Checklist for New York Contractors

Staying legal in the New York construction contracting business begins with licensing.

New York State licenses only asbestos contractors. But that doesn't make licensing a trivial issue in New York. Cities and counties in New York are free to require a license for any type of construction activity. And many municipal governments do exactly that. For example, New York City licenses home improvement contractors. The site is here.

A word to the wise. Don't sign a contract or begin work without checking into license requirements. New York State may be a little casual about licensing of contractors. But New York courts are ruthless in enforcing licensing laws. Where a contracting license is required, unlicensed contractors may have no right to collect for work completed. Nassau County and Westchester County enforce their license laws by impounding construction vehicles.

But even if you don't need a license, New York State jumps with both feet into your construction contracts. You need to know about several statutes.

If the contract price is $150,000 or more for commercial work or if the job is a larger residential project, New York's Construction Contracts Act dictates many key terms: payment dates for both contractors and subcontractors, grounds for stopping work, termination of contract and arbitration (required). That's New York General Business Law § 756-a. But that's just the beginning. New York General Business Law Section 756-b sets penalties for violation of Albany's contract terms – maybe not what you wanted at all.

New York General Business Law, Section 771 is even more explicit on what has to be in residential construction, home improvement and home repair contracts.
(1) The name, address, telephone number and license number, if applicable, of the contractor.
(2) The dates when work will begin and be completed, including any contingencies that could delay completion.
(3) A description of the work including makes and model numbers
(4) A disclosure in bold type that subs and suppliers have lien rights.
(5) A notice that the contractor has to deposit payments in a trust account or supply other security for payment of subcontractors and suppliers.
(6) A progress payment schedule by job phase in dollars and cents.
(7) A 3-day right to cancel.
For technical violations, the penalty is $100. For substantial violations, the penalty is the greater of $250 or 5% of the contract price up to $2,500.

New York General Business Law, Section 771 also requires the same information in every amendment to a residential construction, home improvement or home repair contract. That makes for lengthy change orders.

New York General Obligations Law Section 5-322.2 requires that every construction contract for residential work of less than five units (1) identify who owns the property and (2) include a property address adequate for lien law purposes. Subcontracts have to include the same information.

If you have better ways to spend your time than deal with all this legal gibberish, I can recommend a couple of web sites.

Construction Contract Writer drafts letter-perfect New York construction contracts and subcontracts for residential and commercial work. The trial version is free.

Directions to the New Jersey Supreme Court

Not many home improvement contractors get their day at the supreme court. But it happened in New Jersey earlier this year. And there's a lesson here for residential contractors in many other states. I'll explain.

Jo Anne and Tom Heath selected Czar, Inc., a Patterson, NJ cabinet shop, to install kitchen cabinets and woodwork in their new home. The Heaths weren't happy with the cabinets Czar installed and refused to pay. Czar filed suit to collect. To this point, it's a story you've heard many times. But this is where the case got interesting.

The Heaths knew a thing or two about New Jersey home improvement contract law. They knew Czar didn't have a legal contract. They didn't have to complain about the job. Instead, they could counter-claim over the contract. The Heaths filed suit in Morris County for damages, alleging violation of the Home Improvement Practices Act.

New Jersey Administrative Code sections 13:45A-16.1 to 16.2 (Home Improvement Practices) and New Jersey Administrative Code sections 13:45A-17.1 to 17.14 (Home Improvement Contractor Registration) require that all home improvement contracts for more than $500 be in writing and include very specific disclosures. Failure to include those disclosures in the written contract is a violation of New Jersey's Consumer Fraud Act. Penalties include a full refund (New Jersey Statutes Annotated Section 56:8-2.11) or treble damages plus legal fees (New Jersey Statutes Annotated Section 56:8-19).

The Heath's counter-claim put the case under New Jersey's Consumer Fraud Act. The Heaths were in line to collect treble damages and their attorney fees – not because of any defect in the cabinets but because of a defect in the contract.

What should have been in that contract?

• The legal name, business address and registration number of the contractor.
• A certificate of commercial general liability insurance.
• The total price including any finance charges.
• A notice of the right to cancel.
• Disclosures: start date, finish date, phone numbers, etc.

Omit any of those from a home improvement or home repair contract and you've dropped into New Jersey's Consumer Fraud Act: full refund, triple damages plus attorney fees.

