Understanding a Home Improvement Contract


Welcome to the Office of Consumer Affairs and Business Regulation presentation on understanding a home improvement contract During this presentation will address the following topics the home improvement contractor program Before hiring a contractor the contract itself Review of the contract during construction the sample contract and the Office of Consumer Affairs hotline and programs the office of consumer affairs and business regulation regulates the registration of contractors performing improvements or renovations on detached one to four family homes prior to performing work on such homes a Contractor must be registered as a home improvement contractor as of July 2016 there were more than 26 thousand registered home improvement contractors with the program and that number is anticipated to grow significantly our office assists with complaints from homeowners building officials or contractors holds administrative hearings and can change the registration status of a contractor and impose fines and penalties when necessary We also administer the arbitration program, which includes reviewing eligibility for all arbitration requests There are four main components to the program registration Enforcement arbitration and the guarantee fund you can learn more about all of them by accessing our homeowners guide to the home improvement contractor program presentation Before you hire a contractor there are several steps. You’ll want to take to ensure you are prepared for the project Educate yourself on the project think about the materials and design you’d like have a clear description of the work that needs to be completed get at least three quotes from three different contractors and familiarize yourself with the home improvement contractor program a Contract is the cornerstone of any home improvement project contracts benefit contractors as well as homeowners by providing clarity about both parties expectations and responsibilities for the project a well-written contract can help avoid many common disputes The law requires a written contract for any home improvement work valued at more than $1,000 dollars contracts for any improvements under $1,000 are not required, but are highly advised a Contract entered into between the contractor and a homeowner requires the contractor to inform the homeowner of any and all necessary permits The obligation of the contractor to obtain all permits and that homeowners who secure their own permits will be excluded from the guaranty fund provisions of the law This is a very important component of the contract if there are complications or poor workmanship on the project And if the owner has obtained his own permits under the law the homeowner will not have access to Potentially be awarded up to $10,000 by the guaranty fund for judgments or Awards defaulted on by Contractors through either the courts or our arbitration program, please also remember if you do contract with an unregistered Contractor you are disqualified from accessing the guaranty fund by law You’ll want to make sure you read and understand the contracts before the work begins the signatures of both the homeowner and Contractor are required on the contract The law lays out the requirements for what a registered home improvement contractor must include in the contract among these required terms are a start and end date for the project a Detailed description of the work to be done in the materials to be used The total amount agreed to be paid for the work to be performed and a schedule of payments to be made under the contract Generally you do not want to pay more than one-third of the contract price up front However the law allows larger deposits if they are equal to the actual cost of special ordered or custom materials And if the deposit is necessary to avoid project delays To learn more about the contract terms look for the information sheets titled required contract terms on our website To view a sample contract look for the information sheet entitled sample contract on the Office of Consumer Affairs website under home improvement contracting important considerations during construction the Contractor is obligated to pay all subcontractors for their work when the homeowner gives sufficient funds to do so if a contractor fails to pay Subcontractors it may be a violation of the law Once the project begins it’s a violation of the law for a contractor to abandon the project before it’s complete unless there is sufficient justifications such as non-payment by the homeowner however a contractor cannot justify abandoning a project simply because of Underestimated costs if a contractor believes the project is complete the homeowner should be in agreement before the final payment is made Thank you for viewing this presentation. We hope it was helpful for you. Please feel free to reach out to our office Should you have any questions about the home improvement contractor program or any consumer questions in general?

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