Construction payment and financial risk go hand in hand. That’s an unfortunate truth, but it’s true nonetheless. The risk of nonpayment is a very real fear for those in the construction industry, so it’s important to stack the odds to prevent payment disputes. The best way to avoid disputes is to communicate and create a transparent project (and payment chain). That process begins even before the agreement is signed – a solid, fair, and legally compliant contract can set tone for the rest of the project.
With that in mind – Connecticut General Contractors must be extra cautious when working on home improvement jobs. The contract utilized at the outset of the project could make or break the ability to recover payment.
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Connecticut General Contractors: Home Improvement Jobs Carry Extra Risks
Let’s start with the bottom line: Connecticut General Contractors working on home improvement jobs must abide by Connecticut’s regulations for Home Improvement Contractors. This begins even before a project comes onto the horizon. A contractor must first obtain a certificate of registration for work that constitutes essentially any permanent change to residential property.
Anyway, for a Home Improvement contract to be valid and enforceable it must abide by Connecticut’s Home Improvement Act (“HIA”). There are a number of contractual requirements, but compliance isn’t too terribly burdensome. Regardless – contractors had better comply. Failure to meet all requirements could result in a loss of legal right to payment. That includes any lien claims, bond claims, or potential lawsuits for nonpayment.
You might be thinking: Surely, there are exceptions?
A (Rare) Exception
There is a limited exception, but I certainly wouldn’t count on it applying.
First, the owner must be aware that the contractor failed to abide by the HIA, and they must also be aware of the potential consequences for the contractor. Knowing that information, the owner must then intentionally deceive the contractor, using the failure to comply with the HIA as grounds for nonpayment. When that situation occurs, a contractor may still be entitled to payment – but again, that’s a high bar.
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Simple enough, right? Wrong. Abiding by the HIA is pretty much an absolute requirement. Take this example, posed in Lucien v. McCormick Construction.
As described in this post by Goldberg Segalla, even though the homeowner’s attorney was the one to draft the contract, and even though the owner didn’t mention any HIA issue until after work had been performed, the contractor was out of luck. We meant it when we said the exception is limited. Unless an owner intentionally uses the Connecticut HIA to deceive or commit fraud, a contractor who fails to comply will likely be left empty handed.