Indiana's Home Improvement Contract Act
At Slotegraaf Niehoff, P.C., we have represented home improvement contractors as well as home improvement customers in litigation. Though complaints about the quality of the contractor’s services may be the source of the initial dispute, questions about the contractor’s compliance with Indiana’s Home Improvement Contract Act (“HICA”) often arise.
HICA requires that certain information be included in agreements for home improvement work done for consumers, or else the contract could be a deceptive act, and therefore, void. If a contract is declared void, the contractor can still recover the reasonable value of the work performed for the consumer, but contract provisions benefitting or protecting the contractor – such as attorney fee provisions, management fees, arbitration, mediation, venue, or “opportunity to cure” requirements – will not be enforceable. Interpreted strictly, a minor HICA defect can result in significant financial consequences for a contractor, and can create leverage for an aggrieved consumer.
Given these potential penalties for non-compliance, contractors are well advised to understand and comply with HICA’s requirements. Pursuant to HICA, when an agreement for home improvement services involves more than $150, it must be in writing and must include, among other things:
The name and address of the property being improved;
the name and address of the contractor and a phone number to which complaints can be addressed;
the date the contract was provided to the consumer and any limitation on when the consumer can accept the contract;
a “reasonably detailed” description of the improvements;
if the description does not include specifications, a statement that specifications will be provided before work begins and will be subject to the consumer’s written approval of the specifications;
The approximate starting and finishing time of the work;
A statement of contingencies that would materially change the completion date;
the price of the improvements; and
Signature lines for contractor and consumer with legibly printed names of both below or next to signature line.
Violation of HICA is considered a “deceptive act” under Indiana Deceptive Consumer Sales statute. The Attorney General is empowered impose a variety of sanctions on contractors who violate HICA, but HICA can also, as noted above, be raised as an issue in private civil actions. The Indiana Deceptive Consumer Sales statute states that courts “may” declare HICA non-compliant agreements to be void.
By providing that courts “may” declare a HICA non-compliant contract void, the statute begs the question of when a contract should be declared void. Several Indiana cases decided since HICA was passed have addressed this question.
Paul v. Stone Artisans, Ltd., 20 N.E.3d 883, 886 (Ind. Ct. App. 2014) involved a claim to foreclose a mechanic’s lien filed after the customer failed to pay the contract amount, despite having no complaints about the work that was completed. Instead, the customer alleged that the contract violated HICA insofar as it failed to identify a start/stop date and did not include a printed or typed version of the customer’s name, and should therefore be void. The trial court held that the contract should be enforced despite its non-compliance with HICA, and the appellate court affirmed, noting that the customer “was not deceived here” and that HICA “aims to protect consumers from abuse, not to provide an escape from legitimate contractual obligations.” The trial court’s determination that the customer was responsible for the contractor’s attorney fees was also affirmed.
In First Response Servs., Inc. v. Cullers, 7 N.E.3d 1016, 1017 (Ind. Ct. App. 2014), the dispute was in regard to the scope and cost of the work. The customer failed to pay, and the contractor attempted to collect attorney fees pursuant to the terms of a “work authorization” signed by the homeowner. The work authorization failed to include the scope of work or its cost, violating HICA. The trial court refused to permit the recovery of attorney fees based on these HICA violations. The appellate court affirmed the trial court’s decision, noting that had the contract complied with HICA, the underlying dispute would likely not have arisen in the first place, the scope of work and cost thereof would have been set forth in writing.
In Warfield v. Dorey, 2016 WL 3058422, at *1 (Ind. Ct. App. May 31, 2016), the homeowner executed an agreement with contractor for roofing work. Later, the contractor offered to fix homeowner’s fireplace and homeowner orally agreed, but did not amend the contract to detail the work or price of so doing. The contracts asserted that the contractor had the proper license to do the work, an assertion that was false at the time it was made, though the contractor did eventually obtain the required licenses. The homeowner had no issue with the quality of the work, so the trial court used its discretion to enforce the contract despite the HICA violations. The Appeals Court, however, reversed, emphasizing the contractor’s false statements about its license and stating that “the violation before us is precisely one of the well-known abuses found in the home improvement industry which the HICA intended to protect the consumer against.” Based on the Appeals Court’s ruling, the Contractor could recover the value of his work under quantum meruit, but was denied attorney fees.
In Imperial Ins. Restoration & Remodeling, Inc. v. Costello, 965 N.E.2d 723, 726 (Ind. Ct. App. 2012), is similar to Dorey in that the customer executed a “work authorization” that the contractor asserted was the contract. The “work authorization” violated HICA because it did not include the cost of the work or the scope of the project. The customer had no issues with the quality of the work and even signed a “certificate of satisfaction”, but failed to pay for any portion of the work completed by the contractor – including interest and attorney fees as provided in the “work authorization.” The trial court held that the contract could not be enforced (no attorney fees or interest on unpaid amounts) due to HICA violations, but the appellate court reversed and remanded the matter back to the trial court to determine the amount of interest and attorney fees due.
Whether you are a contractor trying to comply with HICA or a consumer trying to hold a contractor accountable for not complying with the law, your attorney should understand the implications not only of the HICA statute, but of the appellate courts’ application of the statute. As the various cases cited above demonstrate, the trial court’s determination of whether a HICA defect is substantial enough to void the contract can dramatically change the outcome of a dispute, and that determination can rest on subtle differences in the facts presented.