Home Improvement Contractor Presentation Mass General Law Chapter

Home Improvement Contractor Presentation Mass. General Law Chapter 142 A Presented by: Officer Franz J. Strassmann, Belmont Police Chief Richard J. Mc. Laughlin (chief@belmontpd. org) Belmont Police Department 460 Concord Avenue Belmont, MA 02478 617 -993 -2500 (main number) 617 -484 -1212 (alternate number) 617 -993 -2525 (fax)

Contact Information Officer Franz J. Strassmann Belmont Police Department 460 Concord Avenue Belmont, Massachusetts 02478 617/993 -2480 fstrassmann@belmontpd. org

AGENDA Purpose of the Presentation What is a Home Improvement Contractor? Who Has Standing? Selecting a Home Improvement Contractor Read Mass General Law Chapter 142 A (sections 2, 17, 19) Complete Contract What to do if Problems Arise Recourses

Purpose of this Presentation In the past few years, we have seen a dramatic increase in Complaints against Home Improvement Contractors. While most contractors are honest and reputable, there are some who are not and still others who take on a project that they are not capable of completing. This presentation will assist homeowners in what to look for as well as what to look out for when selecting a home improvement contractor. We will discuss what exactly a Home Improvement Contractor is, what projects require a registration or license, who can recover under the statute, recommendations for the homeowner when selecting a contractor, what to look for once you have selected a contractor but before you sign the contract, the terms required in a contract and what your recourses are if something goes wrong.

Top Five Consumer Complaints of 2011 Office of Consumer Affairs and Business Regulation 1. 2. 3. 4. 5. Auto Insurance Health Insurance Home Improvement Contractors (3200 Complaints) Lemon Law Home Insurance Office of the Attorney General 1. 2. 3. 4. 5. Foreclosure Relief Scams Identity Theft High-Pressure Sales Pitches Home Improvement Contractors False Introductory Offers

What is Chapter 142 A? Chapter 142 A or the “Home Improvement Contractor Act” is a consumer friendly statute that sets out specific guidelines that contractors must follow when contracting with homeowners for home improvement work. Failure to comply with the provisions of the act may subject the contractor to certain administrative sanctions, criminal prosecution, and civil remedies. From a civil standpoint, the real teeth of Chapter 142 A is that it declares that any violation of the act to be a per se violation of Chapter 93 A, the Massachusetts Consumer Protection Act. Chapter 93 A is a consumer friendly statute that prohibits “unfair or deceptive practices” in the marketplace. Chapter 93 A may entitle a homeowner who prevails on a claim against a contractor for violation of the Home Improvement Contractor Act to recovery multiple damages and attorneys fees.

What is a Home Improvement Contractor? A Home Improvement Contractor (“HIC”) is defined as any person who owns or operates a contracting business who, through himself or others, undertakes, purports to have the capacity to undertake, offers to undertake, or submits a bid for residential contracting work to an owner, as such work is defined in 780 CMR R 6 and Massachusetts General Law chapter 142 A (which are the rules and regulations pertaining to the program). All HIC’s must be registered with OCABR (Office of Consumer Affairs and Business Regulation).

Who Has Standing? Standing to bring suit under Chapter 142 A is limited to homeowners who fall within the statutory definition of an “owner” described in Chapter 142 A. Section 1 of Chapter 142 A defines an owner as “any homeowner of a pre-existing owner-occupied building containing at least one but not more than four dwelling units, or tenant thereof, who orders, contracts for, or purchases the services of a contractor or subcontractor. ” A plain reading of this language makes it appear that only persons who are in occupancy when the work is being done by the contractor may avail themselves to the protection of the act. This is not the case at all. In 2001, the Massachusetts Appeals Court issued a decision in Simas v. House of Cabinets, Inc. expanding the statutory definition of Section 1 of Chapter 142 A to include a brand new homeowner who has never occupied their home but intends to occupy the building when the work is complete.

Selecting a Home Improvement Contractor Recommendations for the Building Owner When Selecting a Contractor to Perform Work on an Existing Home Before you enter into any written agreement to remodel or build an addition onto an existing home Ensure that the Contractor is appropriately licensed and is a Registered Home Improvement Contractor. Ensure that the contractor has adequate liability insurance and workers compensation insurance. Ask the contractor for a written list of his/her three most recent projects with names, telephone numbers and addresses of the owners. CALL THEM Call the owners and ask questions as to the performance of the contractor. Check with your local better business bureau, the Office of Consumer Affairs and Business Regulation and the Office of the Attorney General to find out whether the contractor has any complaints filed against the contractor or whether or not any disciplinary action has been taken against the contractor.

