As of January 22, 2017, Mr. Millar is no longer accepting new clients.

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MICHAEL MILLAR, ESQ.

Consumer Protection Lawyer

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Home Improvement Fraud

THE NEW JERSEY CONSUMER FRAUD ACT AND HOME IMPROVEMENT CONTRACTS

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Under the New Jersey Consumer Fraud Act (the "CFA"), a home improvement contractor commits an act of consumer fraud in any one of three ways: (1) affirmative misrepresentations, (2) knowing omissions, and (3) certain regulatory violations. Since Hurricane Sandy, we have seen contractors who have committed one - and often - all three types of consumer fraud.

1. Affirmative Misrepresentations



An "affirmative misrepresentation" is a statement made either negligently or intentionally, which is factually untrue. For example, if the contractor promises to install Anderson windows and he instead installs generic windows, the contractor has committed an act of consumer fraud by an affirmative misrepresentation.

2. Knowing Omissions



A "knowing omission" occurs when a contractor knows a material fact but fails to tell you. For example, if you tell a contractor that the project has to be completed by a date certain, and he knows that he cannot meet that date but fails to tell you that the date cannot be met, then the contractor has committed an act of consumer fraud by a knowing omission.

3. Regulatory Violations



The third type of consumer fraud - a regulatory violation - is the most common type committed by home improvement contractors. Having seen over 100 home improvement contracts, the author has found that nearly every home improvement contract violates the CFA in one respect or another. Thus, this type of consumer fraud is often very easy to prove. Even a "technical", regulatory violation results in the contract being declared invalid and unenforceable (i.e., the contractor cannot collect on any claimed unpaid balance) and the contractor must pay the consumer's reasonable attorney fees and costs. The CFA requires trebling of damages. However, an isolated violation of a regulation may not result in actual damages - and thus no treble damages. However, a pattern of many regulatory violations may result in the court finding that all damages that arise out of the transaction will be trebled.

4. Personal Liability of Contractors



There are several New Jersey court decisions that have held that a consumer may sue not only the home improvement company, but may also sue the workers who committed the violations and the owners of the company who selected the use of an illegal contract. Thus, despite a contractor operating through a corporation or an LLC, the contractor may nonetheless be personally liable under the CFA.

5. Remedies Available to a Homeowner



A successful plaintiff is required to receive treble (3X) damages and payment of reasonable attorney fees from the defendant.

Many consumers - and their attorneys - misunderstand the concept of what damages are available in a CFA action. Some mistakenly believe that any act of consumer fraud - technical or otherwise - results in the amount paid to the home improvement contractor, or the amount of the contract, being trebled. That is not the case. It is, as a general rule, only those out of pocket costs to repair or replace defective work that is an "ascertainable loss" subject to trebling.

6. Requirements for a Valid Home Improvement Contract.



Here are just some of the requirements of a legal home improvement contract:

(1) The contractor must be registered as a home improvement contractor with the Division of Consumer Affairs (DCA).

(2) The contract must provide the name and address of the contractor.

(3) The contract must provide the contractor's registration number.

(4) The contract must provide the toll free telephone number for the DCA.

(5) The contract must annex the contractor's certificate of general liability insurance.

(6) The contract must provide the telephone number for the contractor's insurance company.

(7) The contract must set forth the full price for the project.

(8) The contract must state the date that work will begin.

(9) the contract must state the date that work will end.

(10) the contract must provide a three day right to cancel.

(11) the contract must identify the brand, type and quantity of material to be provided.

(12) the contract must state what warranties for goods or materials are to be provided.

(13) The contract must be signed by the parties.

(14) Once the contract is signed, any modifications / change orders must be in writing.

(15) All communications - such as letters and invoices - must contain the contractor's registration number.

(16) The contractor may not begin work until all required permits are obtained (working without permits is prima facie consumer fraud).

(17) The contractor may not begin work until the contract is fully signed.

(18) The contract may not require that the homeowner pay in full prior to completing the job.

(19) The contractor's work vehicles must display his "13VH" registration number.

(20) The contractor may not mislead the prospective buyer into believing that the down payment or any other sum constitutes the full amount the buyer will be obligated to pay.

The list above is not exhaustive. There are other requirements found in the Contractor's Registration Act (NJSA 56:8-136 et seq) and the Home Improvement Practices regulations (NJAC 13:45A16 - 17). Given the myriad requirements, only the most diligent home improvement contractor may comply with the law. The vast majority of home improvement contractors are not diligent and are using illegal contracts that are unenforceable.

7. Where to Get Help if You Have Been the Victim of Home Improvement Fraud



If you have issues with a home improvement contractor, you may contact the NJ Division of Consumer Affairs (DCA):

http://www.njconsumeraffairs.gov/HIC/HIC_complaint.htm

or, a local consumer protection attorney.



Michael Millar, Esq.

