- The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller;
- The contractor’s Division of Consumer Affairs registration number and the DCA’s toll free telephone number must be prominently displayed on the first page of the contract;
- A copy of the Certificate of Commercial General Liability Insurance required of a contractor under the Act and the telephone number of the insurance company issuing the Certificate;
- A description of the work to be done and the principal products and materials to be used or installed in performance of the contract;
- The total price, including all finance charges and, where applicable, the hourly rate for labor;
- The start date and completion date;
- A description of any mortgage or security interest to be taken in connection with the financing or sale of the home improvement;
- A statement of any guarantee or warranty with respect to any products, materials, labor or services made by the contractor; and
- A precise and conspicuous notice of cancellation provision informing the customer of his or her right to cancel the contract by the end of the third business day after having received a copy of the contract.
In a recent unpublished decision under New Jersey’s Consumer Fraud Act, the Appellate Division in D. Wyatt Stone and Stone Foundation, LLC v. Kahr Properties, LLC, December 2008 App. Div. 09-2-2471), decided the appeal of a judgment in the Plaintiff’s favor for damages, attorneys’ fees and costs arising from a home improvement project. The Plaintiff was a limited liability company engaged in the business of buying, renovating and reselling residential properties. The Defendant was a family-owned company whom the Plaintiff contracted with to renovate a residential property. The project met with delays, shoddy workmanship and overcharges, which prompted suit by the Plaintiff under the Consumer Fraud Act. The Defendant appealed the judgment in Plaintiff’s favor by arguing that the Consumer Fraud Act was not intended to apply to a corporate entity such as the Plaintiff that is engaged in the business of buying, renovating and reselling residential properties. The Appellate Division disagreed, finding that the Consumer Fraud Act applied to the transaction between the parties, based upon testimony from the Defendants that established they were involved in the sale or advertisement of home improvement services, either directly or indirectly to the public, and finding that the Act was meant to protect both business entities like the Plaintiff as well as individual consumers.
The Appellate Division recently denied a landscaping contractor’s suit to collect amounts due for extra work in addition to that called for in his contract for complete landscaping of the defendants’ home. Online Contracting, Inc. v. Tripucka, No. A-2622-06 (App. Div., December 6, 2007). The defendants counterclaimed for treble damages and attorneys’ fees under the Consumer Fraud Act (N.J.S.A. 56:8-1 to 116). The court concluded that the contractor’s failure to secure a written agreement for extras totaling $32,994 violated N.J.A.C. 13:45A-16.2(a)(12), which requires all home improvement contracts exceeding $500 to be memorialized by a writing signed by the parties, specifying the work to be performed and the materials to be used, and identifying the start and end date.
The contractor argued that the following language, included within the underlying agreement for landscaping purposes, authorized verbal change orders:
Any alteration or deviation from the description of the work listed above will be executed upon a written change order issued by the contractor and signed by the owner. The change order, whether it be verbal or in writing, will become an extra and will be billed to the owner at the daily rate provided in the [attached] equipment and labor price list.
Because the work was performed pursuant to the equipment and materials price list attached to the underlying contract, the contractor maintained that the contract clause did not violate the Consumer Fraud Act. Further, argued the contractor, the defendants should be estopped by their own conduct in verbally requesting the extras (a putting green and associated structures).
The court disagreed. Citing Scibek v. Longette, 339 N.J. Super. 72 (App. Div. 2001), an auto repair case, it pointed out that since the defendants had not induced the contractor to proceed with the extras without a writing, estoppel did not apply. “Defendants’ verbal directions to [plaintiff] to get the extras ‘done’ cannot be fairly characterized as ‘the intentional relinquishment of a known right,’ or a clear unequivocal ‘act from which an intention to relinquish’ a right can be drawn.” Online Contracting, Inc., supra, No. A-2622-06 at 4, citing Scibek, supra, 339 N.J. Super. at 82. In the absence of the required written agreement for the extras, the defendants could not be said to have intentionally relinquished their right to a written contract by a clear, unequivocal and decisive act.
The court added that the contractor could have preserved its right to collect for the extras simply by providing a written estimate and securing the defendants’ written authorizations. Accordingly, it affirmed the trial court’s grant of attorneys’ fees in accordance with the Consumer Fraud Act ( N.J.S.A. 56:8-19).
Home improvements can cause homeowners as many, and sometimes more, headaches as building a new home. Until recently, home improvement contractors were essentially unregulated, which led to many unskilled and sometimes dishonest contractors preying upon innocent homeowners. In response, the New Jersey Department of Community Affairs (“DCA”) required home improvement contractors to register with the State as of December 31, 2005. N.J.A.C. 13:45A-17.1, et seq. The registration includes the registration of the formal name and address of the company, including all trade names, as well as the disclosure of the name and address of the principals of the company and any criminal record of any of those principals.
