New Laws for Remodeling Contractors in Illinois
By: James P. Ziegler
The Illinois Legislature amended the Home Repair and Remodeling Act and the Illinois Roofing Industry Licensing Act effective 1/1/12 by Public Act 97-235. All roofing contractors must display their Illinois license number on their commercial vehicles. Effective 1/1/12 failure to do so will expose that contractor to a $250 fine to be imposed by local code enforcement officials. If the roofer corrects this violation prior to the hearing on the violation, the ticket is to be dismissed.
The “Storm Chaser” amendment to the Home Repair and Remodeling Act becomes effective 1/1/12. A contractor engaged in home repair or remodeling as that is defined by the Act is prohibited from offering to pay all or any portion of a customer’s insurance deductible as an inducement to the customer to engage the contractor to do repairs. A contractor may not accept any compensation for allowing an out of area contractor to use its business name or license. A contractor must include its State of Illinois roofing license number on all contracts, bids, and advertisements that involve roofing work.
Notably the new provisions create another right to cancel and another mandatory disclosure of that right. If a contractor enters into a contract for home repairs or remodeling to be paid from the proceeds of a property and casualty insurance policy, the insured may cancel the contract prior to the earlier of midnight of the 5th business day after the insured receives notice from the insurer that all or any part of the claim or contract is not a covered loss under the policy or the 13th business day after receipt by the insurer from the insured of a properly executed proof of loss. (Since the contractor may not know when that proof of loss is actually received, this limitation on the right to cancel may be illusory.) Any contract covered by this new right to cancel must include a new explanation of the right in 10 point bold typeface as follows:
"You may cancel this contract at any time before midnight on the earlier of the fifth business day after you have received written notification from your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy or the thirteenth business day after your insurer has received properly executed proof(s) of loss from you. See attached notice of cancellation form for an explanation of this right."
In addition the contract must attach the actual notice of right to cancel as follows, also in 10 point bold type:
"NOTICE OF CANCELLATION"
If you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy, you may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice to (name of contractor) at (address of contractor's place of business) at any time prior to midnight on the earlier of the fifth business day after you have received such notice from your insurer or the thirtieth business day after your insurer has received properly executed proof(s) of loss from you. If you cancel, any payments made by you under the contract, other than payments for goods or services related to a catastrophe which you agreed in writing to be necessary to prevent damage to your property, will be returned to you within 10 business days following receipt by the contractor of your cancellation notice.
If the contractor receives a timely notice of cancellation, that contractor must tender to the insured any payments, partial payments, or deposits made by the insured. A notice of cancellation is timely if placed in the mail, postage prepaid, within the applicable time period. It does not have to be received by the contractor within that time period. The notice of cancellation must include a copy of the notice received from the insurer indicating some or all of the claim is not covered. Contractors may not offer to represent the insured relative to any insurance claims. Contractors may not call in or file claims to or with the insurance company.
This new right to cancel is in addition to the already existing right to cancel created by both the Illinois Consumer Fraud and Deceptive Business Practices Act and the Federal Trade Commission Rule on door to door sales that grants customers a three day right to cancel for contracts signed in the home.
Even if a contractor’s business does not typically include these type repairs they will be affected by this new law. The “Know Your Consumer Rights” brochure required by the Home Repair and Remodeling Act is changing to include a reference to these new provisions. All contractors should update the brochures they deliver to their customers and begin using the new forms on 1/1/12. Unfortunately the new required language is not yet included on the form available on the Attorney General’s Web Site. The new language is attached. Additions are underlined.
"HOME REPAIR: KNOW YOUR CONSUMER RIGHTS"
As you plan for your home repair/improvement project, it is important to ask the right questions in order to protect your investment. The tips in this fact sheet should allow you to protect yourself and minimize the possibility that a misunderstanding may occur.
AVOIDING HOME REPAIR FRAUD
Please use extreme caution when confronted with the following warning signs of a potential scam:
- (1) Door-to-door salespersons with no local connections who offer to do home repair work for substantially less than the market price.
