NYC Department of Consumer Affairs investigations that involve issues pertaining to work deficiencies and model home improvement contracts are on the rise.

Regarding the latter, for contracts and estimates involving the provision of home improvement contracting services to any consumer in New York City, contractors should use the current Model Contract and Model Estimate in effect at the time the contract is entered into, or at the time an estimate is provided. The New York City Department of Consumer Affairs’ model contract covers the breadth of a home improvement project, from materials and equipment to prices, payments and work schedules.

The Model Contract and Model Estimate should also be used for any change orders for home improvement services with any consumer in New York City.

Contract deficiencies often cited by the NYC DCA include, without limitation:

• Failure to obtain signatures of all parties;
• The address of the home improvement contractor as on record with the Department of Consumer Affairs;
• The approximate or estimated dates of commencement of the contract work;
• The approximate or estimated dates of substantial completion of the contract work;
• A notice to the owner that the contractor or subcontractor who performs on the contract
and is not paid may have a claim against the owner that may be enforced against the
property in accordance with applicable lien laws;
• A notice to the owner that the home improvement contractor is legally required to deposit
all payments received prior to completion in accordance with subdivision four of § 71-a of
the New York State Lien Law and that, in lieu of such deposit, the home improvement
contractor may post a bond or contract of indemnity with the owner guaranteeing the return or proper application of such payments to the purposes of the contract;
• A clause wherein the contractor agrees to furnish the buyer with a certificate of workers’
compensation insurance prior to commencement of work pursuant to the contract;
• A clause wherein the contractor agrees to procure all permits required by law; and
• A notice to the buyer, in immediate proximity to the space reserved for the signature of the
Buyer and in bold face type of a minimum size of 10 points, that the buyer has a three day
right to cancel the transaction at any time prior to midnight of the third business day after
the date of the transaction.

If a contractor negotiates a contract with any consumer in a language other than English, the contract must be in English as well as in the other language. For example, contracts negotiated in Spanish must be in both Spanish and English.

When contracting for home improvements, contractors should also distribute an up-to-date copy of the “Consumer Bill of Rights” to all consumers: (i) prior to preparing an estimate; and (ii) prior to entering into a contract with consumers in New York City. The document should be provided in English and in the language principally used in the oral sales presentation to the consumer.

Contractors should also provide consumers with a separate notice of cancellation form regarding the consumer’s three day right to cancel the contract.

The Administrative Code of the City of New York prohibits materially deviating from or disregarding the plans or specifications or any terms and conditions agreed to under a home improvement contract and by abandoning the work without written consent of the owner. The Code also prohibits, without limitation, failing to perform work under a home improvement contract in a skillful and competent manner.

As referenced above, in part, the Rules of the City of New York prohibit, without limitation, failing to obtain a written contract signed by all parties, failing to include in the contract the contractor’s office address, failing to include in the contract a statement of whether or not the parties had determined a definite completion date to be of the essence, failing to include in the contract a notice to the owner that the contractor or subcontractor who performs on the contract and is not paid may have a claim against the owner which may be enforced against the property in accordance with the applicable lien laws, failing to include in the contract a notice to the owner that the home improvement contractor is legally required to deposit all payments received prior to completion in accordance with subdivision four of §71-a of the New York State Lien Law and that, in lieu of such deposit, the home improvement contractor may post a bond or contract of indemnity with the owner guaranteeing the return or proper application of such payments to the purposes of the contract, failing to include in the contract a clause wherein the contractor agrees to furnish the buyer with a certificate of workers’ compensation insurance prior to commencement of work pursuant to the contract, failing to include in the contract a clause wherein the contractor agrees to procure all permits required by law, failing to include in the contract – in immediate proximity to the space reserved for the signature of the Buyer and in bold face type of a minimum size of 10 points – a statement that the buyer has the right to cancel the transaction at any time prior to midnight of the third business day after the date of the transaction, and failing to failing to provide a separate notice of cancellation to the owner.

Fines for violation of the foregoing can result in steep fines.  Consult with an experienced NYC Department of Consumer Affairs (DCA) defense lawyer with experience resolving related investigations and enforcement actions.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.  

ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.