Exceptions List of R 6. 1. 6 Persons Exempt From Registration or Renewal: Any person exempt from the registration requirement by 780 CMR R 6. 1. 6 who does not voluntarily register is not subject to any of the provisions of 780 CMR R 6 or G. L. c. 142 A. Persons exempt from registration are:

Exceptions 1. the Commonwealth or its political subdivisions; 2. any school, public or private, offering as part of a vocational education program courses and training in any aspects of home construction or home improvements; 3. electricians, plumbers, architects or any other persons who are required by law to attain standards of competency or experience as a prerequisite to licensure for and engaging in such trade or profession and who are acting exclusively within the scope of the profession for which they are currently licensed pursuant to such law, construction supervisors excepted; 4. persons dealing in the sale of goods or materials who neither arrange to perform nor perform directly or indirectly any work or labor in connection with the installation of or application of the goods or materials; 5. any owner personally doing residential contracting work on his/her own home; 6. any individual who performs construction related labor or services for a home improvement contractor or subcontractor, for wages or salary and who does not act in the capacity of a home improvement contractor or subcontractor;

Exceptions 7. any contractor or subcontractor who works on one residential contracting undertaking or project by one or more contracts where the aggregate contract price to the owner is less than $500; provided, however, that the contract is not in an amount of less than $500. for the purpose of evading 780 CMR R 6 or M. G. L. c. 142 A; 8. any person who engages in the business of a home improvement contractor or subcontractor on other than a full-time basis, and who has earned in gross revenues from residential contracting work, less than $5, 000 in the previous 12 -month period; 9. any person acting as a home improvement contractor or subcontractor who was enrolled as a full-time student in a secondary school or college with degree granting authority from the government of the state in which the school is located, for the immediately preceding academic semester and is also enrolled as a full-time student for the next academic semester, in the same or a similar degree granting secondary school or college provided that at least of the number of employees of the contractor or subcontractor are similarly enrolled in secondary schools or colleges and that the home improvement contractor or subcontractor does not reasonably expect to earn or does not in fact earn, in gross revenues, more than $5, 000 from residential contracting work;

Exceptions 10. persons who install any or all of the following: · central heating, · air-conditioning systems, · energy-conservation devices, or· provides conservation services conducted by or on behalf of a public utility under a program approved by the department of public utilities; 11. any contractor or subcontractor who works exclusively in any of the following home improvement areas: - landscaping; - interior painting or wall covering; - finished floor covering, including, but not limited to, carpeting, vinyl, tile, non-structural hardwood; · fencing or freestanding masonry walls; · above-ground swimming pools; - shutter or awning installation; - ground level patios; includes flagstone, concrete, block, and wood set directly onto the ground; excludes decks which are supported above ground. · asphalt and driveway installation and maintenance.

Selecting a Home Improvement Contractor Once you have selected a contractor and before you sign any agreement or contract; Do not enter into any construction agreements without a written contract. Before signing a contract make sure that your attorney reviews the contract. Ensure that you authorize the contractor to apply for the building permit as your agent. Registered Home Improvement Contractors are required by law to apply for all building permits which are subject to the Home Improvement Registration Law. OCABR strongly cautions building owners against applying for their own building permit. Reputable contractors will apply for the permit, acting as the owner's agent and with the owner's written authority. Only an HIC Registrant may apply for a building permit for work covered by the program. If a contractor is reluctant to apply for the building permit on your behalf it may be an indication that the contractor does not possess a registration. To check a Home Improvement Contractor Registration: http: //db. state. ma. us/homeimprovement/licenseelist. asp or go to Google or another search engine and type: “Massachusetts home improvement contractor lookup”

Remember: For home improvement work covered by Chapter 142 A of the General Laws you are EXCLUDED from reimbursement of up to $10, 000 from the guaranty fund if you apply for your own building permit or if you do business with an unregistered contractor.

Required Contract Terms Contracts - all contracts over $1, 000 (One Thousand Dollars) must be in writing. The law requires the following FOURTEEN items to be included in any contract between a homeowner and a registered home improvement contractor for home improvement work subject to MGL c. 142 A: 1. The complete agreement between the contractor and the owner and a clear description of any other documents which are part of the agreement. 2. The full names, federal I. D. number (if applicable), addresses (NOT P. O. Box numbers), of the parties, the contractors registration number, the name(s) of the salesperson(s) involved, if any and the date the contract was executed by the parties. 3. The date on which the work is scheduled to begin and the date the work is scheduled to be substantially completed. 4. A detailed description of the work to be done and the materials to be used. 5. The total amount agreed to be paid for the work to be performed under the contract. 6. A time schedule of payments to be made under the contract and the amount of each payment stated in dollars, including any finance charges. Any deposit required to be paid in advance of the start of the work SHALL NOT exceed one-third of the total contract price or the actual cost of any material or equipment of a special order or custom made nature, which must be ordered in advance of the start of the work to assure that the project will proceed on schedule. No final payment shall be demanded until the contract is completed to the satisfaction of all parties. 7. All parties must sign the contract.

