Construction Law Changes in New York and Texas

If you work in either New York or Texas, keep reading. Changes in the law are going to affect how you do business.

First, New York

As I write these words (November 23, 2019), New York Governor Andrew Cuomo is about to sign S.B. 1405, the “storm chaser” bill. There’s no organized opposition to the bill. So, you can assume the bill will go into effect by June 2020.

What’s in the new law? Roofing, siding and waterproofing contracts have to be in writing and must show the name of the roofer’s liability and worker’s comp carriers. Policy limits are $100,000/$300,000 for liability and either workers’ comp coverage or a Certificate of Exemption from the Workers' Comp Board.

No payment on the contract is allowed until materials are on site.

For insured losses:

• Roofing contractors can’t offer to cover any portion of the deductible.
• The owner has three business days to cancel the contract after being informed that any part of the loss is not covered by insurance.
• Emergency work is exempted if the owner furnishes a dated and signed hand-written statement of the emergency and waives the right to cancel.
• Roofers aren’t allowed to negotiate settlement of claims or receive a fee for referral to a claims negotiator.

Failure to comply with this new law bars suit on the contract.

Now to Texas

The new law is similar in some respects to the New York law but covers all insured losses, not just residential roofing. Business and Commerce Code § 2702 became effective September 1, 2019.

Any repair job for $1,000 or more that’s covered at least in part by insurance has to a include a detailed notice in 12-point type:

Texas law requires a person insured under a property insurance policy to pay any deductible applicable to a claim made under the policy. It is a violation of Texas law for a seller of goods or services who reasonably expects to be paid wholly or partly from the proceeds of a property insurance claim to knowingly allow the insured person to fail to pay, or assist the insured person’s failure to pay, the applicable insurance deductible.

It's a Class B misdemeanor (six months in jail) to either (1) omit the contract notice or (2) offer to reimburse the owner’s deductible.

20 States

With the addition of New York and Texas, 20 states now place some form of restriction on contracts for insurance repair work: AL, AZ, GA, IL, IN, KY, LA, MI, MO, MS, NE, NY, OK, SC, SD, TN, TX, UT, WI and WV. The laws are technical and change every year. No matter the type of work or where you build, Construction Contract Writer will draft letter-perfect contracts that comply exactly with the law in your state. The trial version is free.