Pennsylvania's Home Improvement Consumer Protection Act (HICPA)
P.L. 1645, enacted October 17, 2008
Effective July 1, 2009
A. Registration Requirement:
1. Unless you did less than $5,000 of home improvement work last year or your work is restricted to (1) only commercial construction and/or (2) only new residential construction, you must register with the Pennsylvania Attorney General's Office and obtain a "Certificate of Registration" and Contractor's Registration Number before July 1, 2009.
2. If you work on existing residential properties (land or buildings), you must register. The new law says that any contractor who does "repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting", must register. In addition, any contractor who works on driveways, swimming pools, pool houses, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, fences, gazebos, sheds, cabanas, landscaping, placement of retaining walls, fountains, drainage systems, painting, doors, windows, waterproofing, HVAC, or awnings must register.
3. You register by going to www.attorneygeneral.gov, to complete the form online and print a hard copy of the application form for mailing.
4. There is a $50 registration fee.
5. You must renew your registration every 2 years.
6. You must include your Contractor's Registration Number on all advertisements, letterhead, signs (remember the signage on your trucks, at your office, and posted at job sites), publications, business cards, contracts, estimates and proposals on and after July 1, 2009.
B. Written Contract Requirement:
1. Effective July 1, 2009, a written contract is required for nearly every home improvement/construction task in or around a residence, if the contract price is more than $500.
2. The written contract must include:
a. Your Contractor's Registration Number;
b. The toll-free telephone number of the Pennsylvania Bureau of Consumer Protection of the Office of the Pennsylvania Attorney General -- 800-441-2555;
c. Your full street address (no P.O. Box allowed);
d. Approximate start and completion dates;
e. Description of the scope of work, materials to be used and specifications (defined as "The plans, detailed drawings, lists of materials, stated allowances or other methods customarily used in the home improvement industry as a whole to describe with particularity the work, workmanship, materials and quality of materials for each home improvement");
f. Your property damage and liability insurance limits ($50,000 minimum);
g. The names of all your subcontractors, along with each of their own Contractor's Registration Numbers, phone numbers and full street addresses (and again, no P.O. Boxes permitted);
h. The "Three Business Day Right of Recission Notice" as a separate attachment (in duplicate);
i. Change Order notice; and,
j. Must be (a) signed and dated by you and the owner, (b) contain the entire agreement between you and the owner and (c) state the total sales price and the amount of any downpayment and/or amount advanced for the purchase of special order materials (and list as such material).
3. If disputes are to be settled by arbitration, the arbitration clause has to be in 12-point bold caps, must be a separate attachment, must be signed and dated by you and the customer, and must specify (1) whether the facts of the dispute, related documents and the decision are confidential and (2) whether the arbitrator's decision is final.
4. If the contract price exceeds $1,000, the downpayment may NOT exceed 1/3 of the total price plus the cost of any special order materials which are not included in the total price and which, in any event, have to be listed in the contract.
5. Time and material contracts (cost-plus agreements) are unlawful. The contract must show a contract price, and can no longer be stated simply as an hourly rate.
C. Insurance Requirement:
1. Every home improvement contractor is required to carry insurance covering (1) personal injury in an amount not less than $50,000 and (2) property damage in an amount not less than $50,000.
2. The application for your Contractor's Registration Number requires you to provide the name, NAIC number, policy number, expiration date and coverage limits of your required insurance.
D. Penalties for noncompliance:
1. A disgruntled customer can report a violation to the Attorney General's Office for prosecution as a crime involving "home improvement fraud"
2. The entire contract is unenforceable by the contractor if any of ten previously common clauses appear in the document. These prohibited provisions include hold harmless clauses, waivers of jury trials and terms that award attorney fees to the contractor.
3. Use of a noncompliant contract is an "unfair or deceptive act or practice" under Pennsylvania's Unfair Trade Practices and Consumer Protection Law, entitling the customer to seek triple damages plus costs and legal fees.
4. The customer is entitled to a complete refund if no substantial portion of the work has been performed within 45 days following the specified starting date.
5. The law expressly prohibits any material deviation from or disregard of the plans or specifications without a written change order which has been signed and dated by you and the customer and which contains the price change for any deviation.
Do you have your PA Home Improvement Consumer Protection Act (HICPA) contract ready for July 1?
Phone: (610) 820 - 7580
Fax: (610) 820 - 5779
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