Eighteen states have made changes to construction contract law in the last few months. Some of these changes are trivial. A few will affect nearly every contractor in the state. Here’s a state-by-state summary of the highlights:
Arizona: Pool and spa work has to follow a new payment schedule if there’s no bond on the project. Payments can’t exceed 15% down, 25% more on completion of excavation, another 25% after installation of the pool or spa shell, 25% more after installation of the deck, and final payment just prior to application of finishing materials. Arizona Revised Statutes § 32-1158.01
Arkansas: Most residential contractors will have to show proof of current workers' compensation coverage before taking out or renewing a license. Arkansas Code Annotated § 17-25-514
California Labor Code Section 218.7(a) makes prime contractors liable if a sub at any level fails to pay wages or make benefit contributions. To protect yourself, write into subcontracts the right to review the sub’s payroll records. Then be sure subcontracts include the right to charge the sub if the contractor has to pay twice.
Connecticut General Statutes § 42-158k requires that retainage be released no later than 30 days after completion.
Kentucky’s Insured Roof Repair Act (§367.628) prohibits damaging a roof to increase the scope of work. Any violation entitles the owner to recover two times the amount of any damages.
Louisiana contracts for home improvement work offered by registered or licensed contractors have to include proof of liability and workers’ compensation insurance. Louisiana Revised Statutes § 37:2175.2. Penalties for residential contracting fraud have been increased (§ 202.1) to as much as twenty years at hard labor and a fifty thousand dollar fine or both.
Maine Revised Statutes Annotated Title 17 § 908 makes it a criminal act to write a residential construction or repair contract that: (1) Includes misrepresentations or (2) Gives a false impression, or (3) Makes false promises, or (4) Is intentionally deceptive, or (5) Is for repair of damage done by the contractor.
Montana Code § 28-3-704 makes the right to collect attorney fees reciprocal. If your contract includes the right to collect attorney fees if you win in court, you’ll have to pay attorney fees if you lose.
Rhode Island General Laws § 5-65-27 requires a special 3-day cancellation notice in home improvement contracts if one or more of the owners is age 60 or more.
Tennessee Code Annotated § 39-14-154(b) makes it a crime for a new home builder or home improvement contractor to either: (1) Refuse to make a refund when due or (2) Deviate from the approved plans and specs.
Vermont’s Home Improvement Contracts Act (Title 9, § 4010) requires that the following appear in any agreement: (1) Either the maximum price or, if time and materials, a statement that there is no maximum price, (2) A start date and a completion date, (3) Scope of the work including materials to be used, (4) A specific warranty, (5) A specific statement on change orders, (6) A maximum down payment of one-third of the contract price or the price of materials, whichever is greater. A contract that does not cover each of these points is unenforceable against an owner.
You won’t find good news for contractors on this list. Contract requirements for 2018 are stiffer. The penalties are greater. But there’s an easy way to keep your contracts legal, no matter the state. Construction Contract Writer will draft letter-perfect contracts no matter how the law changes.