your contract being voided by the homeowner, and may also result in a breach of Pennsylvania Unfair Trade Practices and Consumer Protection Law, which could expose your business to claims for punitive damages and attorney's fees.

The lists provided above are representative of the requirements of the Act, but are not exhaustive. A complete list of the businesses subject to the Act, the provisions that must be included in your contracts, and the provisions that must be excluded can be found on the Attorney General’s website. But the best way to ensure your agreements comply with the Home Improvement Consumer Protection Act is to contact your trusted legal advisor at Cozza Law Group PLLC.