Sandy Repairs: New Jersey Home Improvement Contracts

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In the aftermath of Hurricane Sandy, many have been dealing with damages caused by this “Super Storm”.  Hopefully by now you have resolved the issues with insurance coverage and have either received a settlement check or are about to receive one.  As such, your main concern will now be obtaining a suitable contractor to perform the repairs to your residence.  This is by far the most important choice you will make in this process to date.

In the State of New Jersey all contractors are required to register with the New Jersey Division of Consumer Affairs.  The first thing you should do prior to retaining a contractor is to confirm that they are properly registered.  This can be done simply by searching their name on the Division of Consumer Affairs website, or by having the contractor provide the information to you.  Once their registration has been verified, it is important that you carefully review any contract proposal submitted by the contractor for your signature.

Pursuant to the New Jersey Consumer Fraud Act, a contractor must provide certain information in its contract with regard to any home improvement project.  A home improvement project is defined as the renovation of any existing structure or appurtenance to the structure, as well as work performed on the grounds of the residence.  The New Jersey Consumer Fraud Act is one of the toughest pro consumer laws in the country and is designed to protect homeowners from contractors who seek to take unfair advantage of them.  Set forth below is a general list of items which is not inclusive, however, which are essential and must be within the proposal submitted by the contractor.

The most important item that must be clearly set forth in the contract is whether the contract is a “Fixed Price Contract” or “Time and Materials Contract”.  If it is a “Fixed Price Contract” the price must be stated clearly.  If it is a “Time and Materials Contract” the rates must be set forth clearly.  In addition to the price of the contract, the contract must set forth a start and completion date with dates to be signed off by the owner.  Furthermore, the contractor must provide proof of insurance, and the contract must also contain a provision which gives the homeowner three days to cancel the contract after its execution.  Furthermore, the contract must contain a detailed description of the work to be performed.  If the contractor has promised warranties, these must be written and they must be provided to the homeowner at the time the contract is executed.  Furthermore, should there be any changes in the contract, such as additional work, they also must be in writing and signed by both the homeowner and the contractor if the amount is more than five hundred dollars. 

It is crucial that a homeowner carefully review the contract to make sure these provisions are within the Home Improvement Contract and that they are clearly stated.  Aside from the provisions within the Home Improvement Contract, the property owner must be careful to insure that all proper permits are obtained by the contractor prior to performing the work.  In addition to obtaining the permits, the Homeowner should make sure that all necessary inspections are performed by the Township as to any work performed by the contractor.  Finally, the homeowner should be aware that they need not make the final payment on the contract unless and until the Township has approved the work that was performed by contractor.  In the absence of this approval, the contractor is not entitled to final payment.

The information provided above is not meant to be entirely inclusive, but instead, is a simple guideline of the items which a homeowner should consider in retaining a contractor to do home improvement work.  These same items apply for repairing any damage which may have been caused by “Super Storm Sandy”  If possible,  a homeowner should have an attorney review the contract to insure compliance with state law, and moreover, to insure that the homeowners rights are adequately protected.

Paul Norris is a Shareholder in Stark & Stark's Litigation Group in our Lawrenceville, New Jersey office. For questions, or additional information, please contact Mr. Norris.

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