The DCA also recently created regulations that were specific to home improvement contracts under the New Jersey Consumer Fraud Act. The regulations take into account almost any type of home improvement, from remodeling the kitchen to repairing the driveway to installing wall-to-wall carpeting. Specific actions are prohibited by the regulations including misrepresenting the types of material used in the home improvement, failing to begin or complete work on the date or within the time period specified, failing to give timely written notice to the buyer of reasons beyond the seller’s control for any delay in performance, and when the work will begin or be completed and failing to obtain the proper building permits or inspections.
Also, any home improvement contract for a purchase price in excess of $500.00 must be in writing, must be signed by both the buyer and seller and must clearly set forth the terms of the contract. The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller must also be included in the contract. The contract must also include a description of the work to be done and the principal products and materials to be used or installed in performance of the contract, the total price to be paid by the buyer, the dates or time period on or within which the work is to begin and be completed and a statement of any guarantee or warranty to be provided. Violations of these regulations could result in the award of triple damages and reimbursement of counsel fees, if those violations result in damage to the homeowner.
Therefore, in addition to obtaining several bids for the work, asking for and following up with references, it may also be beneficial to homeowners who are thinking about making improvements to their home to obtain the registration information from the DCA and to make sure that the regulations provided by the DCA are followed to protect themselves from future problems.
Having construction work or renovations done on your home is certainly an exciting, but undoubtedly stressful time. In fact, the process from selecting a suitable (and experienced) contractor to completion of the project can be downright daunting at times. As a homeowner myself, who coincidentally is going through this very process as we speak, I know the difficulties of sifting through countless potential contractors, negotiating prices, and coordinating schedules and the like. As daunting as it may seem, there are certain steps a homeowner can take at the outset that will mitigate potential pitfalls during construction, ensure your project is constructed properly, mitigate construction disputes, and alleviate unnecessary stress.
The New Jersey Supreme Court announced a sweeping expansion of the NJ Consumer Fraud Act, N.J.S.A. 56:8-2 (“CFA”), to include work done by contractors performing interior work on new construction. In Czar Inc. Heath, A-114-07, decided 3/13/09, the Supreme Court ruled 6-1 that new homeowners who act as their own general contractors for interior finish work have a right to assert claims under the CFA against the Czar, Inc (“Czar”), the subcontractor responsible for doing installation of kitchen cabinets, doors, chair railing and other interior finishes.
The owners of the home were unhappy with the subcontractor’s work and withheld $80,000 from the bill. When they were sued by the subcontractor, the owners counterclaimed based on, among other things, violations of the CFA. Czar moved to dismiss the CFA claim arguing that HOW and its implementing regulations specifically exclude application of the CFA because this case involved “construction of a new residence” . The trial court agreed and dismissed the CFA claim.
The Appellate Division reversed the trial court holding that the exemption for construction of a new residence in the home improvement regulations under HOW did not apply to the work of the subcontractor. The Appellate Division panel reviewed the Contractor’s Registration Act (“CRA”) and noted that it regulates contractors who are involved in the home improvement business. The CRA exempts from its reach any person who is required to register under the New Home Warranty and Builder’s Registration Act (“HOW”) and who were already subject to a registration requirement. The Appellate Division reconciled the regulatory schemes set forth in the CRA and HOW, noting that HOW created a warranty program and an election of remedies by the homeowner. By contrast, instead of requiring warranties, CRA requires insurance and disclosures and, through its implementing regulations, defines unlawful practices which are punishable under the CFA.
The Court noted that Czar had not registered as a new home builder under HOW and had not provided the required warranties. The Court refused to allow Czar to simultaneously escape the requirements for the warranty under HOW while also escaping from the registration requirements of the CRA and the remedies afforded to consumers protected by the CRA. Essentially, the Court declined to allow Czar to have its cake and eat it too. Since Czar did not register as a builder of new homes under HOW, the Court rejected its argument that it was involved in building new homes. Czar therefore did not fall within the ambit of HOW, was not entitled to the safe harbor of the exclusion for new home builders and was subject to the CFA.
After a condominium association president declined a contractor’s request to execute a written change order and directed the contractor to proceed with the additional work, the association was barred from seeking relief under the Consumer Fraud Act (“CFA”) (N.J.S.A. 56:8-1 to -167) provisions requiring that all modifications to contracts for home improvements be in writing. B & H Securities, Inc., v. CKC Condominium Ass’n, Inc., 2008 WL 508082 (App. Div., February 27, 2008).
Defendant Association hired Plaintiff contractor to complete installation of a fire alarm system in its building that had been begun, but not completed, by a prior contractor. After Plaintiff inspected the premises, its engineer, Charles Hamburger, briefly inspected a portion of the building and estimated the time and expense necessary to complete the project. The parties entered into a time-and-materials contract for completion of the fire alarm system , which was necessary for the building to pass a municipal fire inspection.
Upon beginning its work, Plaintiff discovered that the existing installation was the wrong size and violated applicable building and fire protection codes. Accordingly, Hamburger informed the Association’s president, Robert Lyon, of the existing substandard work, informed him that additional time and materials would be necessary to make the system compliant, and suggested that the parties prepare and execute a change order. Defendant’s president declined, protesting insufficient time and the pressure to complete the installation. Plaintiff then completed the work, including making the existing portions code compliant.
