There are many different laws that come into play when contractors and property owners enter into a contract for the performance of a project. The Wisconsin Home Improvement Practices Act (HIPA) is just one Wisconsin law that both contractors and homeowners need to be aware of when doing business together.
What does the Wisconsin Home Improvement Practices Act (HIPA) involve?
The Wisconsin Home Improvement Practices Act (HIPA) involves home improvement projects that are performed on residential, or non-commercial, buildings. Home improvements are considered the remodeling, repairing, painting, modernization, or additions of a property. It does not involve new constructions or major renovations.
This law, also referred to as ATCP 110, addresses many different items that occur when a contractor enters into contract with a homeowner for a home improvement. Some items found with ATCP 110 include contract requirements, failure to complete work and contract cancellations, unethical sales tactics, warranties, lien waivers, and more.
Are written contracts required?
Written contracts are not always required. According to the HIPA, written contracts are only needed under a few circumstances. A written contract is required when a contractor requires payment before work is finished. It is also needed when the contractor initiates a contract face-to-face and not in their place of business. Likewise, if a contractor initiates a contract over the phone, by mail, or through a flyer, a written contract is again needed. While a written contract is not required in some instances, it is always the best practice to have a contract.
Can a contract be cancelled?
According to the Federal Trade Commission (FTC), there is a 3-day “cooling off” period when a “sale” or contract is made. The buyer or homeowner can cancel the signed contract within 3 business days under certain circumstances. The contractor must provide a written notice of this 3-day cancellation period to the buyer or homeowner.
There are other ways that a contract may be cancelled. This can include if a contractor fails to provide the materials and labor by the deadline found within the contract and/or if the contractor fails to notify the buyer or homeowner of a delay. The delay, however, cannot be due to fault by the homeowner or natural disaster.
If there is a delay, the contract must give a timely notice to the homeowner with the reason and updated timetable. If the contract is in writing, then an updated/newly agreed element of the contract must be as well.
What if prepayments were made?
Some contracts may require prepayments for work and/or materials. If prepayments are made, the money that is given as the prepayments must be solely used on materials and labor needed for that specific job or project. A contractor cannot use these prepayments to fund old debts or start new projects with other people. If the contractor does not provide the materials or work on time, the homeowner may cancel their contract, demand a return of their prepayment, demand delivery of goods and material that is needed for the project, or demand an accounting of how their prepayment dollars were spent.
Are there sales tactics that cannot be used?
Under the Wisconsin Home Improvement Practices Act, a contractor cannot make false, deceptive, or misleading claims that encourage the homeowner to enter into contract with them. They also cannot make these claims to keep payments or to delay performance. There are many other sales tactics that contractors need to be aware of that are against HIPA. To learn more about the prohibited trade practices, read ATCP 110.02.
How are warranties kept track of?
Warranties are to be expressed through a written copy given to the homeowners. Even if the contractor gives a verbal warranty, it must be written down and the homeowner must be given a copy. Warranties from the contractor should be given to the homeowner at the time they enter into contract with each other.
How do lien waivers work?
Contractors are required to give notice of lien waivers to homeowners in a written statement. If the homeowner requests lien waivers, the contractor must provide the homeowner with the subcontractor and supplier lien waivers before the last payment is made or before a partial payment is made.
What are the damages that can be recovered?
Wisconsin law states that a person who files a claim under the Wisconsin Home Improvement Act may recover double damages, or twice the amount of the loss and attorney fees.
Experienced construction attorneys can guide you through all steps of a construction project
Experienced construction law attorneys can help guide you through all steps of a construction project to ensure adherence to state and federal statutes. It is important for contractors to follow all steps to prevent claims from arising. It is also important for homeowners to be aware of their rights when dealing with contractors. If you are in need of a construction attorney to draft or review your contracts, call McDonald & Kloth, LLC at 262-252-9122 or use our contact form.