Unfortunately for contractors, New Jersey isn't unique in this respect. Many states give owners the right to collect for a defective home improvement or home repair contract: Texas, Oklahoma, Arkansas, Illinois, Indiana, Tennessee, Ohio, Maryland, Pennsylvania, Connecticut and Massachusetts come to mind.

As for Czar, Inc. I doubt they got much satisfaction out of their day at the Supreme Court. The Heaths won, of course. It was an expensive lesson for Czar, Inc. Legal fees on the way to the New Jersey Supreme Court can run many times the cost of kitchen cabinets. Which proves a point I've made more than once on these pages: When a job goes bad, you better have a good contract.

What to do? Easy. Construction Contract Writer drafts home improvement and repair contracts that comply precisely with New Jersey law. The trial version is free.

 

Checklist for Florida Contractors

I'm asked occasionally to recommend a simple 2-page construction contract.

"Where can I get a contract like that?"

If you see one of these two-page wonders, you can be sure it's junk – at least in the State of Florida. The legislators in Tallahassee have seen to that. Every valid Florida construction contract will include several pages of notices and disclosures required by Florida law.

If you've been using a two-page contract for residential construction in Florida, here's a handy guide to what you're missing.

Opportunity to Repair (Florida Statures Chapter 558.005)

Every construction contract in Florida (except public transportation projects) must include the "notice of claim" statement.

CHAPTER 558, FLORIDA STATUTES, CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU MAY BRING ANY LEGAL ACTION FOR AN ALLEGED CONSTRUCTION DEFECT. SIXTY DAYS BEFORE YOU BRING ANY LEGAL ACTION, YOU MUST DELIVER TO THE OTHER PARTY TO THIS CONTRACT A WRITTEN NOTICE, REFERRING TO CHAPTER 558, OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE DEFECTIVE AND PROVIDE SUCH PERSON THE OPPORTUNITY TO INSPECT THE ALLEGED CONSTRUCTION DEFECTS AND TO CONSIDER MAKING AN OFFER TO REPAIR OR PAY FOR THE ALLEGED CONSTRUCTION DEFECTS. YOU ARE NOT OBLIGATED TO ACCEPT ANY OFFER WHICH MAY BE MADE. THERE ARE STRICT DEADLINES AND PROCEDURES UNDER THIS FLORIDA LAW WHICH MUST BE MET AND FOLLOWED TO PROTECT YOUR INTERESTS.

The contract is still valid if you omit this statement. But the fine for leaving it out is $500 under Florida Statutes § 775.08(3).

Buyer's Right to Cancel (Florida Statutes § 501.031)

Unless the deal was closed at a state fair, at your office or after an express invitation to visit your client at home, residential contracts have to give notice of the buyer's right to cancel.

BUYER'S RIGHT TO CANCEL. This is a home solicitation sale, and if you do not want the goods or services, you may cancel this agreement by providing written notice to the seller in person, by telegram, or by mail. This notice must indicate that you do not want the goods or services and must be delivered or postmarked before midnight of the third business day after you sign this agreement. If you cancel this agreement, the seller may not keep all or part of any cash down payment.

If the deal was closed, for example, over lunch in a restaurant, on the phone, by email, on a golf course or at an architect's office, it's a home solicitation sale. I know that doesn't make sense. But it's Florida law. The notice is required. Omission of the notice is a first degree misdemeanor punishable by up to a year in prison and a $1,000 fine under Florida Statutes § 775.082 and § 775.083.

Florida Construction Lien Notice (Florida Statutes § 713.015)

This notice has to appear in all residential prime contracts valued at $2,500 or more if work is either new construction or improvement of a building with four units or less. The notice has to be in 12-point bold caps and either on the front page of the contract or on a separate page. If the notice is on a separate page, this statement has to be signed by the owner and dated.

