Home Repair and Remodeling Act: What You Need to Know
In August 2018, the Illinois General Assembly enacted an amendment to the Home Repair and Remodeling Act (HRRA). These changes, which will go into effect on the first of January 2019, will impact homeowners, real estate investors, and contractors alike, so we decided to dive into this statute and offer our readers a quick “need to know” guide.
What is the HRRA All About?
Home repair is an industry based on trust. Often, homeowners do not have an advanced knowledge of repairs, remodeling, or contracts, so they have to rely on the contractors they hire to be trustworthy, honest, and fair. To help avoid the risk of exploitation, the State of Illinois created a law providing guidelines for contractors to protect homeowners’ rights.
The Home Repair and Remodeling Act (HRRA) was first enacted in 2000 to promote fair business practices in the construction, remodeling, and home repair industry. It applies to all kind of home repair, from kitchen remodels, to plumbing, to full rehabs. However, the HRRA only applies to residential home repair and remodeling work (and only to jobs in excess of $500). Under the law, “residential” property is defined as a single family home or multiple-family home or condo consisting of six or fewer dwelling units. The law applies whether the owner is an individual, partnership, or LLC. It does not cover things like carpet cleaning or the maintenance, repair, or installation of appliances.
Contractors: Know Your Requirements and Responsibilities
If you are a contractor who performs any of the above residential work, HRRA applies to you. If you aren’t familiar yet with your requirements and responsibilities under this law, reach out to us at Enterprise Esquire. In general, HRRA requires contractors to:
Use a written contract for all residential repair work in excess of $1,000
This contract should include:
A description of the work you will perform,
The total cost of the project,
How and when you should be paid,
Start and completion dates for the work
A clause allowing the customer to terminate the contract within three business days of signing,
Your business name and address (This should be a physical address. If your business uses a P.O. Box, also provide your home address).
Provide this contract to the customer for signature before the work begins
Maintain public damage and general liability insurance for the duration of the project
Advise the customer of any clauses in the contract that:
Require contract disputes to be submitted to arbitration, or
Waive the customer’s right to a jury trial.
Provide customer with a “Home Repair: Know Your Consumer Rights” pamphlet
Provide customer with a Sworn Statement, when requested
Consumers: Know Your Rights
One of the ways that HRRA attempts to draw attention to the possibility of exploitation within the residential repair industry is to require contractors to provide customers with a copy of a pamphlet called “Home Repair: Know Your Consumer Rights.” The language that should be included in this pamphlet is written in HRRA, and it was the subject of this summer’s amendment. The amendment added a section to the pamphlet explaining how the Mechanics Lien Act may impact consumers.
Mechanics Liens and Consumers
Under the Mechanics Lien Act, it is possible for a contractor’s suppliers and subcontractors to file a lien against your home if they are not paid for their labor or materials. Of course, if you relied on your contractor to pay these workers, you may not even know who the subcontractors or suppliers are, let alone whether they have been paid. This is why it is so important for homeowners and consumers to know their rights:
Consumers should request (and contractors must provide) a signed statement (called a “Sworn Statement” that lists all people and companies hired to work in their home before paying the contractor
The Sworn Statement should include all subcontractor and supplier’s addresses, amounts to the paid to each, and the total amount owed after all subcontractors and suppliers are paid
As outlined above, for residential home repair and remodel work in excess of $1,000, contractors are required to use a written contract. Before agreeing to any work in your home, ensure that you have carefully reviewed the contract and that you are clear on
What work is to be performed
By whom (including contact information)
At what cost
Over what time period (both start and end dates)
If you have not been provided a “Home Repair: Know Your Consumer Rights” pamphlet, request one and review it carefully
If you are concerned about a contract provided to you by a contractor, or if you are not sure about your rights under HRRA, contact the experienced real estate legal team at Enterprise Esquire. We are happy to review contracts and ensure your rights are protected.
Hire an Experienced Real Estate and Contracts Attorney
When it comes to home repairs, both contractors and homeowners need to be cautious. Understanding your rights and responsibilities under Illinois state law is only the first step. A well-drafted, clear contract is also essential. Contractors, working with an attorney is a great way to ensure you have a contract to present to customers that is clear, compliant with HRRA, and enforceable should any disputes arise. Consumers, protect yourselves! At Enterprise Esquire, we provide affordable and efficient legal services to help you know your rights and prevent costly litigation in the future.
To learn more about Enterprise Esquire and our real estate and contracts services, click here to schedule a free 15-minute consultation.