Required Contract Terms 8. A clear and conspicuous notice stating: a. That all home improvement contractors and subcontractors shall be registered and that any inquiries about a contractor or subcontractor relating to a registration should be directed to: Office of Consumer Affairs and Business Regulation Ten Park Plaza, Suite 5170 Boston, MA 02116 Phone: (617) 973 -8700

Required Contract Terms b. The contractor’s registration number must be on the first page of the contract. c. The homeowner’s three day cancellation rights under MGL c 93 s 48; MGL c 140 D s 10 or MGL c 255 D s 14 as may be applicable. d. All warranties on the owner's rights under the provisions of and MGL c. 142 A. e. In ten point bold type or larger, directly above the space provided for the signature, the following statement: DO NOT SIGN THIS CONTRACT IF THERE ARE ANY BLANK SPACES. f. Whether any lien or security interest is on the residence as a consequence of the contract. 9. An enumeration of such other matters upon which the owner and contractor may lawfully agree. 10. Any other provisions otherwise required by the applicable laws of the Commonwealth. 11. Permit Notice: Every contract shall contain a clause informing the owner of the following: a. any and all necessary construction-related permits; b. that it shall be the obligation of the contractor to obtain such permits. c. that owners who secure their own construction-related permits or deal with unregistered contractors shall be excluded from access to the Guarantee Fund. be excluded from access 12. Acceleration of payment: No contract shall contain an acceleration clause under which any part or all of the balance not yet due may be declared due and payable because the holder deems himself to be insecure. However, where the contractor deems himself to be insecure he may require as a prerequisite to continuing said work that the balance of funds due under the contract, which are in possession of the owner, shall be placed in a joint escrow account requiring the signatures of the home improvement contractor and the owner for withdrawal. 13. No work shall begin prior to the signing of the contract and transmittal to the owner of a copy of such contract.

Required Contract Terms 14. Arbitration: If the contractor determines that in the event of a dispute, the contractor wishes the dispute to be settled by arbitration, this fact must be signified on the contract and both the contractor and owner shall sign this clause separately. The following format is acceptable (in 10 point type or larger); "The contractor and the homeowner hereby mutually agree in advance that in the event that the contractor has a dispute concerning this contract, the contractor may submit such dispute to a private arbitration service which has been approved by the Office of Consumer Affairs and Business Regulation and the consumer shall be required to submit to such arbitration as provided in MGL c 142 A. Owner: ______________________ Contractor: ____________________ NOTICE: The signatures of the parties above apply only to the agreement of the parties to alternate dispute resolution initiated by the contractor. The owner may initiate alternative dispute resolution even where this section is not signed separately by the parties. "

What to Do if Problems Arise?

STEP 1: Try to resolve the issue with the contractor directly.

STEP 2 Consider filing a complaint with the Local Consumer Program (“LCP”) that serves residents of your city or town. The LCPs work in cooperation with the Attorney General’s office. You can find out the name, address, and telephone number of your LCP by calling the Attorney General’s office at 617 -727 -8400 or by visiting http: //www. mass. gov/Cago/docs/Consumer/lcp_index_fy 10. pdf. In most cases, the LCP will attempt to mediate your complaint. This means they will contact both you and the contractor to confirm both sides of the story, and try to work out a resolution through an informal process of telephone calls and letter writing. In some cases, there may also be a Face to Face Mediation Program (“FTFMP”) that works in cooperation with the Attorney General’s office available to you. You can also check for that option with the Attorney General’s office. The FTFMPs bring the parties together in person to discuss their differences. Please note: all mediation through these programs is voluntary. If the contractor refuses to mediate, or if you are not satisfied with the results of mediation, please read about possible next steps below.

Attorney General’s office: 617 -727 -8400 Local Consumer Program Website: http: //www. mass. gov/Cago/docs/Consumer/lcp_index_fy 10. pdf Select Towns and Regional Offices: Arlington Belmont Watertown: Waltham: Cambridge Lexington (Medford): (Newton): (Cambridge): (Lowell): 781/393 -2460 617/796 -1292 617/349 -6150 978/656 -3342

How to Recover from a Contractor: OPTION A: You can consider filing suit against the contractor in small claims court yourself if the amount you are seeking is $7, 000 or less. The filing fee ranges between $40 and $150. depending on the amount of your claim. For additional information, call 617 -973 -8787 and ask for a copy of the booklet “Small Claims Courts”.

