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In the State of New York, contractors working on certain residential projects need to have a good understanding of the NY Home Improvement Contracts Act. Under these statutes, on certain protected projects, there are a fair amount of rules and requirements that must be met, particularly when it comes to what must be included in the contract between the contractor and the owner. Here’s what NY residential contractors must include (and what can’t be included) in a New York home improvement contract.

What types of projects are covered under the NY Home Improvement Contracts Act?

Let’s start with some basic definitions under NY Gen. Bus. Law §770.

What’s considered a “home improvement contract” in New York for the purposes of these rules? First and foremost, it covers all contracts that are valued at $500 or more. As far as the services being performed, home improvements include the following:

Repairing, remodeling, altering, converting, or modernizing of, or adding to, residential property and shall include, but not be limited to, the construction, erection, replacement, or improvement of driveways, swimming pools, siding, insulation, roofing, windows, terraces, patios, landscaping, fences, porches, garages, solar energy systems, flooring, basements, and other improvements of the residential property and all structures or land adjacent to it.

This definition also covers a few other types of contracts. One such additional contract includes the construction of “custom homes” — in other words, a new, single-family residence to be constructed on premises owned by the purchaser at the time of contract that the owner intends to occupy.

Another inclusion is the installation of any “home improvement goods or services.” Think alarm systems, A/C systems, fencing, or any other goods which become permanently affixed to the property.

Furthermore, the statutes list specific types of contracts that do NOT fall under these requirements:

  • Sale or construction of a new home, other than a “custom home” (as defined above)
  • Sale of goods by a seller who neither arranges to perform nor performs any work/labor in connection with the installation or application of the goods
  • Sale or installation of appliances, such as stoves, refrigerators, freezers, room air conditioners, dishwashers, clothes washers or dryers, which are designed to be removable from the premises without material alteration thereof
  • Sale or installation of decorative goods or services, such as draperies and carpets
  • Performance of repairs, replacements, or other services pursuant to an express or implied warranty, or a maintenance agreement as defined in NY Gen. Bus. Law §395-A

What needs to be included in a NY home improvement contract?

Now onto the meat of these statutes: What must be included in a NY home improvement contract? These requirements can be found under NY Gen. Bus. Law §771. The first step is that the contract must be in writing and signed by both the contractor and the property owner.

The contract must also include all of the following information:

  • Approximate/estimated start and substantial completion dates
  • A statement of any contingencies that would materially change the start/completion dates;
  • Whether or not the contractor and owner determined that a definite completion date is of the essence
  • Description of the work to be performed and the materials to be used — including make, model numbers, or any other identifying information
  • The agreed-upon consideration for the work and materials
  • If the contract provides for multiple progress payments, then it must include the payment schedule, dollar amount, and work/services covered under each payment
    • Note: Time-based payments such as hourly rates do not count as “progress payments”
  • A notice of the 3-day right of cancellation
  • Disclosure of contractor’s property and/or casualty insurance policy and coverage (should an insurance claim be filed regarding losses arising from the work), and the carrier’s contact information
  • The following notice in bold font:

Any contractor, subcontractor, or materialman who provides home improvement goods or services pursuant to your home improvement contract and who is not paid may have a legal claim against your property known as a mechanic’s lien. Any mechanics lien filed against your property may be discharged. Payment of the agreed-upon price under the home improvement contract prior to filing a mechanic’s lien may invalidate such lien. The owner may contact an attorney to determine his rights to discharge a mechanics lien.

Additional requirements for home improvement roofing contracts

In addition to all of the required information listed above, roofing contractors on such covered projects have a few extra requirements

The first of these additional requirements pertains to disclosures of insurance coverage.

If the roofing contractor has employees, then they must carry worker’s compensation insurance covering all employees. If there are no employees, then they must provide a certificate of attestation of exemption (CE-200) from the NY Worker’s Compensation Board.

Also, roofing contractor’s must also provide proof of general liability & property damage insurance coverage of at least:

  • One hundred thousand ($100,000) dollars per person
  • Three hundred thousand dollars ($300,000) per occurrence, bodily injury
  • Fifty thousand dollars ($50,000) for each occurrence and aggregate, property damage.

One last thing to note: Roofing contracts on these types of projects cannot require a deposit or other payments prior to commencement of the work — with one exception. The roofer may invoice the owner for materials upon delivery of said materials to the owner’s property.

Penalties for non-compliance

Failure to include any of these provisions, or other violations under the Home Improvement Contracts Act can lead to varying degrees of penalties.

“Technical violations,” are subject to civil penalties of no more than $100 per violation. These encompass minor violations. However, substantial violations come with steeper penalties of up to $250 per violation or 5% of the aggregate contract price; which cannot exceed a total of $2,500 in penalties per contract. These penalties may be increased at the discretion of the court, depending on the following factors:

  • Volume of business the contractor performs on an annual basis
  • Number of contracts in violation
  • Actual financial loss or exposure to financial loss suffered by the owner as a result of the violations
  • Whether the contractor acted in GF or willfully with respect to such violations

Speaking of willful violations, if the violation is found in bad faith and constitutes fraud under NY Gen. Bus. Law §772 an owner may sue and recover the actual damages incurred, plus $500, and any reasonable attorney fees associated with the litigation.

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