Friday, December 30, 2016

Changes in Construction Contract Law for 2017

Twelve states have made significant changes in construction contract law in the last few months. Here are the highlights:

Connecticut. Effective January 1, 2017, all home improvement contracts and all changes to home improvement contracts must be in writing and must cover 10 specific points. Connecticut General Statutes § 20-429. Every contract for emergency repair of an insured loss must include a statement that the owner can waive the usual 3-day waiting period. Connecticut General Statutes § 38a-313a

Florida. Wording of the required construction recovery fund notice was changed on July 1, 2016. Florida Statutes section 489.1425
Maryland. In rare cases, home improvement contracts must include the notices required by Maryland's Door-To-Door Sales Act, Commercial Law Code Annotated § 14-301 to § 14-306. See my blog post of July 16, 2016.

Minnesota. The limit for retainage on public works contracts and subcontracts was lowered to 5% effective August 1, 2016. Minnesota Statutes § 337.10

Oklahoma. Effective November 1, 2016, roofing contracts must include a statement affirming workers' compensation insurance coverage. For residential jobs, workers’ compensation insurance is not required for “legitimately exempt” workers if an affidavit of exemption is attached to the contract. For commercial jobs, all workers must be covered. Oklahoma Statutes Title 59 § 1151.22

Construction Contract Writer is the easiest way to stay current on these and other changes in construction contract law. The trial version is free.

Another Change
Every residential contractor knows about the three-day right to cancel. Any time you do work on the principal residence of an owner (whether new construction, improvement or repair), 12 CFR § 226.15 requires that you:
  • Give each owner two copies of the federal Reg Z notice, and
  • Show on each form the date the right to cancel expires, and
  • Give the owner three days (excluding Sunday and holidays) to back out of the deal.
What if your client doesn’t want to wait? The exception in 12 CFR § 226.15(e) allows you to start work immediately if all of the following apply:
  1. The owner has a true personal financial emergency. To me, a financial emergency means that delay is going to make things worse.
  2. The owner signs a written waiver of the right to cancel. This can’t be a printed form. The waiver has to be handwritten, dated and signed by every owner with a right to cancel.
  3. The statement has to describe the emergency. For example, “My roof blew off and it’s raining.”
  4. The statement has to waive the right to rescind. For example, “I give up my right to cancel this contract.”
At your option, Construction Contract Writer will add a page to the agreement that explains the right to rescind and then coaches an owner through the waiver process. With that signed statement in your file, it’s safe to begin work right away.