Monday, March 9, 2015
Wisconsin’s Home Improvement Surprise
A fire on September 7, 2009 did serious damage to the home of David and Carol Butler. The Butlers selected Purofirst of Milwaukee to do the repair work and signed an "Authorization" form provided by Purofirst. The Butlers moved out and Purofirst went to work. Six months later, work was done and the Butlers moved back in. Purofirst suggested writing up a punch list of any defects the Butlers found. Purofirst fixed some items on the Butlers' punch list but insisted others were not their problem. The Butlers didn’t like that. They refused to make the final payment. Purofirst filed suit to collect.
Does this sound familiar? If you’re going to have a collection problem, it’s most likely over final payment. Until that time, the owner is eager to keep the job moving. Any delay in payment would delay completion and the owner’s use of the property. But when the job is done, the owner holds all the cards.
So the dispute over the Butler job landed on desks at two law firms. When that happens, focus will always be on the contract. What does the contract say? Does it comply with the law? This is no time for a surprise, which is exactly what Purofirst had coming.
Law in nearly all states sets standards for residential construction contracts, especially home improvement contracts. What’s required and the penalties imposed vary by state. In Wisconsin, the law is the Home Improvement Practices Act, Wisconsin Administrative Code ATCP (Agriculture Trade and Consumer Protection) § 110.01 to § 110.08. A home improvement contract has to be in writing and has to cover eight specific points, including a full description of the work. Doing work on an illegal home improvement contract in Wisconsin can earn the contractor a fine of up to $5,000 and as much as a year in jail. Violation also gives an owner the right to recover twice the amount of the loss plus reasonable attorney fees. And that’s what the Butlers wanted; twice their loss plus attorney fees.
The trial court found Purofirst had violated ATCP § 110.05 by failing to put all contract terms in writing. That opened the door for the Butlers. Purofirst didn’t collect anything in their suit. Instead, the trial court awarded the Butlers $29,407. Then the trial court doubled the award under Wisconsin Statutes § 100.20(5) and added attorney fees. That wasn’t exactly what Purofirst expected when they filed suit to collect for work completed.
Purofirst appealed the trial court judgment. Last month, a Wisconsin Court of Appeals gave Purofirst some relief (2015 Wisc. App. LEXIS 117). On technical grounds, the appellate court reversed the trial court's grant of attorney's fees and the doubling of damages. But the award of $29,407 stands.
Avoid The Purofirst Surprise
There was a time when builders could do residential work on a generic contract form -- or even on handshake. No longer. Like Purofirst, you’ve got a surprise in store if your contracts don’t comply with state and federal law. Fortunately, it’s easy to write perfectly legal construction contracts for any state. Get ConstructionContract Writer. The trial version is free.