NOTICE OF FLORIDA'S CONSTRUCTION LIEN LAW

ACCORDING TO FLORIDA'S CONSTRUCTION LIEN LAW (SECTIONS 713.001-713.37, FLORIDA STATUTES), THOSE WHO WORK ON YOUR PROPERTY OR PROVIDE MATERIALS AND SERVICES AND ARE NOT PAID IN FULL HAVE A RIGHT TO ENFORCE THEIR CLAIM FOR PAYMENT AGAINST YOUR PROPERTY. THIS CLAIM IS KNOWN AS A CONSTRUCTION LIEN. IF YOUR CONTRACTOR OR A SUBCONTRACTOR FAILS TO PAY SUBCONTRACTORS, SUB-SUBCONTRACTORS, OR MATERIAL SUPPLIERS, THOSE PEOPLE WHO ARE OWED MONEY MAY LOOK TO YOUR PROPERTY FOR PAYMENT, EVEN IF YOU HAVE ALREADY PAID YOUR CONTRACTOR IN FULL. IF YOU FAIL TO PAY YOUR CONTRACTOR, YOUR CONTRACTOR MAY ALSO HAVE A LIEN ON YOUR PROPERTY. THIS MEANS IF A LIEN IS FILED YOUR PROPERTY COULD BE SOLD AGAINST YOUR WILL TO PAY FOR LABOR, MATERIALS, OR OTHER SERVICES THAT YOUR CONTRACTOR OR A SUBCONTRACTOR MAY HAVE FAILED TO PAY. TO PROTECT YOURSELF, YOU SHOULD STIPULATE IN THIS CONTRACT THAT BEFORE ANY PAYMENT IS MADE, YOUR CONTRACTOR IS REQUIRED TO PROVIDE YOU WITH A WRITTEN RELEASE OF LIEN FROM ANY PERSON OR COMPANY THAT HAS PROVIDED TO YOU A "NOTICE TO OWNER." FLORIDA'S CONSTRUCTION LIEN LAW IS COMPLEX, AND IT IS RECOMMENDED THAT YOU CONSULT AN ATTORNEY.

Omitting this notice is a non-criminal violation punishable by a fine of up to $500 under Florida Statutes § 775.08(3) and may make it difficult for a prime contractor to enforce lien rights.

Construction Industry Recovery Fund Notice (Florida Statutes § 489.1425)

This notice is required in all residential repair, restoration and improvement contracts valued at over $2,500.

FLORIDA HOMEOWNERS' CONSTRUCTION RECOVERY FUND

PAYMENT MAY BE AVAILABLE FROM THE FLORIDA HOMEOWNERS' CONSTRUCTION RECOVERY FUND IF YOU LOSE MONEY ON A PROJECT PERFORMED UNDER CONTRACT, WHERE THE LOSS RESULTS FROM SPECIFIED VIOLATIONS OF FLORIDA LAW BY A LICENSED CONTRACTOR. FOR INFORMATION ABOUT THE RECOVERY FUND AND FILING A CLAIM, CONTACT THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD AT THE FOLLOWING TELEPHONE NUMBER AND ADDRESS:

DIVISION OF PROFESSIONS, CONSTRUCTION INDUSTRY LICENSING BOARD, 1940 NORTH MONROE STREET, TALLAHASSEE, FL 32399, PHONE: 850.487.1395, EMAIL: CALL.CENTER@DBPR.STATE.FL.US

Omission of this notice is punishable by a fine of up to $500 for the first offense and up to $1,000 for a second or subsequent offense.

The Home Improvement Sales and Finance Act. (Florida Statutes § 520.73)

If a home improvement contract includes a finance charge, Florida law requires a statement in 10-point bold type directly above the owner's signature.

Notice to Owner. Do not sign this home improvement contract in blank. You are entitled to a copy of the contract at the time you sign. Keep it to protect your legal rights. This home improvement contract may contain a mortgage or otherwise create a lien on your property that could be foreclosed on if you do not pay. Be sure you understand all provisions of the contract before you sign.

Omission of this notice requires a credit of all delinquency fees charged, plus attorney fees and costs.

If your Florida contracts fudge on these notices, you have an excuse. Some of these notices are new. The right to repair notice became effective October 1, 2006. The lien notice law became effective in the present form on July 1, 2007.

This checklist covers only notices required by Florida law. Of course, all Florida contracts have to comply with Federal law – the 3-day right to cancel (12 C.F.R. 226.15 ), Federal Truth in Lending (15 U.S.C. 1601) and insulation disclosures (16 C.F.R. 460). If you do home improvement work in zips between 33010 and 34141, Miami-Dade Municipal Code § 10-33 requires additional disclosures.

Even if you're not concerned about the threat of fines and jail time, there are good reasons to keep your contracts legal under Florida law. Get into a dispute on any job and the attorney for the other side will hammer away at every little flaw and blemish in your contract. You could be left with no way to collect.

Need help sorting all this out? I think every contractor does. Construction Contract Writer drafts agreements that comply perfectly with Florida law. The trial version is free.

