A failed home improvement contractor project can be an aggravating experience for both consumer and contractor clients and present a range of legal issues for attorneys.
This article analyzes the legal implications of several recurring complaints arising out of home improvement contracts, including poor contractor workmanship, warranty issues, and contractor theft.
Poor Workmanship
The most frequent problem from home improvement projects are claims of poor workmanship.
Many home improvement contracts will extend a workmanship warranty for a limited period of time. Disputes between a contractor and customer over whether there is defective workmanship may give rise to a breach of contract claim.
More serious, however, are those situations where a home improvement contractor refuses to perform warranty repairs and simply stops communicating with a customer.
Under the Wisconsin Administrative Code, a contractor is not permitted to offer a warranty that the contractor does not intend to honor.1
An aggrieved customer may seek relief with a claim under Wis. Stat. section 100.20 for a violation of the Code.
Work in Advance of a House Sale
More complicated scenarios can arise when home improvement work is performed in anticipation of a house sale.
The home improvement contract in this situation is typically between the contractor and the seller of the house. Even though the agreement may contain a warranty, the contractor may later disclaim the warranty after the sale because the buyer of the property was not a party to the warranty. If the warranty states that it is non-transferable, the contractor may not be obligated to fulfill the warranty.
On the other hand, if the contractor undertakes some repairs for the new owner as if the warranty is in force or if the warranty is silent on whether it is transferable, the buyer may hold a legal advantage.
In this scenario, the code imposes a strict obligation upon a contractor that its warranty be clear. In no uncertain terms, the code states that the warranty
shall be clear and specific and shall clearly specify all of the following: (a) Any warranty conditions or exclusions; (b) Any limitations on the scope or duration of the warranty; (c) The time period within which the seller will perform the seller's warranty obligations after the buyer makes a valid warranty claim.2
If a warranty is silent as to whether it is transferable, the contractor may be in violation of the code for not specifying a limitation on the scope of the warranty.
A claim under section 100.20 may result if the contractor refuses to honor a house purchaser’s warranty claim.
Kevin Trost, U.W. 1998, is the founding member of
Trost, LLC Madison where he focuses on litigating and resolving disputes regarding real estate, construction, and contractual matters.
Contractor Fraud
Occasionally, a home improvement contractor may take deposit funds but never perform the contracted work. The contractor may subsequently refuse to return the deposit or stop responding to the customer’s request for repayment. Such behavior can give rise to both civil liability and criminal penalties.
Wis. Admin. Code § ATCP 110.07 details a home improvement customer’s rights to cancellation of the contract. Subsection (3) outlines the steps for a customer to formally demand the return of funds given to the home improvement contractor.
Upon being presented with a properly submitted written demand, the home improvement contractor has 15 calendar days to return unexpended payments and unused materials.3
Violations of this administrative code provision are civilly enforceable through a claim under section 100.20, which includes a fee-shifting provision for successful claims.
Additionally, the Department of Agriculture, Trade and Consumer Protection (DATCP) may open its own investigation into contractors suspected of violating the Code.
In egregious cases, most frequently seen where there is a pattern of repeated misconduct, a local district attorney may pursue criminal charges of theft by contractor against the home improvement contractor.
Civil claims of theft by contractor are also a remedy for defrauded customers.4 In addition to allowing customers to recover compensatory damages, a theft by contractor claim allows the finder of fact to award exemplary damages to discourage future misconduct.
Tips to Avoid Disputes
Fortunately, many of the legal disputes that can result from home improvement projects can be avoided with careful research and detailed contracts.
Contractors’ agreements should plainly discuss the subjects the code requires to be addressed in home improvement contracts, including an explanation of any limitations on a warranty.
Customers can research potential contractors prior to hiring them, carefully review all of the terms of a proposed contract, and be particularly leery of signing a contract whose terms are indefinite or vague.
With such advance preparation, customers and contractors can potentially avoid extended litigation over home improvement projects.
This article was originally published on the State Bar of Wisconsin’s
Solo/Small Firm & General Practice Blog of the Solo/Small Firm & General Practice Section. Visit the State Bar
sections or the
Solo/Small Firm & General Practice Section web pages to learn more about the benefits of section membership.
Endnotes
1Wis. Admin. Code § ATCP 110.04(3).
2Wis. Admin. Code § ATCP 110.04(2).
3See Wis. Admin. Code § ATCP 110.07(4).
4See WIS JI-CIVIL 2722.
