Residential and restoration contractors working in Connecticut need to be aware of the provisions of the Connecticut Home Improvement Act so they can ensure that they are in compliance, their contracts are valid, and they get paid.
What is the Connecticut Home Improvement Act?
The Connecticut Home Improvement Act or, HIA, is a set of laws pertaining to contractor licensing and contracts for home improvement projects. It provides guidance regarding contractor licensing, bonding, and the establishment of a Guaranty Fund. It also has specific requirements for residential remodel contract language, how payments are handled when there’s a dispute, and documentation of changes in the work.
The laws apply to contractors working on residential remodel and restoration projects in Connecticut. They do not apply to new construction projects.
Connecticut Home Improvement Act: Contract specifications
The Connecticut Home Improvement act specifies that the following must be included to make a valid and legally enforceable contract with a homeowner:
- Must be in writing
- Must be signed by the owner and the contractor
- Contains the entire agreement between the owner and the contractor
- Contains the date of the transaction
- Contains the name and address of the contractor and the contractor’s registration number
- Contains a notice of the owner’s cancellation rights in accordance with the provisions of Chapter 740
- Contains a starting date and completion date
- Is entered into by a registered salesman or registered contractor
- Includes a provision disclosing each corporation, limited liability company, partnership, sole proprietorship or other legal entity, which is or has been a home improvement contractor pursuant to the provisions of this chapter or a new home construction contractor pursuant to the provisions of Chapter 399a, in which the owner or owners of the home improvement contractor are or have been a shareholder, member, partner, or owner during the previous five years
In addition, the contract cannot include a provision “obligating the owner to instruct the home improvement contractor, by a date determined by such contractor, that periodic home improvements are not to be performed unless it also includes a provision requiring the contractor to remind the owner of that obligation by means of a card or letter mailed to the owner and postmarked not earlier than twenty days, and not later than ten days, prior to such date.”
If one or more of the above nine elements are missing, or the clause above is included, your contract can be legally unenforceable.
Once the contract has been signed by both the owner and the contractor, the contractor must provide and deliver to the owner, without charge, a completed copy in order to comply with the HIA.
In order to ensure your right to be paid for the work, you must include the provisions for contracts listed above. As long as your contract includes items 1, 2, 6, 7, and 8, you can collect payment for your work, based on the reasonable value of the services requested by the owner, provided the court determines that it would be inequitable to deny recovery. However, the Act “does not permit recovery in quasi-contract (such as quantum meruit) by a contractor who fails to comply with requirement for written contract,” absent proof of bad faith on the part of the homeowner.
If you get in a dispute with the owner about the scope or price of the work due to the contract not complying with the section above, that is not considered “bad faith” as defined above.
If the contract is deemed unenforceable, you are entitled to receive the value of the work performed, but not any additional damages provided for in the contract, like attorney’s fees.
If the GC’s contract with the homeowner doesn’t comply with the requirements of the HIA, subcontractors can still recover payment using a mechanics lien. But note, you have to be a registered (licensed) contractor to file a mechanic’s lien in the state of Connecticut.
If your contract contains finance charges or stipulates that you’ll be loaning the homeowner funds to make purchases for the project, you must include the following:
- The information required to be disclosed pursuant to the Connecticut Truth-in-Lending Act, sections 36a-675 to 36a-685, inclusive
- Allow the owner to pay off in advance the full amount due and obtain a partial refund of any unearned finance charge
- Contain a finance charge set at a rate of not more than the rate allowed for loans pursuant to Section 37-4 (12%)
According to the HIA, “’finance charge’ means the amount in excess of the cash price for goods and services under the home improvement contract to be paid by the owner for the privilege of paying the contract price in installments over a period of time.”
Changes to the work
The HIA states that changes in the terms and conditions of the contract must be in writing and be signed by both the owner and contractor.
HIA protects homeowners and contractors
Connecticut’s Home Improvement Act seeks to protect both homeowners and contractors by clearly spelling out the requirements for a valid contract for residential work in the state of Connecticut.
These provisions are meant to protect homeowners from unscrupulous contractors who don’t provide all the information needed to come to an informed consensus on scope of work and price. It also limits the amount that contractors without an “enforceable” contract can collect.
Before beginning work in Connecticut, contractors and subcontractors need to be aware of their rights and responsibilities by reviewing the HIA.