In 1987 the Maine Legislature adopted the Home Construction Contract Law. The law generally requires contractors to use a written contract containing specified provisions prior to performing any work on a home construction project involving more than $1,400.00 in materials or labor. Failure to comply with the law constitutes a violation of Maine's Unfair Trade Practices Act which, among other things, affords a plaintiff the potential ability to recover treble damages and attorneys fees. Furthermore, each violation of the law constitutes a civil violation for which forfeiture of not less than $100.00 nor more than $1,000.00 may be adjudged.
While most builders engaged in the business of constructing residences are well aware of the law, many other businesses are not aware that the law applies to some of their products and services. Specifically, the law defines "home construction contract" as a contract to build, remodel or repair a residence, including not only structural work but also electrical, plumbing and heating work; carpeting; window replacements; and other non-structural work. The law defines "residence" as a dwelling with three or fewer living units and garages, if any. Many vendors engaged in selling and installing residential appliances, heating equipment, air handling and air conditioning equipment, swimming pools, hot tubs, and water filtration or water treatment systems do not realize that they must use contracts which comply with the Home Construction Contract Law when the transaction exceeds $1,400.00 in materials or labor.
The Home Construction Contract Law provides that the contract must contain at least the following parts:
- names of parties;
- location of the property upon which the work is to be performed;
- the estimated date of commencement of work and the estimated date when the work will be substantially completed;
- the contract price;
- the method of payment, with the initial downpayment being limited to no more than one-third of the total contract price;
- a description of the work to be performed and the materials to be used;
- specific warranty language set forth in the statute;
- a dispute resolution provision allowing the parties to adopt one of three specified methods of resolving contract disputes;
- a provision stating that any change orders must be in writing;
- if the contract is the result of a telephone solicitation or a home solicitation, a description of the owner's right to avoid the contract under certain consumer protection laws; and
- if the construction includes installation of insulation in an existing residence, certain disclosures required by other provisions of Maine law; and in the context of a new building or an addition to an existing building, a statement by the contractor that certain minimum energy efficiency building standards for new residential construction will be met or exceeded.
To the extent transactions involving the services and products that your business provides exceed $1,400.00 in material or labor and fall within the definition of "home construction contract," your business should use a contract which complies with the law. Failure to comply not only gives rise to the potential liabilities described above, but also puts your business at a considerable disadvantage in the context of any negotiations with a disenchanted customer. Furthermore, in my experience, the law has not been a difficult law for clients to comply with, and many of my clients have advised me that their use of the contract has worked to their advantage in resolving differences with customers.
*article courtesy of George F. Eaton II, Esq. of Rudman & Winchell.