Home Solicitation Sales

Have you ever bid a job without visiting the site?

Not likely. Nearly every bid should begin with a job walk. All construction contractors understand that. But here’s something you may not understand.

A contractor visiting the site before a residential contract is signed drops the job into a special legal category in nearly every state. Everywhere except Oregon, a job walk makes the deal a home solicitation sale. State law requires that the contract include specific notices. Omit any required notice and heavy penalties apply. For example, in most states, the owner can cancel the deal and demand a full refund. In other states, omitting a required notice is considered consumer fraud. That’s not where any contractor wants to be.

Even if you’re not cited for consumer fraud, there are good reasons to have a perfectly legal contract. If there’s a dispute, the owner’s attorney will scour your agreement for anything that isn’t strictly legal. Omitting a notice required by state law gives the owner extra negotiating leverage. You’ll probably have to make concessions to collect the final payment.

Please don’t misunderstand. There’s a place for home solicitation sales acts. They’re consumer protection law. But the way I see it, a contractor doing a job walk doesn’t belong in the same category with door-to-door sales people. It’s simply not possible to do home improvement without a visit to the construction site. Still, the law is the law. Until the law changes, every conrtactor has to comply. Fortunately, it’s easy. More on that shortly.

What the States Require

As mentioned, every state except Oregon has either a Door-To-Door Sales Act or a Home Solicitation Sales Act. Every act is different. But all require a special written notice – usually a statement that the owner has three days to cancel the deal. The notice has to explain how an owner can cancel and has to set a deadline for making a refund.

A notice like that probably sounds familiar. The same terms appear in the federal 3-day right of rescission (Reg Z) notice required any time you do work on the primary residence of an owner. So if state and federal notices are essentially the same, are both notices required? Very good question. In some states the answer is “yes.” In other states, the answer is “no.”

Twenty-two states and the District of Columbia currently require both state and federal rescission notices: AK, AR, AZ, CT, DC, FL, GA, HI, IN, KY, MI, MO, MS, ND, NH, NJ, NY, OK, VT, WA, WI, WV, WY. In the remaining states, the federal Reg Z notice is enough.

But there are loopholes in the law. For example, big-box retailers are usually exempted. In some states, a notice isn’t required if the contract is signed at the seller’s place of business or if the contractor is invited to the construction site. But in most states, a job walk permanently taints the transaction as a home solicitation sale.

Now, about the easy way to comply precisely with the law in your state. It’s called Construction Contract Writer. The trial download is free.