Connecticut Contractors beware, that cartoon was reality for one of your peers, and cost him a ton of money. A recent Connecticut Supreme Court decision (meaning it’s the law of the state) took away a contractor’s $214,039 court judgment it had won for services it had performed for a homeowner. You can read the decision here. We’ve blogged about home improvement contractor laws here and here.
Bottom line is you must ignore the voices in your head that tell you “you don’t need a written agreement” or “none of my contractor friends use agreements.” If you don’t use an agreement that complies with Connecticut’s Home Improvement Act, you could lose a lot, and I mean a lot, of money, unless you can prove the homeowner engaged in bad faith, even if the homeowner was completely happy with the work you did. And “bad faith” here is very narrow – it means the homeowner knew from the beginning that they could have you do the work and not pay you because your contract violated the law; like an escape hatch. That is a very difficult burden to overcome. The law exists to protect the homeowners, not the contractor. But if you comply with the law you have a much better chance of winning a lawsuit. You can read about the laws here on the Department of Consumer website. Contractors should read the Department of Consumer Protections guide, which you can download here, for more information.
In this recent case, the contractor had agreed to perform extensive demolition and construction at the consumer’s weekend residence in Salisbury. But the agreement didn’t comply with Connecticut’s Home Improvement Act, because the consumer didn’t sign it, it didn’t have a completion date and the consumer never received a completed copy. Though the original cost of the project was going to be around $400,000, the cost increased to over 1 million dollars, primarily because of substantial additional work the consumer requested.
For almost one year, this project was the only project the contractor worked on, and he was paid about $985,000, but believed he was still owed $214,039 for work performed. After the consumer fired him, the contractor recorded a mechanics lien, and sued to foreclose the lien and recover the money he claimed he was owed. Though the contractor won at trial, he ultimately lost on appeal, bigtime.
LESSONS LEARNED: The take aways for contractors. Use a contract that really complies with the law. It’s not expensive and not difficult to have one prepared. When the homeowner makes changes – get the homeowner to sign a written change order. PERIOD. And keep good records of the work you performed and the materials you purchased. If you don’t follow the law, and following the law would have avoided a dispute about the cost of the change-ordered work, you may never see another dime.