What Connecticut Home Builders and eBay Have in Common

July 1, 2009 was a red letter day for residential contractors in Connecticut. The Nutmeg State adopted a protocol that eBay, Amazon, and others have used for years. These Web vendors make it easy for customers to know who they're dealing with. eBay calls it their "Feedback Profile." Click the link and you'll see ratings and comments about a particular vendor. Starting July 1, Connecticut requires about the same thing – but not on the Web. Connecticut wants a feedback link embedded in residential construction contracts.

Customer feedback makes sense. For Web vendors, organizing Web feedback is both easy and effective. Potential customers get unvarnished opinions from users who (supposedly) have no financial incentive to exaggerate. That's a rare treat in our plugged-in culture. For Connecticut, this is simply more avant-garde legislation. Connecticut has been famous for that since colonial times. Remember, Connecticut is the "Constitution State."

So what does the new law require of builders and remodelers in Connecticut? First, understand that legislators in Hartford are throwing the book at residential contractors who aren't paying attention. A home improvement contract that doesn't comply with Connecticut law can't be enforced against the property owner. With an illegal contract, you have to turn beggar to collect anything. But that's just the beginning. Most violations are class B misdemeanors punishable by a fine of $1,000 or six months in prison, or both.

For the full text of the law, you'll need to see:

• Connecticut's Home Improvement Act (CHIA), General Statutes §§ 20-418 to § 20-432
• Connecticut's Home Solicitation Sales Act (CHSSA), General Statutes §§ 42-134a to 42-141
• Connecticut's Unfair Trade Practices Act (CUTPA), General Statutes §§ 42-110a to 42-110q
• Connecticut's New Home Construction Act (CNHCA), General Statutes § 20-417a to § 20-417j

If you aren't acquainted with these abbreviations, I'll summarize:

CHIA applies to every construction job valued at over $200 on any residential property with six units or less, including alteration, remodeling, and repair, such as painting or roofing. Also included: yard work such as pools, fences, walls, walks, driveways and patios.

If CHIA applies to a project, CHSSA also applies. A home improvement contract which does not meet CHSSA qualifies the contractor for a fine of up to $500 or imprisonment for up to 90 days, or both.

Violation of Connecticut's CHIA or CHSSA is also a violation of CUTPA. A willful violation of CUTPA (such as failure to offer or honor the 3-day notice of cancellation) is punishable by a fine of up to $5,000. In addition, an owner who suffers a loss as a result of any unfair trade practice may bring suit to recover actual damages. A court can also award punitive damages and attorney fees to the property owner.

CHIA excludes work done by professionals licensed in Connecticut so long as work done is within the licensed trade description. Licensed professionals include electricians, glaziers, plumbers, fire sprinkler, heating, piping, cooling and sheet metal installers. CNHCA applies only to new home builders -- single-family, two-family or condominium.

Doing the eBay Thing

Whether the job is home improvement or new home construction, the contract is illegal and unenforceable if it fails to disclose the name of every residential construction company the contractor has had an interest in for the last five years. Starting July 1, 2009, CNHCA requires that contractors (1) offer prospective owners a list of customers over the last two years and (2) suggest that the prospect discuss quality issues and timely completion with those references. The construction contract has to (1) advise the customer that others may call to inquire about work of the contractor and (2) offer to withhold the customer's name from others on written request.

In effect, Connecticut requires that residential construction contracts include what Web vendors offer routinely on their Web sites. That's breaking new ground for construction contracts.

Is customer feedback an appropriate topic for construction contracts? I'm not sure. But until Hartford repeals CHIA, CHSSA, CUTPA and CNHCA, your residential contracts have to comply. Click here for a tool that writes letter-perfect Connecticut construction contracts. The trial version is free. All meet requirements of the new Connecticut law.

"Legal in All 50 States"

Go browsing on the Web for construction contracts and you'll see braggadocio about some boilerplate contract being "legal in all 50 states."

Claims like this show up on Web sites run by savvy people with good credentials but who should know better. If you've skimmed over any of the earlier entries in this blog archive, you know how foolish it is to claim any construction contract is "legal in all 50 states."

Every state has the right to set unique requirements for construction contracts. And nearly all have.

You can take this to the bank: There's no home improvement contract that's legal in all 50 states. I'll go one step further: There's no contract for residential construction that's legal in all 50 states. You won't even find a contract for commercial construction that's legal in most states. That's not the way it works.

Construction contract law varies from state to state the same way income tax law varies from state to state. Imagine the reaction if you tried to file a New York or Texas income tax return with the Montana Department of Revenue. You'd probably be breaking the law in two states.

