Violation of the Home Repair and Remodeling Act, DuPage Bar Association Brief, April 2008

By Michael T. Nigro

As you plan for your home repair/improvement project, it is important to ask the right questions in order to protect your investment. The tips in this fact sheet should allow you to protect yourself and minimize the possibility that a misunderstanding may occur.

Smith v Bogard

In the recent case of Smith v Bogard ⁱ, the court found that violation of the Home Repair and Remodeling Act (Act) ⁱⁱ bars any recovery by a general contractor even for unjust enrichment and quantum meruit. The Bogards hired Smith to construct a room addition to their home. According to the Bogards, Smith estimated the cost at "$20,000 or less". Smith completed the construction and issued a bill for $25,515.85. The Bogards, who had previously paid $15,000, refused to pay the balance of $10,515.85 and Smith filed suit. Smith's amended complaint included counts for breach of contract, unjust enrichment, and quantum meruit.

The Bogards filed a motion to dismiss claiming Smith violated the Act by failing to provide them with the consumer-rights pamphlet and a written contract, as required by the Act. Smith argued, first, that the Act should not apply, as he was a subcontractor. Second, Smith argued that even if the Act voided his contract, it should not bar him from recovering on equitable theories.

The trial court granted the motion to dismiss and the appellate court affirmed. The appellate court found that the record did not support Smith's contention that he was a subcontractor. The court noted that Smith provided a variety of general construction services, that the Bogards did not employ any other general contractor, and that they communicated directly with Smith regarding planning and construction. The court found that these factors indicated Smith was not a subcontractor.

The appellate court went on to note that the Act was enacted for the protection of consumers against deceptive practices. Since Smith violated the Act, "...he is precluded from recovering any amounts he claims due for work performed." "Allowing a contractor when he breached certain provisions of the Act would run afoul of the legislature's intent of protecting consumers, would reward deceptive practices, and would be violative of public policy." Furthermore, the court held that since the contract was void, "the courts should not assist either party but will leave them where they have placed themselves". Finally, the court denied Smith equitable remedies on the basis that his violation of the Act created unclean hands.

The Act

The Home Repair and Remodeling Act applies to all contractors contracting directly with an owner in the sum of $1,000.00 or more for the repair or remodel of existing residential units of six dwelling units or less. It applies to construction, installation, replacement or improvement of swimming pools, basements, chimneys, garages, fences, heating and cooling systems, windows and roofs, and the like. It does not apply to new constructionⁱⁱⁱ and it does not apply to a true subcontractor^iv. In short, the Act applies to almost any contractor who contracts directly with the owner for home repair or remodeling services.

The contractor must provide the consumer rights brochure "Home Repair: Know Your Consumer Rights." The contractor must obtain the homeowner's signature and date on a receipt of the brochure^v.

The contractor must also provide a written contract before work is commenced. The written contract must comply with the requirements of the Act. The contract must state the total cost, any charges for an estimate, the costs for parts and materials and the business name and street address of the contractor^vi.

Below is the required consumer rights brochure with an acknowledgement of receipt for the homeowners and contractor to sign. It must appear in at least 12 point type and in legible ink.

As you plan for your home repair/improvement project, it is important to ask the right questions in order to protect your investment. The tips in this fact sheet should allow you to protect yourself and minimize the possibility that a misunderstanding may occur.

1. Door-to-door salespersons with no local connections who offer to do home repair work for substantially less than the market price.
2. Solicitations for repair work from a company that lists only a telephone number or a post-office box number to contact, particularly if it is an out-of-state company.
3. Contractors who fail to provide customers references when requested.
4. Persons offering to inspect your home for free. Do not admit anyone into your home unless he or she can present authentic identification establishing his or her business status. When in doubt, do not hesitate to call the worker's employer to verify his or her identity.
5. Contractors demanding cash payment for a job or who ask you to make a check payable to a person other than the owner or company name.
6. Offers from a contractor to drive you to the bank to withdraw funds to pay for the work.

1. Get all estimates in writing
2. Do not be induced into signing a contract by high-pressure sales tactics.
3. Never sign a contract with blank spaces or one you do not fully understand. If you are taking out a loan to finance the work, do not sign the contract before your lender approves the loan.
4. Remember, you have 3 business days from the time you sign your contract to cancel any contract if the sale is made at your home. The contractor cannot deprive you of this right by initiating work, selling your contract to a lender, or any other tactic.
5. If the contractor does business under a name other than the contractor's real name, the business must either be incorporated or registered under the Assumed Business Name Act. Check with the Secretary of State to see if the business is incorporated or with the county clerk to see if the business has registered under the Assumed Business Name Act.
6. Homeowners should check with local and county units of government to determine if permits or inspections are required.
7. Determine whether the contractor will guarantee his or her work and products.
8. Determine whether the contractor has the proper insurance.
9. Do not sign a certificate of completion or make final payment until the work is done to your satisfaction.
10. Remember, homeowners should know who provides supplies and labor for any work performed on your home. Suppliers and subcontractors have a right to file a lien against your property if the general contractor fails to pay them. To protect your property, request lien waivers from the general contractor.

1. Contractor's full name, address, and telephone number. Illinois law requires that persons selling home repair and improvement services provide their customers with notice of any change to their business name or address that comes about prior to the agreed dates for beginning or completing the work.
2. A description of the work to be performed.
3. Starting and estimated completion dates.
4. Total cost of work to be performed.
5. Schedule and method of payment, including down payment, subsequent payments, and final payment.
6. A provision stating the grounds for termination of the contract by either party. However, the homeowner must pay the contractor for work completed. If the contractor fails to commence or complete work within the contracted time period, the homeowner may cancel and may be entitled to a refund of any down payment or other payments made towards the work, upon written demand by certified mail.

IF YOU THINK YOU HAVE BEEN DEFRAUDED OR YOU HAVE QUESTIONS

If you think you have been defrauded by a contractor or have any questions, please bring it to the attention of your State's Attorney or the Illinois Attorney General's Office. Attorney General Toll-Free Numbers

I, the homeowner, have received from the contractor a copy of the pamphlet entitled "Home Repair: Know Your Consumer Rights."

Conclusion

Any contractor who directly contracts with an owner to do home repair work for $1,000 or more must comply with the Act. The Courts, no matter how much money is owed or how unjust the result may seem, will not aid those who violate the Act. Violation of the Act voids any contract and any claim to a mechanics lien. The existence of a contract is a prerequisite for a mechanics lien^vii. Furthermore, a knowing violation of the Act is a violation of the Consumer Fraud and Deceptive Practices Act^viii. This results in the contractor being liable to the owner for damages and attorneys fees and personal liability for those violating the Act.

Prepared by:
Michael T. Nigro
NIGRO & WESTFALL, P.C.
Attorneys at Law
1793 Bloomingdale Road
Glendale Heights, IL 60139
(630) 682-9872
fax 580-5696

web site: nigrowestfall.com

ⁱ 2007 WL 4563999, Ill.App. 4 Dist. Dec. 2007.
ⁱⁱ 815 ILCS 513/1 et seq.
ⁱⁱⁱ 815 ILCS 513/10.
^iv MD Electrical Contractors, Inc. v Abrams, 369 Ill3d 309, 859 N.E.2d 1070 (2nd Dist., 2006).
^v 815 ILCS 513/20
^vi 815 ILCS 513/10
^vii Pascal P. Paddock, Inc. v. Glennon, 32 Ill.2d 51, 203 N.E.2d 421, 422 (1964)
^viii 815 ILCS 505/2Z