Changes in Construction Contract Law


Twenty-five states have made changes in the last few months. Highlights follow. As you read down the list, keep a tally. How many of these changes make it easier to do business as a construction contractor?


Alabama – Owners have ten days to cancel residential roofing repair contracts if any part of the insurance claim is denied. Work can’t start until the claim is settled. Contractors are barred from negotiating the settlement. Effective August 1, 2012


Arizona – Contracts for repair of storm damage require specific notices and disclosures. Owners have three days to cancel after any part of the insurance claim is denied. Work can’t start until the claim is settled. The down payment can’t exceed 50% of the contract price. Enacted April 2012.


California -- No matter what the contract says, a 2% per month penalty plus attorney fees applies on retention wrongfully withheld. Operative July 1, 2012. Licensed contractors and subcontractors are prohibited from inserting into any contract either an indemnity clause or a waiver of lien rights which would be void under California law. Operative July 1, 2012. Residential construction consultants need a contracting license and have to comply with construction contract law. Effective January 1, 2013.


Delaware – Home construction fraud is now considered either a class B, D, or G felony or a class A misdemeanor. Approved July 20, 2012.


Idaho – Any contract clause which limits the right to sue in Idaho or limits the time to bring suit is void. Enacted April 5, 2012.


Indiana – On public works contracts, claims of subcontractors and suppliers to retained funds are barred once the public agency has settled with the prime contractor. Effective July 1, 2012. Pay-if-paid clauses in subcontracts will be enforced. Court decision on May 11, 2012.


Iowa – Contracts for residential work must include a specific lien notice. Omitting the notice voids all lien rights of the prime contractor. Effective January 1, 2013.


Kentucky -- Owners have five days to cancel residential roofing repair contracts after any part of the insurance claim is denied. The right to cancel has to be disclosed in the contract. Work can’t start and no payment is allowed until the claim is settled. Effective July 12, 2012.


Louisiana – Owners have three days to cancel residential roofing repair contracts after any part of the insurance claim is denied. The right to cancel has to be disclosed in the contract. Effective August 1, 2012.


Massachusetts – No claim for extras on public works projects will be approved without prior notice to the comptroller. Effective January 1, 2013.


Nebraska -- Owners have three days to cancel contracts for repair of residential roofing after any part of the insurance claim is denied. Contractors can’t offer to rebate any part of the deductible. Effective July 19, 2012


North Carolina –Submitting a false statement of charges for home improvement work is a misdemeanor and grounds for license revocation or suspension. Effective January 1, 2013


Ohio – The limitation period for making contract claims is reduced from fifteen years to eight years. But claims for defective work under a construction contract retain a ten-year limitation. Effective Sept. 28, 2012.


South Dakota – Owners have three days to cancel contracts for repair of storm damage to residential roofing after any part of the insurance claim is denied. Contractors can’t offer to rebate any portion of the insurance deductible. Effective July 1, 2012.


How many of these changes are contractor-friendly? None, in my opinion. All make it harder to do business. But there’s an easy way to stay legal, no matter what changes come your way. Have a look at Construction Contract Writer. The trial version is free.



2 thoughts on “Changes in Construction Contract Law”

  • Gary W. Moselle

    Hi Kristen,Good points. We considered a Web-based tool before creating CCW as a download app. That was seven years ago. At the time, programming tools for Web developers were comparatively primitive. But times have changed. The only constraint now is money and time. I'm told that turning CCW into a cloud based program would require a complete re-write. CCW source code is C#. Late last year we started development of a program that does for construction liens what CCW does for construction contracts. That's another major undertaking, made slightly less daunting by use of the same software engine that runs the CCW interview. Unfortunately, using the same engine precludes making the lien writer program a Web tool. Still, I'm circulating your comment to Craftsman's software development staff. I'll be back to you if they come up with a brainstorm. To be honest, we've had several similar suggestions.To answer your question. No, I don't know of any other program running on any platform that drafts truly legal contracts for construction in the 50 states.Gary W. Moselle

  • Hi Gary! I sincerely appreciate your feedback. I am somewhat tech saavy, but it seems one cannot be successful if they're tinkering in too many baskets. Until, of course, they've already become successful and are able to spread their interests into different facets. As I just turned 30 and don't have a large pile of money from my parents, I am not that person ;) So,even though undertaking a silicon valley type of endeavor has been on my mind, I figured it is best to stick to my profession and leave it to the professionals like yourself. I do love your product and that's why I haven't stopped using it. I keep looking to see if I can find something similar, and that's what prompted me to write to you. While we're chatting, and since yall are at least fiddling with the idea of putting something into production at some point... I might as well give you my thoughts... hahaIn my dream world- there would be an application (in the cloud of course) that would incorporate the functionality of cloud systems like while adding a contract feature (per state)- like yalls software. The problem I have found in this market (construction, design+build, remodeling, etc)- is there is a HUGE gap. You have your big businesses; those generating large revenues- upwards of 1 mil and more; those who can afford the 2K startup costs of buildertrend. Then, you have your small businesses. Like myself ;) I will probably get to that point, but I'm not there yet. Or, some that will always be at the 100-200K. Or, shoot- your average electrician who has a wife/husband at home and likes to be organized and owns a tablet and/or smartphone (which almost everyone does). The difference in pricing is astronomical. There aren't many all encompassing products that are nicely put together like buildertrend. There are other products, but they aren't designed with such an easy UI and such. Buildertrend sets up the software for each company and has start up costs, etc. is just plug and play. But, it's universally applicable. It's not designed just for construction. Which means the contractor has to do all their own spreadsheets, change orders, etc. Which is fine- but there's no ability to keep everything updated in real time, as far as the useability of internet based spreadsheeting goes (not a word, but should be). The best solution would be a plug and play, stripped down, not a whole ton of bells and whistles, for the regular general contractor, including a contract section of course. Similar to buildertrend and If you're not familiar with it's awesome. But, not built for simply remodelers. (I'm completely taking away the contract part now, of course). Google drive is great, but it's not really for business and you get into privacy issues. But, it is what 'smaller' businesses use when they can't afford a decent program like buildertrend. We also create our own spreadsheets in programs like frevvo. It's just a lot of work. If there were an all encompassing tool that had all those features (and took out the MAJOR stuff that smaller businesses dont need that jump up the price that make buildertrend so expensive)- you'd have a jackpot. I have read on numerous forums from intelligent, computer proficient, business people like myself who would buy it in a second. Instead, we are left piece milling some apps together to make the best experience for our user experience. Pinterest,, basecamp, smugmug, smart contractor, etc. Then, having to go home AND do the contract writer. Boo. ;(Anywho- don't meant to vent. Just telling you what my dream silicon valley startup would entail. Haha. Out there- and have the most user friendly interfaces. If yall are going to spend the money on re-configuring and turning the CCW net-based, it's an idea that yall should look at. In my opinion, yall would gain a much larger market share ;)-Kristen

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