New Jersey's Contractors' Registration Act, passed in 2004, requires contractors to register with the Division of Consumer Affairs (known as "the DCA," a part of the Department of Law and Public Safety in the Attorney General's Office) and disclose specific information to homeowners in a written contract. Violation of this act carries significant penalties.
The Act requires disclosures such as start and stop dates; materials to be used; and payment amounts, breakdowns, due dates and bench marks. It also requires proof of insurance; display of registration numbers; certain other specific information; copies of warranties; and notices of the consumer's right to cancel within three business days.
Violations of same provisions of the Act can be crimes of the fourth degree, with sentences up to eighteen months in prison, and violation of New Jersey Consumer Fraud Act, which entitles homeowners to triple damages plus their attorneys fees. Therefore, it is good practice for contractors to have experienced attorneys who know the requirements of the Act draft their written contracts.
The Act specifically applies to "home improvement contractors" and "home improvement contracts" between an owner, tenant or lessee of residential or non-commercial property. It applies to remodeling, altering, renovating, repairing, restoring, modernizing, removing, demolishing, or in any way modifying any part of residential or non-commercial property. It includes insulation, renovation or any other type of work which could reasonably be interpreted as a "home improvement." However, it does not apply to new home warranties, builder's registration, people performing their own home improvements, architects, professional engineers, surveyors, or other licensed professionals, or people who are employed by the owner - even if that owner is a coop board or condo association.
The Act also prohibits people who have been convicted of certain felonies from being registered as a "home improvement contractor."
The Act is good news and bad news. First the good news - and it is good news, for both homeowners and reputable contractors. For homeowners, it provides a remedy with "teeth" for damages incurred because of a contractor who, for example, took their deposit and never performed the work, or did not perform what he represented that he would perform. It is also good news for reputable contractors, because it allows homeowners to distinguish between contractors who are reputable and those who are not.
It is not all peaches and cream even for good contractors, however. Any violation of the Contractor's Registration Act can be a crime. Moreover, many of the requirements of the Act are quite technical. They must be included and met with exactitude in a written contract. Failure to do so opens up the Consumer Fraud Act's draconian remedies, with triple damages and payment of homeowner's attorneys' fees a real possibility. Our attorneys have seen good faith but technical violations hurt excellent contractors even where the contractor had actually done the work and done it well, and even when the homeowners have not made payments.
All this shows the urgent need to have an experienced attorney draft a contract which meets the Act's requirements. Our attorneys have been doing so for many years.
Additionally, attorneys representing homeowners need to be aware of this Act and its penalties. It is one of the ways to force disreputable contractors to meet their obligations, or provide compensation for violations. Additionally, reputable contractors have technical and substantive defenses for suits by homeowners over technical violations of the Act. It is extraordinarily important that the attorney handling the matter be experienced in both the Contractors Registration Act and the Consumer Fraud Act.
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