Defendant paid only a portion of Plaintiff’s invoices, and Plaintiff sued to collect the balance due. The trial court found Hamburger’s testimony more credible than that of Lyons, and questioned whether a change order was even necessary when the contract clearly contemplated that Plaintiff was to complete the job to allow Defendant’s building to pass municipal inspections, and did not specify a date or time certain for completion nor set the cost. The judge found that Plaintiff had performed the contract by installing a system that satisfied the municipal inspectors and that Defendant had breached by failing to pay the full amount due.
The trial court rejected Defendant’s contention that Plaintiff had violated the CFA by failing to provide a written modification to the contract. He judge concluded that Defendant was equitably estopped from seeking sanctions under the CFA, based on Lyon’s response to Plaintiff’s request for a written change order.
The Appellate Division affirmed, holding that, even if a change order were required, Defendant was equitably estopped from asserting a CFA defense where its conduct led the Plaintiff to change its position to its detriment. In reaching its opinion, the appellate court relied on Joe D’Egidio Landscaping, Inc., v. Apicella, 337 N.J. Super. 252, 256-57 (App. Div. 2001), in which the court held that a homeowner who declined a written contract for driveway paving, based on his personal relationship with the contractor, was equitably estopped from invoking the CFA to render his agreement with the contractor unenforceable. “[O]ne who induces the alleged wrongdoing should not benefit as a result of it.” Id. at 257.
Rejecting the condominium association’s arguments, the appellate judges found no meaningful distinction between B & H Securities and Joe D’Egidio Landscaping.
Fall-out from Kara Homes’ bankruptcy is having a heavy impact on homeowners in its partially finished developments as well as the municipalities in which they are located, according to a February 26, 2007 report published by the Press of Atlantic City. Homeowners and municipalities are reporting adverse and unexpected expenditures to address a variety of health and safety problems related to unfinished landscaping and construction. According to the Press report, Kara abandoned developments in eighteen New Jersey municipalities.
In Hamilton Township, Kara left destroyed woodlands, unfinished homes, and mountains of trash at Glen Eyre. Township officials estimate that the cost just to clear garbage and construction debris, dumped on the site when trash disposal companies reclaimed their dumpsters, will exceed $25,000, rendering the clean-up subject to municipal bidding requirements. Hamilton is also adversely affected by lost tax revenue on the abandoned property. Meanwhile, owners of completed and closed homes find the enjoyment and value of their properties minimized by the ugly wasteland surrounding them.
Owners of units in The Landings, a Manahawkin condominium project that Kara abandoned, are paying monthly common expense assessments but receiving no services. Common elements such as roads and grounds are incomplete. Several units flooded when pipes froze and burst in adjacent, abandoned units. Delinquent property tax payments from Kara to Stafford Township, of which Manahawkin is a part, approximate half a million dollars. Like Hamilton Township, Stafford has had to address health and safety problems left by Kara, particularly, filling in or fencing excavations for the foundations of buildings that were never built.
In Little Egg Harbor, homeowners are attempting to cope with incomplete homes next door, improperly paved roadways, burst sprinkler systems and sewer back-ups.
Owners and municipalities anticipate improvement in some developments once they are conveyed in Kara’s planned auction. On February 27, 2007, various sources, including the Asbury Park Press, reported that six developments are currently being advertised by auctioneer Sheldon Good & Co.
The sale of these developments will likely not mark the end of problems for existing homeowners and municipalities. In those communities with common interest ownership, such as condominiums or homeowners’ associations, successor sponsor/developers will purchase both the uncompleted homes and units and their appurtenant interests in common elements or common property. The successor will then need to address not only physical completion of the site but also the details of the community’s registration under the Planned Real Estate Development Full Disclosure Act (“PREDFDA,” N.J.S.A. 45:15-16.27 et seq.) and the governing scheme of the condominium or homeowners’ association as set forth in its Master Deed or Declaration and the association’s by-laws. In light of Kara’s failure to develop the communities profitably during the current real estate downtown, anticipating material changes in the development would not be unreasonable as the successors attempt to salvage value from Kara’s cast-offs.
COVID-19 unquestionably changed the world in countless ways. One of the most significant is that it forced everyone online, from our youngest to our most elder. Those who resisted the lure of online shopping or social interactions pre-COVID were thrust into the jungle of the internet, likely forever captured by its convenience. However, modern-day conveniences are not without traps and pitfalls – enter the case of Wollen v. Gulf Stream Restoration & Cleaning, LLC, issued by the New Jersey Appellate Division on July 9, 2021.
Stucco is a product that has been in use as an exterior building cladding since the early 1800’s. It is made from Portland cement, sand and water. When installed correctly, stucco has been a reliable building material that looks good and allows incidental moisture infiltrating behind the stucco to be safely and efficiently evacuated from the building. Once stucco dries it is as hard as concrete.