By DAN HEATH
Staff Writer
June 29, 2009 03:28 am
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PLATTSBURGH — A proper home-improvement contract can help property owners prevent substantial headaches and lost money.
Assistant Attorney General Glen Michaels said one law that his Plattsburgh office uses to go after criminal or incompetent contractors is the Home Improvement Contracts Law.
Speaking at the Adirondack Builders Association's monthly meeting, Michaels noted that the law requires a written contract signed by both parties.
"If it's a home-improvement contract, the contract must be in writing, and it has to be signed before work begins."
Under the law, a contract is needed between a home-improvement contractor and the owner of the house to be improved when the work will cost more than $500.
A home-improvement contractor is defined as anyone who does more than $1,500 in home-improvement work in a 12-month period.
It doesn't apply to a co-owner of the property or an employee of the owner. The law also doesn't apply to subcontractors who contract with the contractor, Michaels said.
An owner is defined as an owner or tenant of residential property.
CONTRACT CONTENTS
The contract should provide detailed descriptions of the work to be performed, materials to be used and anticipated start and finish dates, total cost and factors that could delay the project.
It needs to contain a notice that a lien could be placed against the owner if the contractor, subcontractors or suppliers are not paid in time.
It should include the dates and dollar amounts of all progress payments and specify events that will trigger those payments.
The latter is not required in "time and materials contracts," where the contractor charges as the project goes for time and materials and profit. It is advisable to establish a project cap price in such a contract, Michaels said.
The owner is allowed to state that time is of the essence, in which case the contractor is required to meet deadlines. The contractor can simply decline the contract, Michaels said.
Any changes to the contract must also be in writing.
DEPOSIT FUNDS
The contractor is required to deposit funds received before substantial completion of work in a separate bank account within five business days of receipt. The owner must be provided that account information within 10 business days.
The law applies to some jobs that people might not think of as home-improvement work, Michaels said. That includes excavation work if it is adjacent to a home, installation of a swimming pool, attachment of a mobile home to a foundation, landscaping, driveway work or even installation of burglar or fire alarms.
"If it's something you can't easily take out, it is a home-improvement project, and the law applies."
The contract must indicate the owner can cancel the contract within three business days after it was signed. It's important that the contractor not start work during that period, Michaels said, unless it's an emergency situation and the customer indicates that in writing.
LIEN LAW
Another tool the Attorney General's Office uses is lien law.
Michaels said it is illegal to use advance payment from one contract to fund another project. That is a practice known as kiting, he said.
"That's how we nail folks," Michaels said.
Minor, technical violations under home-improvement contract law are punishable with a fine of $100 per violation, Michaels said. Substantial violations can result in fines of $250 to $2,500 per violation.
E-mail Dan Heath at: dheath@pressrepublican.com
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