Thursday, June 22, 2017

CT Home Improvement Act Violations Allows Homeowner to Withhold Payment to Contractor

CT Supreme Court Holds Home Improvement Act Violations Relieve Homeowner of Payment Obligations Even if Work Was Performed.

Home Improvement Acts (HIA) have proliferated across the country. The purpose of these acts is to protect homeowners from unscrupulous contractors taking advantage, taking money, and doing no work or terrible work. In some states, such as New Jersey, HIA violations can result in treble damages, attorneys fees, and forfeiture of the right to payment. While the HIAs are strict and written to heavily favor and protect homeowners, many interpretations by the Courts have softened the blow for contractors.

A recent case in Connecticut did not follow that trend. The case of Burns v. Adler, 325 Conn. 14, 155 A.3d 1223 (2017) related to a contractor's action against a homeowner (HO), arising from home improvement services on a residential renovation project. The contractor sued the homeowner for a balance due for work performed on the home, including an action for foreclosure on a Connecticut Mechanic's lien. The contractor further alleged that the homeowner acted in bad faith in not paying the amounts due and owing.

In response, the homeowner claimed that the enactment of the Home Improvement Act, Conn. Gen. Stat. § 20-429 (Rev. to 2007), specifically removed a rule previously created by the courts that allowed judges and juries to consider whether a HO acted in bad faith.

The Court held that Judgment for the HO was warranted dismissing the contractor's breach of contract claim and request for judgment of strict foreclosure on a mechanic's lien.  The court held that the parties' contract did not comply with the Act and the bad faith exception was inapplicable in the circumstances (notably the court did not get rid of the bad faith exception, but rather held that it did not apply to the facts presented to it).

In holding that the HO was not required to pay the contract, the court relied mainly on the CT HIA. The court found that the contract did not satisfy § 20-429(a) or (f) because it was not signed by the contractor, did not contain a completion date, and there was no proof that a completed copy was delivered to the HO.

The message from CT is clear: if you are a contractor, ensure you comply with the HIA, or the homeowner has the right to withhold payment, even if you completed your work in a satisfactory manner. To make sure you are in compliance, contractors should visit the Connecticut Department of Consumer Protection webpage that provides Information for Home Improvement Contractors.


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