Eighteen states have made changes to
construction contract law in the last few months. Some of these changes are trivial.
A few will affect nearly every contractor in the state. Here’s a state-by-state
summary of the highlights:
Arizona: Pool and spa work has to follow a new payment schedule if there’s no bond on the project. Payments can’t
exceed 15% down, 25% more on completion of excavation, another 25% after installation
of the pool or spa shell, 25% more after installation of the deck, and final payment
just prior to application of finishing materials. Arizona Revised Statutes § 32-1158.01
Arkansas: Most
residential contractors will have to show proof of current workers' compensation
coverage before taking out or renewing a license. Arkansas Code Annotated § 17-25-514
California Labor Code Section 218.7(a) makes prime contractors liable if a sub at any level fails to pay wages or make benefit contributions. To protect yourself, write into
subcontracts the right to review the sub’s payroll records. Then be sure subcontracts
include the right to charge the sub if the contractor has to pay twice.
Connecticut General
Statutes § 42-158k requires that retainage be released no later than 30 days after
completion.
Kentucky’s Insured
Roof Repair Act (§367.628) prohibits damaging a roof to increase the scope of work.
Any violation entitles the owner to recover two times the amount of any damages.
Louisiana contracts
for home improvement work offered by registered or licensed contractors have to
include proof of liability and workers’ compensation insurance. Louisiana Revised
Statutes § 37:2175.2. Penalties for residential contracting fraud have been increased
(§ 202.1) to as much as twenty years at hard labor and a fifty thousand dollar fine
or both.
Maine Revised Statutes
Annotated Title 17 § 908 makes it a criminal act to write a residential construction
or repair contract that: (1) Includes misrepresentations or (2) Gives a false impression,
or (3) Makes false promises, or (4) Is intentionally deceptive, or (5) Is for repair
of damage done by the contractor.
Montana Code § 28-3-704 makes
the right to collect attorney fees reciprocal. If your contract includes the right
to collect attorney fees if you win in court, you’ll have to pay attorney fees if
you lose.
Rhode Island General
Laws § 5-65-27 requires a special 3-day cancellation notice in home improvement
contracts if one or more of the owners is age 60 or more.
Tennessee Code
Annotated § 39-14-154(b) makes it a crime for a new home builder or home improvement
contractor to either: (1) Refuse to make a refund when due or (2) Deviate from the
approved plans and specs.
Vermont’s Home
Improvement Contracts Act (Title 9, § 4010) requires that the following appear in
any agreement: (1) Either the maximum price or, if time and materials, a statement
that there is no maximum price, (2) A start date and a completion date, (3) Scope
of the work including materials to be used, (4) A specific warranty, (5) A specific
statement on change orders, (6) A maximum down payment of one-third of the contract
price or the price of materials, whichever is greater. A contract that does not
cover each of these points is unenforceable against an owner.
You won’t find good news for contractors
on this list. Contract requirements for 2018 are stiffer. The penalties are greater.
But there’s an easy way to keep your contracts legal, no matter the state. Construction Contract Writer will draft letter-perfect contracts no matter how the law changes.
The trial version is free.