732-914-9114

mmillar@michaelmillar.com

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The New Jersey Door-to-Door Home Repair Sales Act

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As discussed in previous posts, the Consumer Fraud Act ("CFA") is the primary consumer protection law in New Jersey. Many look no further than the CFA when evaluating the legality of a home improvement contract or the actions of a home improvement contractor. However, there are other consumer protection laws that apply to home improvement fraud and that both consumers and their attorneys should be familiar with.

The Door-to-Door Home Repair Act was enacted more than 45 years ago - it is one of our older consumer protection laws. In a nutshell, the act provides that if a home improvement contract is signed at any location other than the place of business of the home improvement contractor, and it is for an amount greater than $25.00, then the home improvement contractor must give the homeowner two copies of a "certificate" which provides:

(1) The home repair contractor's name and place of business;

(2) A description of the goods and services sold;

(3) Indicate the amount of money paid by the owner at the time the home repair contract was entered into.

(4) A three day right of rescission in no smaller than 10 point, bold faced, type that reads:

“NOTICE TO OWNER: YOU MAY RESCIND THIS SALE PROVIDED THAT YOU NOTIFY THE HOME RE-PAIR CONTRACTOR OF YOUR INTENT TO DO SO BY CERTIFIED MAIL, RETURN RECEIPT REQUEST-ED, POSTMARKED NOT LATER THAN 5 P.M. OF THE THIRD BUSINESS DAY FOLLOWING THE SALE. FAILURE TO EXERCISE THIS OPTION, HOWEVER, WILL NOT INTERFERE WITH ANY OTHER REME-DIES AGAINST THE HOME REPAIR CONTRACTOR YOU MAY POSSESS. IF YOU WISH YOU MAY USE THIS PAGE AS NOTIFICATION BY WRITING ‘I HEREBY RESCIND’ AND ADDING YOUR NAME AND ADDRESS. A DUPLICATE OF THIS RECEIPT IS PROVIDED BY THE HOME REPAIR CONTRACTOR FOR YOUR RECORDS.”

(5) The receipt may not contain a provision in which the homeowner waives his rights under the Door to Door Home Repair Act.

(6) If the contractor regularly deals with homeowners for whom English is not their primary language, then the contractor must provide one certificate in the language of the homeowner and the other in English.

As to the right to cancel, a "business day" is any day other than a Saturday, Sunday or holiday; a "place of business" is a main office, branch office or local office of the home repair contractor; and, “purchase price” means the total price paid or to be paid for goods and services sold pursuant to the home repair contract including all interest and service charges.

If the homeowner elects to cancel the contract by sending the notice of cancellation, then within 10 days the home improvement contractor must refund any monies paid by the homeowner and remove any goods or equipment from the homeowner's property.

The Door-to-Door Home Repair Sales Act does not apply to contracts entered into over the telephone or throughout the mail - it applies to face to face meetings where a contract is signed at a location other than the contractor's office - such as at the home of consumer.

A home improvement contractor who violates the Door-to-Door Home Repair Sales Act may be subject to damages, attorney fees and a $500 statutory penally for each violation.

At least one New Jersey court has found that a violation of the Door-to-Door Home Repair Sales Act is an "unconscionable commercial practice" under the Consumer Fraud Act - which would render the contract unenforceable and result in treble damages. Swiss v. Williams, 184 N.J.Super. 243, 251 (Cty.D.C. 1982) (“It is apparent to the court, and it so determines, that plaintiff's failure to supply defendant with the statutorily mandated information concerning her re-scission rights was an unconscionable commercial practice.”) rev’d on other grounds Performance Leasing Corp. v. Irwin Lincoln Mercury, 262 N.J.Super. 23, 32 (App. Div. 1993) (reversing Swiss to the extent it held that the trebling of damages under the CFA is discretionary).

It is likely that if you have a problem with a home improvement contractor, you will need the the protections of several consumer protection laws - including both the Door-to-Door Home Repair Sales Act and the CFA.

If you have issues with a home improvement contractor, you may contact the NJ Division of Consumer Affairs (DCA):

http://www.njconsumeraffairs.gov/HIC/HIC_complaint.htm


or a consumer protection lawyer:

Michael Millar, Esq.

732-914-9114

mmillar@michaelmillar.com
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STATE INSPECTIONS FOUND THAT 1 IN 4 HOME IMPROVEMENT CONTRACTORS WERE ILLEGALLY WORKING WITHOUT REGISTRATION

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Complaints against Home Improvement Contractors are perennially one of the largest category of consumer complaints filed with the New Jersey Division of Consumer Affairs ("DCA").

In February and March of 2013, the DCA did a sweep of home improvement contractors working on Hurricane Sandy related projects. The DCA found that approximately 25% of all contractors were illegally working without the required state registration. Since a state registration is prerequisite for obtaining a building permit, this means that nearly 1 in 4 projects were illegally being performed without required building permits.

