This
blog is about consumer protection law – what contractors must do to stay legal in
their state. It’s a big topic and grows every year. State legislators like piling
the protection deeper and deeper – usually in the form of notices and disclosures that have to be inserted
in construction contracts.
Without the right words in your contract, you may have no right to collect. Or you
could be fined or disciplined by the state board. Or you could face jail time.
Most
consumer protection laws make sense – at least to the lawmakers. But every once
in a while, a new law comes along that makes very little sense at all. Maryland
Commercial Law Code § 14-302.1 fits that category.
The law, passed as Maryland House
Bill 439, becomes effective on June 1, 2016. If the law applies, home improvement contracts have to include a paragraph
explaining the buyer’s right to cancel – five days for those under 65 and seven
days for those 65 and older. For the contract to be legal, the buyer has to sign
a statement acknowledging receipt of an oral explanation of the right to cancel.
The signed statement has to be on a sheet separate from the contract and has to
show the date when the right to cancel expires.
Make
a mistake on any of this and you’ve committed an “unfair or deceptive trade practice”
under Maryland law. Expect a $1,000 fine (first offense) or both fine and a year
in jail (repeat offenses).
The
new Maryland law is pretty routine stuff. Many states (CA, CT, DC, FL, GA, HI, IN,
KY, LA, MI, MO, MS, ND, NH, NJ, NY, OK, RI, TX, VT, WA, WV, and WY) have similar
statutes.
What
makes the new Maryland law so peculiar is the exceptions. Section 14-302.1 goes
on and on about what has to be in a home improvement contract. And then exceptions
swallow the rule. I’ll explain.
The Rule Gets Swallowed
Exception
1: The new law doesn’t apply if the buyer has the 3-day right to cancel under
federal law. That’s in § 14-301(d)(2)(ii). Any time you do work on the primary residence
of the owner, the owner has the 3-day right to cancel.
Exception
2: The new law doesn’t apply to rental property because contracts for improvement
of rental property are not for personal, family or household purposes of the owner.
That’s in § 14-301(c)(1).
So
if the owner lives in the house being improved, the new law doesn’t apply. If the
owner doesn’t live in the house being improved, the new law doesn’t apply. There’s
not much left.
So
why the new home improvement disclosure statute? Like I said, legislators earn credit
by piling on consumer protection law. But in this case, I believe it’s a simple
mistake. The bill was sponsored by delegates Kramer and Fraser-Hidalgo. Did they
get bad legal advice? Or maybe they didn’t read or understand their new law. We’ll
see what happens in the next MD legislative session.
No
matter how deep your state piles consumer protection law, Construction Contract Writer will make sure your agreements are letter perfect. The trial version is free.