It's the same with construction contracts. Nearly all states require specific disclosures, set unique limits or void certain types of clauses in construction contracts. No two states are alike. And most states impose heavy penalties for doing construction work under a contract that doesn't meet state code. Fines up to $1,000 are common, as is the threat of jail time.

Even if you aren't concerned about fines and jail time, consider the impact if you get into a dispute before collecting final payment. The attorney for your client won't be impressed with your "legal in all 50 states" contract. More likely, you'll discover that the contract is either partially or totally unenforceable under state law. Game over! You lose. Run, don't walk, to the nearest exit. You're not going to collect another dime on that contract. If opposing counsel is charitable, you'll escape discipline from the state board. Persist and you'll get an invitation to do the perp walk at a state hearing.

When you see the claim, "legal in all 50 states," I recommend thinking "probably not legal in any state." The latter is far more likely than the former.

So how do you judge if some boilerplate contract is legal? If you're paying the $10 to $150 that most vendors change for a download, you've got the right to know: Is it really legal in my state?

I can recommend a Web site. Construction Contract Writer has legal contracts for every state -- home improvement, residential and commercial construction contracts. The trial version is free.

Oregon's New Construction Contract Law

Legislators in Salem dropped a list of new statutes on Oregon contractors in 2008. Like many other states, Oregon has jumped with both feet into writing residential construction contracts. And, like other states, Oregon imposes stiff penalties on contractors who aren’t paying attention. Most of the new requirements are simple disclosures designed to educate the buyer (home owner) before agreeing to anything.

If the value of a residential job exceeds $1,000, you'll need to supply a notice about construction liens. If the value exceeds $2,000, the contract has to include both a Consumer Protection Notice and a Notice of Procedure. All three of these notices have to be signed by both the contractor and the owner. The contractor has to keep a file copy for two years. The fine for failure to comply is up to $5,000. These three disclosure forms are available from the Oregon Construction Contractors Board at the CCB site. Unfortunately, these disclosures are just the beginning.

Oregon Administrative Rule 812-012-0110 requires that residential contracts explain property owner rights and terms of the contract. Most of what's required is strictly routine -- names and numbers. But some of what has to be in the contract is pretty much off the wall -- a description of the right to file a complaint. The same rule requires a checkbox in the contract disclosing whether arbitration is required to settle disputes. These disclosures are part of the contract. So no separate signature is required. Finally, for residential work, the owner has to receive notice of the right to cancel, using either the federal right of rescission form or an equivalent Oregon form.

More disclosures are required if the project is a new residence (rather than home improvement). As of July 2008, the contractor has to offer a written warranty against defects in material and workmanship. The owner has to acknowledge receipt of that offer and indicate either acceptance or rejection. No separate signature is required because this offer has to be part of the basic contract. Finally, you have to provide a Moisture Intrusion and Water Damage Maintenance Schedule and get the form signed by both the contractor and the owner.

If you haven't been counting, a total of seven disclosures are required, each with many parts. Obviously, it's easy for an Oregon contractor to make a mistake. And more than a few have. In the last three months of 2008, nearly 600 Oregon contractors were fined by Oregon's Construction Contractors Board. The average fine was about $1,000. Another 218 warnings were issued. Licenses were pulled on 204 contractors. In all, more than 2% of all licensed contractors in Oregon were cited by the CCB. And that was in just three months! Many of these fines were the result of a simple mistake – such as failure to attach a Consumer Protection Notice.

Oregon's seven disclosures add at least four pages to the shortest, simplest home improvement contract you can imagine. I wonder if disclosures aren't subject to the law of diminishing returns. Every additional disclosure form deflates the shock value of disclosures already made. If there's a practical limit to how much disclosure is too much, Oregon may be getting close.

But don't get me wrong. I like disclosures. The more the buyer knows, the better informed the decision. True, the new Oregon rules create a mine field for Oregon residential contractors. You have to be careful. But with one exception, Oregon has resisted the temptation to tip the fairness scale against contractors. That's what Pennsylvania and Texas do -- flatly outlawing some contract clauses or demanding others. Oregon doesn't do that. At least not yet.

The one exception: Oregon Revised Statutes Section 87.037 denies lien rights to prime contractors who do work valued at over $2,000 without a written contract. Think about that. No right to collect on the contract and no lien rights. It's heavy stuff. If you expect to get paid, you better have a written contract.

If you're serious about writing contracts that comply with Oregon law, have a look at the Oregon edition of Construction Contract Writer. The trial version is free.