- (2) Solicitations for repair work from a company that lists only a telephone number or a post-office box number to contact, particularly if it is an out-of-state company.
- (3) Contractors who fail to provide customers references when requested.
- (4) Persons offering to inspect your home for free. Do not admit anyone into your home unless he or she can present authentic identification establishing his or her business status. When in doubt, do not hesitate to call the worker's employer to verify his or her identity.
- (5) Contractors demanding cash payment for a job or who ask you to make a check payable to a person other than the owner or company name.
- (6) Offers from a contractor to drive you to the bank to withdraw funds to pay for the work.
- (1) Get all estimates in writing.
- (2) Do not be induced into signing a contract by high-pressure sales tactics.
- (3) Never sign a contract with blank spaces or one you do not fully understand. If you are taking out a loan to finance the work, do not sign the contract before your lender approves the loan.
- (4) Remember, you have 3 business days from the time you sign your contract to cancel any contract if the sale is made at your home. The contractor cannot deprive you of this right by initiating work, selling your contract to a lender, or any other tactic.
- (5) If the contractor does business under a name other than the contractor's real name, the business must either be incorporated or registered under the Assumed Business Name Act. Check with the Secretary of State to see if the business is incorporated or with the county clerk to see if the business has registered under the Assumed Business Name Act.
- (6) Homeowners should check with local and county units of government to determine if permits or inspections are required.
- (7) Determine whether the contractor will guarantee his or her work and products.
- (8) Determine whether the contractor has the proper insurance.
- (9) Do not sign a certificate of completion or make final payment until the work is done to your satisfaction.
- (10) Remember, homeowners should know who provides supplies and labor for any work performed on your home. Suppliers and subcontractors have a right to file a lien against your property if the general contractor fails to pay them. To protect your property, request lien waivers from the general contractor.
BASIC TERMS TO BE INCLUDED IN A CONTRACT
- (1) Contractor's full name, address, and telephone number. Illinois law requires that persons selling home repair and improvement services provide their customers with notice of any change to their business name or address that comes about prior to the agreed dates for beginning or completing the work.
- (2) A description of the work to be performed.
- (3) Starting and estimated completion dates.
- (4) Total cost of work to be performed.
- (5) Schedule and method of payment, including down payment, subsequent payments, and final payment.
- (6) A provision stating the grounds for termination of the contract by either party. However, the homeowner must pay the contractor for work completed. If the contractor fails to commence or complete work within the contracted time period, the homeowner may cancel and may be entitled to a refund of any down payment or other payments made towards the work, upon written demand by certified mail.
- (7) A provision stating the grounds for termination of the contract if you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy, you may cancel the contract by mailing or delivering written notice to (name of contractor) at (address of contractor's place of business) at any time prior to the earlier of midnight on the fifth business day after you have received such notice from your insurer or the thirtieth business day after receipt of a properly executed proof of loss by the insurer from the insured. If you cancel, any payments made by you under the contract will be returned to you within 10 business days following receipt by the contractor of your cancellation notice. If, however, the contractor has provided any goods or services related to a catastrophe, acknowledged and agreed to by the insured homeowner in writing to be necessary to prevent damage to the premises, the contractor is entitled to the reasonable value of such goods and services.
Homeowners should obtain a copy of the signed contract and keep it in a safe place for reference as needed.
To file a complaint against a roofing contractor, contact the Illinois Department of Financial and Professional Regulation at 312-814-6910 or file a complaint directly on its website.
IF YOU THINK YOU HAVE BEEN DEFRAUDED OR YOU HAVE QUESTIONS
If you think you have been defrauded by a contractor or have any questions, please bring it to the attention of your State's Attorney or the Illinois Attorney General's Office.
Attorney General Toll-Free Numbers
Carbondale (800) 243-0607
Springfield (800) 243-0618
Chicago (800) 386-5438