THE ADVICE PAGE VII
WHAT SHOULD BE IN A CONTRACT!
Whether it is roofing, siding, windows, that new kitchen or
an addition it will be a costly investment and you should protect yourself
before signing a contract.
New York State regulates the sale of home improvement goods and services and
applies to most types of improvements costing more than $500 purchased by
homeowners. The law requires contractors to give you a contract that
includes many provisions. The main ones are summarized below:
1. The name, address and phone number of the contractor must be on the
contract.
(Do not accept a P.O. Box number as the contractor's address)
2. The exact amount of the project including progress payments.
3. A start and completion date, including any contingencies which would
change the completion date such as
bad weather. You may also want to have included a penalty clause for running
over the completion date. A
$100 per day deduction off the contract price is common for every day that
the project runs over the
completion date.
4. A clause that reads that any progress payments received by a contractor
from a customer can only be made
if they bear a reasonable relationship to the work actually done, materials
purchased or related costs.
5. Any payments received by a contractor from a customer prior to
substantial completion of the job must be
placed into an escrow account in a bank located in New York State within
five business days and the
customer must be informed where the money is held within ten business days.
The contractor can only
withdraw the deposit only in the following circumstances:
- under the terms of the payment schedule agreed on by the contractor and
the customers;
- upon substantial completion of the job; or
- if the customer violates the contract, but only to the extent that the
amount covers the contractor's reasonable costs.
6. A complete specification description of the work and materials, including
brand names, model numbers
and other identifying information.
7. A consumer notice that reads as follows:
The customer has an unconditional right to cancel the contract until
midnight of the third business day after the contract was signed.
Cancellation must be done in writing! If the contractor or subcontractor who
does the work is not paid, he or she may have a claim against the customer's
property under the Lien Law.
8. Warranties and guarantees should be stated in the contract. Be sure to
understand if the warranty or guarantee
covers both the materials and labor and if they are prorated and
transferable. For example a new roof job
may warrant the materials for 25-30 years but the contractor may only
warrant his labor for one year.
There are penalties against contractors and consumers may sue for actual
damages, plus a $500 penalty and reasonable attorney's fees if the
contractor has used fraudulent written statements to get the contractor to
sign the contract. The Attorney General is also authorized to go to court to
stop illegal practices and order contractors to compensate defrauded
customers. Contractors can also face civil fines for violating the
provisions of the law, especially with the protection of the customer's
payments.