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By Lizanne V. Hoerst

Many people are at least familiarwith New Jerseys ConsumerFraud Act, N.J.S.A. 56:8-1, et seq.

(CFA) although they may not knowthat the CFA provides some of thestrongest consumer protection laws inthe nation. Cox v. Sears Roebuck & Co.,138 N.J. 2, 15 (1994). Both homeimprovement contractors and homeown-ers alike, however, seem largely unawareof the CFAs pro-consumer HomeImprovement Practices Regulations,N.J.A.C. 13:45A-16.2 (HIP Regulations),which were enacted by the New JerseyDivision of Consumer Affairs to provideobjective assurances of the criteria

according to which home-improvementwork [should] be done. Cox, 138 N.J. at16. Indeed, that HIP Regulation violationswhich may be characterized as merely

technical, subject a contractor to treble-damage liability under the CFA seemslargely unknown both to the consumingpublic and contractors, including bothlarge contractors (for example, the Coxcase involved Sears Roebuck), and smallcontractors (those who perform homeimprovement work). As discussed below,although obviously beneficial to home-owners, the HIP Regulations present averitable legal quagmire for unknowing

contractors.The HIP Regulations proscribe myri-ad conduct; beginning with sales pitchesand the content of home improvementcontracts and continuing through theprocess and completion of projects, allstages of the homeowner-contractor rela-tionship are addressed. Regarding thecontract itself, for example, the regula-tions require that all home improvementcontracts exceeding $500, and all changesin the terms of such contracts, be in writ-ing and signed by the parties, N.J.A.C.

13:45A-16.2(a)(12). This provision fur-ther requires that contracts be clear, accu-rate and legible (alone a hazard for con-tractors, whose handwriting often resem-bles that of the family doctor).

Contracts must also set forth, inunderstandable language, all terms andconditions of the contract, including thedates or time within which the work is tobegin and to be completed. N.J.A.C.13:45A-16.2(a)(12)(iv). Pursuant to this

particular requirement as homeownerwill rejoice to know a contractors failure to begin or complete a home renovation project on the date specified in thecontract may entitle the homeowner tocollect treble the amount of resultingdamages. Unless, that is, the contractorhas provided the homeowner with timelywritten notice of the delay, and the delayis due to labor stoppage, unavailability osupplies or materials or similar circum

stances beyond the contractors controlN.J.A.C. 13:45A-16.2(a)(7).Additionally, home improvemen

contracts that are required to be in writingunder the HIP Regulations must containthe following, often overlooked terms:

The legal name and business addresof the contractor, including the legal nameand business address of the sales repre-sentative or agent who solicited or negoti-ated the contract;

A description of the work to be done

and the principal products and materialsto be used or installed, which musinclude, where applicable, the namemake, size, capacity, model and modeyear of principal products or fixtures to beinstalled, and the type, grade, quality, sizeor quantity of principal building or construction materials to be used; and

The total price or other consideration to be paid by the homeowner, includ-ing all finance charges, and if the contrac

VOL. CLXXXI NO. 13 INDEX 1223 SEPTEMBER 26, 2005 ESTABLISHED 1878

This article is reprinted with permission from the SEPTEMBER 26, 2005 issue of the New Jersey Law Journal. 2005 ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved.

REAL ESTATE & TITLE INSURANCE

Homeowners Have Powerful WeaponAgainst Dishonest Contractors

Home Improvement Practices

Regulations present legal pitfalls

for home improvement contractors

Hoerst is a member of

Flaster/Greenbergs litigation and labor

and employment practice groups. She rep-

resents plaintiffs and defendants in busi-

ness disputes in the federal and state

courts of New Jersey and Pennsylvania.

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is one for time and materials, the hourlyrate for labor and all other terms and con-ditions of the contract affecting pricemust be clearly stated. N.J.A.C. 13:45A-16.2(a)(12).

With respect to the home-improve-

ment sales pitch, the regulations man-date that contractors must accurately dis-close when the offered price does notinclude delivery or installation charges orbuilding or installation permit fees.N.J.A.C. 13:45A-16.2(a)(6). Additionally,the regulations bar contractors from,among various activities, misrepresentingto a homeowner that a project is to serveas a model or advertising job orfrom otherwise using any other prospec-tive lure to mislead a homeowner intobelieving that a price reduction or other

compensation will be received by reasonof such representations. N.J.A.C.13:45A-16.2(a)(1). Thus, for example,contractors may not represent that a pricereduction will be given for the use ofmaterials left over from another job, if, infact, no real discount is being afforded.N.J.A.C. 13:45A-16.2(a)(6)(i).

And, regarding the home renovationprocess, the HIP Regulations require that,before a contractor begins work, he mustconfirm that all applicable building andconstruction permits have been issued asrequired under state laws or local ordi-nances. N.J.A.C. 13:45A-16.2(a)(10).Further, where midpoint or final inspec-tions are required under state laws or local

ordinances, the contractor must furnish tothe homeowner copies of inspection cer-tificates before final payment is due andbefore the contractor requests that thehomeowner sign a completion slip. Id.Finally, it should be noted that the HIPRegulations are not intended to be

exhaustive. Accordingly, practices notspecified in the regulations may neverthe-less constitute unlawful consumer fraud.N.J.A.C. 13:45A-16.2(a).

In imposing (even treble-damage) lia-bility, it is of no matter that a contractorsviolations were unwitting or his actionsundertaken in good faith. See Cox, 138N.J. at 16, 18-19. Accordingly, to prevail ina cause of action under the CFA for viola-tions of the HIP Regulations, a homeown-er need only show: (1) that the defendantcontractor did not abide by (even a techni-

cal) requirement of the regulations; and (2)that the homeowner suffered an ascertain-able loss of moneys or property as a resultof the violation. N.J.S.A. 56:8-19; see alsoCox, 138 N.J. at 21-22. Remarkably, if thehomeowner proves both of these elements,an award of treble damages and litigationfees and costs is mandatory. Cox, 138 N.J.at 24.

The expenditure of attorneys fees issufficient, moreover, to constitute anascertainable loss under the CFA.Branigan, 326 N.J. Super. at 30-31. Thus,even where a homeowner is, ultimately,able to establish only a technical violationof the HIP Regulations for example,failure to include in the contract a start or

completion date and is unable to showthat the violation caused damages, hewill, nonetheless, recoup from the errantcontractor her reasonable attorneys feesin bringing the action. Id.

And where a homeowner can showthat a HIP Regulation violation resulted in

damage, she is entitled to collect treblethe damage amount. For instance, in theCox case, the Supreme Court of NewJersey held that Sears Roebucks failure toensure that all permits for a kitchenremodeling project and Sears improperwiring work which may have beendetected if inspections were conductedpursuant to the issuance of a permit entitled the homeowner to over $20,000in damages (treble the roughly $6,000cost of repairing Sears faulty kitchenwork) plus attorneys fees and costs. Cox

138 N.J. at 22-24. Notably, a homeownerneed not first expend money for repairs toinstitute a claim; rather, she may simplysupply the court with a reasonable esti-mate of repair costs. Id. at 22.

In short, for both homeowners in theprocess of, or considering, a home reno-vation project and contractors who under-take this type of work, it is well worthreviewing the HIP Regulations. In doingso, homeowners may learn to spot defi-ciencies in contracts, which could lead toproblems with a contractors work furtherdown the road; and contractors, may, atleast, avoid technical violations forwhich a treble damage award may reallysmart.

2 NEW JERSEY LAW JOURNAL, SEPTEMBER 26, 2005 181 N.J.L.J. 1223