Working without registration or a permit is a per se violation of the New Jersey Consumer Fraud Act. A violation of the CFA requires that the contractor pay you 3X your actual damages and pay for your attorney fees and costs.

If you have questions regarding a home improvement project performed on your property, contact Mr. Millar today.


Michael Millar, Esq.

732-914-9114

mmillar@michaelmillar.com



To see if your contractor is registered, you can access the DCA's online database at http://www.njconsumeraffairs.gov/LVinfo.htm.

If you have an iPad or iPhone - there's an app for that. You can download the free app from the App Store. To find the app - search the App Store for “New Jersey License”.

You may also call the DCA's toll-free number - 800-242-5846 - and ask if your contractor is registered and if any complaints have been filed against the contractor.
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THE CONSTRUCTION LIEN LAW PROVIDES IMPORTANT CONSUMER PROTECTIONS

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When discussing consumer protection laws in New Jersey, the conversation typically revolves around the Consumer Fraud Act (CFA). That is for good reason. The CFA provides that if a plaintiff wins, then the defendant must pay three times the plaintiff's actual damages ("treble damages") and must also pay the plaintiff's attorney fees. While the CFA is by far the most often used consumer protection law, it is not the only one.

When it comes to home improvement contracts, the New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1 et seq.) provides homeowners with important consumer protections. A contractor who improperly files a construction lien against a home must pay the homeowner's attorney fees and costs to have the lien removed and any other damages incurred by the homeowner due to the improperly filed lien.

A valid construction lien requires a three step process.

1. Notice of Unpaid Balance and Right to File Lien



First, a contractor must file with the county clerk, and serve the homeowner with, a Notice of Unpaid Balance and Right to File Lien ("NUB") within 60 days of when work was last performed, or materials were last provided, at the site. [N.J.S.A. 2A:44A-21(b)(1)] If the contractor does not file a NUB, then the contractor may not file a lien. If the contractor waits more than 60 days to file the NUB, then the contractor may not file a lien.

A NUB is not a lien - it is simply a required step that must be taken before a contractor may file a valid construction lien.

2. AAA Arbitration



Second, within 10 days of filing and serving the NUB, the contractor must request arbitration with the American Arbitration Association ("AAA"). The request for arbitration must also be served on the homeowner. [N.J.S.A. 2A:44A-21(b)(3)] The arbitrator will decide if, and in what amount, the contract may assert a lien. If the contractor does not request and go through AAA arbitration, then the contractor may not file a lien.

The arbitration is typically done "on the papers" but either side may request a hearing to present evidence. The decision of the arbitrator is made within 30 days of application. [N.J.S.A. 2A:44A-21(b)(6)] The homeowner may submit evidence to the arbitrator and request set-offs or damages from the contractor. The arbitrator may order that the contract must file a bond as a condition of asserting a lien. [N.J.S.A. 2A:44A-21(b)(5)]

The AAA rules for NJ residential construction lien arbitration are found here: http://goo.gl/ZTlfbQ

3. Construction Lien



Third, only after filing a NUB and obtaining a AAA arbitration decision, may the contractor file a construction lien against residential property. That lien must be filed within 10 days of the arbitrator’s decision [N.J.S.A. 2A:44A-21(b)(8)] and within 120 days of when the contractor last performed work at, or supplied materials to, the site. [N.J.S.A. 2A:44A-6(b)(2)]

Once filed, the contractor may move to foreclose on your property and obtain payment for the amount found in the construction lien. The suit to foreclose on the lien must be brought within one year of the date of the filing of the lien or within thirty days of a demand made by the homeowner.

If the contractor does not bring suit within the one year period, or within thirty days of a written demand, the lien expires - it is ineffective and unenforceable.

Note the statute of limitations for breach of contract is six years - so that even if a construction lien is no longer valid or enforceable because of the lapse of time, the contractor may nevertheless maintain an action for breach of contract prior to the running of the statute of limitations.

Many Construction Liens Are Improperly Filed



Following Hurricane Office, we reviewed all of the residential construction liens that were filed in Ocean and Monmouth Counties. The majority - more than 50% - of the liens filed by home improvement contractors were filed without first filing a NUB or obtaining a decision by an AAA arbitrator. They were illegal and unenforceable.

You should know that county clerks will accept a residential construction lien for filing even where the contractor has never filed a NUB and where the contractor has failed to complete the section of the lien form regarding arbitration. That means that simply because a lien has been filed against your property does not mean that the lien is valid or enforceable.

If your home has been improperly liened by a home improvement contractor, you can sue to have the lien removed.

As indicated above, if the lien was improperly filed, the home improvement contractor is required to reimburse you for your reasonable attorney fees and costs to have the lien removed.

When interviewing an attorney to represent you in such matters, ensure that the attorney has experience litigating construction lien claims.


Michael Millar, Esq.

732-914-9114

mmillar@michaelmillar.com

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As of January 22, 2017, Mr. Millar is no longer accepting new clients.

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