Summary of Home Improvement Consumer Protection Act (HICPA)
Act 132 of 2008; Act of October 17, 2008- SB 100, PN 2484 - effective July 1, 2009
A. § 2 - Definitions – highlights
• Covers repair, replacement, demolition, construction, painting, HVAC, etc.
• Protects only private residences
• Protects only primary residence, if owner has three or more residences
• Protects only owner or those authorized to act on owner’s behalf
• Total cash price must be more than $500
• New home construction not covered
B. § 3 - Contractor Registration with Bureau of Consumer Protection
• Registration required before doing any work or holding out as “contractor”
• Public access to registration information – toll-free number
• No HICPA licenses can be granted to licensees under the Secondary Mortgage Loan Act, 7 P.S. §6601 et seq., or the Mortgage Banker/Brokers and Consumer Equity Protection Act, 63 P.S. §456.101 et seq.
C. § 4 - Registration information
Contractors must provide the following information to the Bureau of Consumer Protection:
• Name(s), address, driver’s license #, federal employer ID #, SSN
• Prior relevant criminal offenses (fraud, etc.)
• Prior bankruptcies – last 10 years
• Civil judgments related to home improvement (H/I) transaction
• Proof of liability insurance – personal injury ($50k), property damage ($5k)
D. § 7(a) - Home Improvement Contracts – not valid/enforceable, unless...
• Written, legible, signed by all parties
• ID info on all contractors, subcontractors
• Contains the entire agreement
• Description of work, materials, specs
• No changes without written change order
• Sales price, down payments
• Contractor agreement to maintain liability insurance
• Toll-free number to Bureau of Consumer Protection
• Notice of right of rescission w/o penalty w/in 3 business days of signing
• Copy of completed contract to owner at time of execution
E. § 7(e) - Voidable clauses – voidable by the owner
• Hold-harmless clause
• Waiver of any local/state/federal safety or building code requirement
• Confession of judgment clause
• Waiver of right to jury trial
• Assignment of wages
• Agreement not to assert any claim or defense
• Grant of attorney fees or costs to contractor
• Release of liability for collections of payments, repossession
• Waiver of rights under HICPA
• Automatic/recurring renewal provision (w/exceptions)
F. § 7(f) - Home improvement retailer contracts (HIRC)
• Covers retailers (undefined) with >$50M net worth who do not perform home improvements
• H/I retailer shall comply with HICPA contract requirements (sec. 7 of SB 100)
• HIRCs not valid or enforceable, unless in writing with all of following:
▫ name, address, phone of retailer
▫ information about person signing for retailer
▫ complies with most provisions in (D), above
G. § 7(g) - Contractor right of equitable recovery
• Nothing in HICPA precludes contractor from recovery of payment
• For work performed
• Based on reasonable value of services requested by the owner, if
• Contractor has complied with (D), above, and
• Court determines it would be “inequitable” to deny such recovery
H. § 7(e) - Arbitration clause
• Nothing in this act shall preclude a court from setting aside an arbitration clause on any basis permitted under Pennsylvania law.”
• If the contract contains an arbitration clause, it shall meet the following requirements or be deemed void upon motion of either party
▫ text of clause must be in capital letters
▫ 12 pt. bold-face type
▫ on separate page from rest of contract
▫ separate line for each party to show assent to be bound
▫ not effective unless both parties sign and date
▫ shall clearly state whether decision is binding or appealable to court
▫ shall state whether facts/documents/decision are confidential
• This provision might well be pre-empted by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. See e.g., Gay v. CreditInform, 511 F.3d 369 (3d Cir. 2007).
I. § 8(a) - Home Improvement Fraud is a crime
A person commits “home improvement fraud” if with the intent to defraud, or, injure anyone, or with the knowledge that he is facilitating fraud or injury by anyone, the actor:
• Makes a false/misleading statement to encourage a person to enter into a H/I contract, or to justify an increase in a previously agreed upon price; or
• Receives an advance payment and fails to perform the contract when specified, and fails to return the payment. Exception: force majeure, labor strike, etc.; or
• Misrepresents or conceals identifying contractor ID information – while soliciting a person to enter into an agreement; or
• Damages property to induce a person to enter into a contract; or
• Falsely represents a government affiliation to induce entry into a contract; or
• Misrepresents an item as a special order; or
• Alters a H/I contract or payment agreement without the consumer’s consent; or
• Publishes a false or deceptive advertisement, in violation of relevant state law about advts.
J. § 8(b), (c), (d) - Prosecution of Home Improvement Fraud
• Grading – M-1 or felony, depending on $, age of victim, priors etc.
• Penalties may include revocation/suspension of H/I contractor certificate
• DAs have authority to investigate and start prosecutions
• State Atty. Genl. can investigate/prosecute multi-county violators
K. § 9 - Prohibited Acts
No person shall:
• Fail to register, as required
• Fail to refund money w/in 10 days of request for refund, if all the following apply
▫ no substantial work has been performed at time of request
▫ more than 45 days have elapsed since starting date in contract
• Accept a certificate of completion or the like, knowing that it is false or work isn’t complete
• Knowingly use a false proof of performance in order to make/accept an assignment, or get/grant credit or loan or right to receive payment under an H/I contract
• Abandon or fail to perform a H/I contract, without justification (e.g., nonpayment)
• Materially deviate from plans/specs, without signed/dated change order, with prices
• Be involved in financing, knowing that the H/I contract states higher than actual price
• Advertise or offer to perform a H/I contract if the person does not intend to accept or perform the contract at the advertised price
• Demand or received any payment before the contract is signed
• Receive a deposit of more than 1/3 of the contract price (contracts of more than $1,000)
• For a salesman to fail to account for/remit a payment to a contractor whom s/he represents
• Change liability or identifying information, after the contract is entered into, in a fraudulent or deceptive manner likely to cause confusion or misunderstanding, without advising the owner in writing within 10 days of any such change.
L. § 10 – Unfair Trade Practices & Consumer Protection Law (UTPCPL)
• A violation of any provisions of HICPA shall be deemed a violation of the UTPCPL.
• Nothing in HICPA shall preclude an owner from exercising a right under the UTPCPL.
M. § 11 – Regulations
The Bureau of Consumer Protection may adopt rules and regulations to carry out HICPA.
N. § 12 – Pre-emption of local registration
• Registration – registration under HICPA precludes other fees/licensing/registration
• Building permits – Local govt. can require building permits and reasonable permit fee
• Local govt. responsibilities remain under Pa. Construction Code and Worker’s Comp. Law
• No effect on trade licensing standards (plumber, electrician, etc.)
• No effect on local regs. for liability insurance adopted before 01-06 and in effect on 07-09
O. § 13 – Exemptions - HICPA does not apply to local, state or federal government
P. § 14 – Repeal - All inconsistent acts are repealed.
prepared by:
Donald Marritz, staff attorney
Regional Housing Legal Services
October 31, 2008