OPTION B: If you used a “registered” contractor, one who has been granted a Home Improvement Contractor registration by the state, you may be entitled to request an arbitration hearing through the Office of Consumer Affairs. All registered contractors must, by law, agree to arbitrate. In arbitration, a neutral third party, the arbitrator, listens to both sides of the dispute, and decides whether to order the contractor to provide a refund for poor or unfinished work, or, in some cases, to perform repairs on work done incorrectly. Not all types of home improvements are covered by this option. To be eligible for arbitration you must reside in an owner-occupied 1 -4 family building and your contract must meet a minimum dollar amount; other requirements also apply. There is an arbitration fee of $150 to $850, depending on the amount of money you are seeking. IMPORTANT: You must file your request for arbitration no later than two years after the signing date of your written contract. To begin this process, check if your contractor is registered by calling us at 617 -973 -8787 or checking online at www. mass. gov/consumer. Complete information about the program is available online or by calling the number above.

OPTION C: You can contact a lawyer who can advise you about feasibility of filing suit against the contractor with lawyer assistance.

OPTION D If you are the prevailing party in your arbitration hearing or court action, but have been unable to recover money from the contractor awarded to you by the decision, our office also administers a “Home Improvement Contractor Guaranty Fund. ” The purpose of the fund is to provide restitution to consumers who have won arbitration awards or court judgments against their contractors, but have been unable to collect on those awards. The fund provides a maximum payment of $10, 000 to eligible consumers, but you must file your request for access to the fund within six months of receiving your award or judgment, and you must also fulfill the requirements listed on the application, including demonstrating reasonable efforts to collect on the award/judgment. Complete information about this program and the application are available online at www. mass. gov/consumer or by contacting us at the address above, or by calling 617 -973 -8787.

OPTION E If you believe that a contractor has violated any portion of G. L. c. 142 A, the Home Improvement Contractor law, you should also consider filing a written complaint with the Office of Consumer Affairs for possible action against the contractor’s registration. Please note that this procedure does NOT involve mediation of individual consumer complaints, but instead entails enforcement hearings on violations of the home improvement contractor registration law. For this process, a complaint must be filed within three years of the date the contract for home improvements was signed. After a hearing on the complaint, at which your attendance may be required, the Office can fine a contractor up to $2, 000 for each violation and/or suspend or revoke the contractor’s registration. No money is awarded to consumers who file complaints through this program, even if fines are assessed. This procedure is solely for enforcement action against a contractor’s registration. Visit the web site at www. mass. gov/consumer for more information about filing a complaint and to download and print the complaint form.

OPTION F: Police Involvement

Chapter 142 A: Section 19. Fines and imprisonment Section 19. Any contractor or subcontractor who shall knowingly, willfully, or negligently operate without obtaining a certificate of registration as required by this chapter and who is not otherwise exempt from the registration requirement or any contractor or subcontractor who continues to operate after revocation of or during suspension of, or who fails to renew his certificate of registration, shall be punished by a fine not exceeding five thousand dollars or imprisonment not exceeding two years, or both. Any person who knowingly and willfully violates any of the provisions of this chapter, with respect to which a greater penalty is not otherwise provided by the provisions of this chapter or by any other law may be punished by a fine of not more than two thousand dollars or by imprisonment for not more than one year or both. Such fines and imprisonment shall be in addition to any administrative penalty otherwise applicable thereto and may be sought in an action brought by the attorney general or the district attorney.

Chapter 266: Section 30 Larceny; General Provisions and Penalties Whoever steals, or with intent to defraud obtains by a false pretence, or whoever unlawfully, and with intent to steal or embezzle, converts, or secretes with intent to convert, the property of another as defined in this section, whether such property is or is not in his possession at the time of such conversion or secreting, shall be guilty of larceny, and shall, if the property stolen is a firearm, as defined in section one hundred and twenty-one of chapter one hundred and forty, or, if the value of the property stolen exceeds two hundred and fifty dollars, be punished by imprisonment in the state prison for not more than five years, or by a fine of not more than twentyfive thousand dollars and imprisonment in jail for not more than two years; or, if the value of the property stolen, other than a firearm as so defined, does not exceed two hundred and fifty dollars, shall be punished by imprisonment in jail for not more than one year or by a fine of not more than three hundred dollars; or, if the property was stolen from the conveyance of a common carrier or of a person carrying on an express business, shall be punished for the first offence by imprisonment for not less than six months nor more than two and one half years, or by a fine of not less than fifty nor more than six hundred dollars, or both, and for a subsequent offence, by imprisonment for not less than eighteen months nor more than two and one half years, or by a fine of not less than one hundred and fifty nor more than six hundred dollars, or both.