Illinois Home Repair and Remodeling Act - the Statute
When researching the law, any good lawyer will tell you to always "read the statute." That is wise advise in the realm of construction law, and certainly applies to the Home Repair and Remodeling Act (HRRA) (don't even get me started on the Illinois Mechanics Lien Act, we'll get to that in future posts). So before we get into the various recent court interpretations, let's look at the HRRA itself - 815 ILCS 513/1 et. seq.
What's the Point? Section 5.
The HRRA was intended to "increase consumer confidence, reduce the likelihood of disputes, and promote fair and honest practices" by improving communications and fostering accurate representations between home repair and remodeling contractors and consumers. Insert sarcastic comment here. Seriously, I think it is fair to say that the HRRA is not living up to these aspirations due to the varied appellate court interpretations, but hopefully the Illinois Supreme Court will help clear that up in 2010.
Who Must Comply? Section 10.
Anyone "engaged in the business of home repair and remodeling." Home repair and remodeling is defined broadly and the statute provides a list of examples of qualifying work. Some examples are not intuitive. For example, besides work on the house itself, garages, driveways, swimming pools and even fences are included. Fallout shelters are also specifically included (I'm still waiting to see the first case where fallout shelter repairs are the basis for a dispute). The HRRA also notes some specific exclusions. Maintenance, service, or repairs under $500 are not included. Nor are carpet installations or repairs, installation or repair of any appliance when installed by the merchant (for example, if Sears includes installation with your purchase). Landscaping is also excluded, though not defined. The HRRA also defines "residence" such that multi-family dwellings containing six or fewer units (apartments, condominiums, town houses, etc.) are included.
What Must a Qualifying Contractor Do? Sections 15, 15.1, 20, and 25
- For work of $1,000 or more, the contractor must "furnish to the customer for signature a written contract or work order that states the total cost, including parts and materials listed with reasonable particularity and any charge for an estimate." The contract/work order also must include the name and street address of the person doing the work (a P.O. Box will not suffice).
- If the contract contains a mandatory arbitration or waiver of trial by jury clause, the contractor must have the consumer sign his or her name and write "accept" or "reject" in the margin next to each of these clauses, or such a clause will not be enforceable.
- The contractor must give the consumer a pamphlet entitled "Home Repair: Know Your Consumer Rights" available from the Illinois Attorney General's office. The pamphlet contains two copies of an acknowledgement form. If the work is for $1,000 or more, the contractor is required to retain one copy of this form.
- Unless the contractor has a net worth of $1,000,000 or more based on its most recent financial statement, prepared within the last 13 months, the contractor is required to carry minimum insurance and maintain it in full force and effect during the operation of the business, as follows: business public liability and property damage insurance - $100,000 per person and $300,000 per occurrence of bodily injury, and $50,000 per occurrence for property damage; $10,000 per occurrence for home repair and remodeling not in conformance with applicable State, county, or municipal codes.
What if You Don't Comply? Sections 30 and 35
The HRRA says that performing home repairs and remodeling work for $1,000 or more before obtaining a signed contract, before providing the consumer rights pamphlet and obtaining the signed acknowledgement form, and before notifying the consumer and getting a signed acceptance or rejection of any arbitration or jury trial waiver clause is "unlawful." The use of the word "unlawful" without elaboration is essentially the cause of the confusion in Illinois courts. The HRRA says that the Illinois Attorney General or a State's Attorney can sue anyone violating the HRRA "to restrain and prevent any pattern or practice violation." The law also says that any violation of the HRRA shall be a violation of the Consumer Fraud and Deceptive Business Practices Act (CFDPA). The CFDPA contains a private cause of action, which exposes contractors violating the HRRA to litigation by consumers (homeowners).
What's the Issue? The issue is what effect, if any, a contractor's noncompliance with the HRRA, has on the contractor's right to be paid for its work. If there is a contract, whether oral or written, is the contract still valid? Can the contractor still file a mechanics lien to enforce its contractual right to be paid for its work? What about equity - even if there's no contract, isn't the contractor still entitled to be paid for its work as a matter of fairness (quantum meruit theory, in legal-speak)? Can the homeowner use the HRRA as a "shield" against a lawsuit by the contractor seeking to be paid for its work? These questions have been the basis for most of the disagreement between the Illinois Appellate Districts, and thus will form the basis for my upcoming posts on the HRRA.