End of the Texas RCC

The much-maligned Texas Residential Construction Commission Act (TRCCA) is about to fade into the sunset if activists in Texas get their way. TRCCA took root in 2004. The legislated purpose was to (1) promote quality construction by registering home builders, (2) serve as a resource for home owners and (3) offer neutral technical review of alleged construction defects. Sounds good so far.

But the Texas Sunset Advisory Commission has reported that TRCCA isn't working as planned and recommended abolishing the Commission. The national press has picked up on the issue, referring to Texas as "the worst state in the nation when it comes to protecting buyers of new homes." Those are strong words -- and will be the subject of this article.

First, an important clarification. TRCCA covers both new homes and nearly every home improvement project valued at $10,000 or more.

The rap on TRCCA is that the claim process takes too long (5 months) and doesn't resolve enough disputes (only 12%). Worse, TRCCA doesn't give anyone authority to enforce decisions that go against Texas builders (or Texas home owners). Texas can't suspend the license of a truly egregious builder because Texas doesn't license contractors.

The benefit of TRCCA is the follow-up every claim receives. At a cost of $250 to the home owner, a state-appointed inspector visits the site, writes a report and makes a recommendation. If the claim involves a structural defect, the inspector will be a licensed engineer. If the construction defect is a threat to health and safety, the builder has to fix the problem ASAP. If not fixed promptly, the home owner can have another contractor do the work and add the cost to the claim. If the inspector finds in favor of the home owner, the inspector's fee can be charged to the builder. The inspector's decision has to be based on the warranty and building code in effect and must recommend a method of repair.

About half of the TRCCA reports confirm a defect that has to be repaired. The inspector's report becomes evidence if suit or arbitration follows. Either the home owner or the builder can appeal the inspector's decision to a review panel. The panel has to reach a decision in 30 days.

TRCCA also created a mandatory residential warranty that can't be waived. This warranty is not a trivial document – over 100 pages of standards that define in detail what constitutes quality construction. This warranty is used by TRCCA inspectors when deciding what constitutes a defect and what doesn't. Duration of the TRCCA warranty is 1 year on workmanship and materials, 2 years on plumbing, electrical and HVAC, and 10 years on structural components. This is the most comprehensive and detailed residential warranty I've seen. No other state comes close.

TRCCA is stacked on top of remedies home owners had before 2004. If TRCCA doesn't resolve a claim, the dispute drops into the Texas Residential Construction Liability Act of 1989. TRCLA gives builders the right to inspect and repair after a claim of defect. There's a heavy incentive for builders to make a reasonable offer of settlement – and sweeten the deal by throwing in attorney fees and the cost of temporary re-settlement if the owner has to relocate during repairs.

If the builder's offer isn't "reasonable," the home owner can claim: (1) the cost of repairs, (2) the cost of replacing or repairing anything damaged as a result of the construction defect, (3) engineering and consulting fees (4) temporary housing during the repair period, (5) loss of market value after the defect is repaired, (6) attorney fees.

If the cost of repairs is extensive, the builder can elect to re-purchase the home at the original purchase price plus closing costs plus attorney fees plus expert witness fees plus the cost of any improvements plus the cost of moving. In essence, it's a money-back guarantee.

But Texas doesn't stop there. TRCCA and TRCLA are stacked on top of remedies provided by the Texas Deceptive Trade Practices Act (DTPA). This is where home owners with construction defect claims want to be. DTPA dates from 1973 and gives buyers of construction services a private right to collect triple damages plus attorney fees for misrepresentation or breach of warranty.

Taken together, TRCCA, TRCLA and DTPA offer Texas home owners a triple canopy of protection, including independent third-party inspection, a 100-page written warranty, money-back guarantee and triple damages.

Even trivial errors by a Texas contractor can earn heavy penalties:

--- Omitting the contract notice required by Texas Property Code § 41.007(a) is a violation of DTPA and qualifies an owner to collect triple damages plus attorney fees.

--- TRCCA voids any arbitration clause in a contract which fails to make specific disclosures in 10-point bold type.

--- Omission of disclosures required by TRCCA makes the contract unenforceable.

--- TRCLA gives an owner the right to recover $500 from a contractor if the contract omits a specific statement.

Is Texas the worst state in the nation when it comes to protecting buyers of new homes? Exactly not, in my opinion.

Can a residential contractor still make a living in Texas? Of course. One place to start is with the Texas edition of Construction Contract Writer. You'll find a good tool for drafting contracts that comply with Texas law. The trial version is free.