Travis R. Watson: The details of home improvement contracts

Indiana home improvement contractors operate under a strict statutory framework known as the Indiana Home Improvement Contract Act. HICA imposes specific requirements on contracts for residential home improvements and is designed to protect homeowners who may lack familiarity with the home improvement industry.

HICA applies to contracts exceeding $150 for the improvement of residential property, i.e. a house, and includes the fixtures, structures and improvements of that residential property including electrical, plumbing, mechanical and exterior work. HICA does not apply to the original construction of a dwelling but instead applies only to “home improvements.”

Here are the required contract terms:

• Name of the consumer and address of the real property
• Name, address and email address of the contractor
• Name, telephone number and email address of each owner, officer, employee or agent of the contractor
• Date the contract was submitted to the consumer and any time limit for acceptance
• A reasonably detailed description of the work, or in the alternative, a statement that the specifications will be provided and that the consumer must sign and date an approval of the specifications before any work begins
• Approximate start and completion dates along with any contingencies that could affect the timing
• Contract price
• A statement whether other party/subcontractor will be completing the home improvements or furnishing any labor, services, material, equipment or machinery
• Signature lines for the contractor or contractor’s agent and for each consumer who is a party to the contract, with each person’s name typed or printed legibly below the signature line

Contractors are prohibited from advertising or offering to pay or rebate any portion of an insurance deductible to induce a contract.

HICA gives homeowners the right to cancel a home improvement contract within three business days after signing by delivering written notice to the contractor. Upon cancelation, the contractor must refund all monies paid, except for payment for work already performed. Contractors must also provide the homeowner with written notice of these cancelation rights and a cancellation form.

A common issue that arises under HICA involves modifications to the contract (called “change orders”). HICA requires that change orders be in writing and signed by the homeowner. If the change order is not signed by the homeowner, the change order is not enforceable under HICA.

Homeowners can assert claims or counterclaims alleging HICA violations. Further, a HICA violation constitutes a “deceptive act” under Indiana’s Deceptive Consumer Sales Act, potentially exposing contractors to actual damages, attorney’s fees and increased difficulty collecting payment.•

__________

Travis R. Watson is an associate with Riley Bennett Egloff LLC.