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Post date: June 2 2012

A.G. Schneiderman Announces Settlements With 47 North Country Contractors Over Violations Of Home Improvement Contracts Law

Following A.G.’s Investigation Revealing Widespread Abuses, North Country Contractors Agree To End Unlawful Practices

30% Of Area Contractors Failed To Provide Written Contracts, 50% Failed To Provide Right To Cancel

Schneiderman: Homeowners Need To Know Their Rights And Home Improvement Contractors Must Obey The Law

PLATTSBURGH – At a press conference today in Plattsburgh, Attorney General Eric T. Schneiderman announced a settlement with 47 home improvement contractors in the North Country after they violated the state’s Home Improvements Contracts Law. The 47 contractors have signed an agreement to end their unlawful conduct and will pay penalties and fines, after an investigation by the Attorney General revealed widespread violations of the law, including failure to provide written contracts or honor the most basic terms of the consumers’ work agreements.

"It happens all too often, homeowners hire contractors without having a signed contract stating what work will be done and how long it will take. And all too often, they end up with a much larger bill than expected, or with a project that was never started or completed," said Attorney General Schneiderman. "Homeowners need to know their rights and home improvement contractors need to obey the law. My office will fight to protect consumers' hard earned dollars and ensure that bad contractors are held accountable."

Article 36-A of the General Business Law requires that every home improvement contractor, before beginning work, must provide the consumer with a written contract, signed by both parties, which sets out certain specific information and disclosures.

For example the contract must:

  • Provide proposed starting and completion dates
  • Describe the work to be done
  • Include materials to be provided 
  • Give notice that the consumer has an unconditional three-day right to cancel the contract without penalty

In addition, the law requires that any advance deposits taken by the contractor must be placed into an account at a banking institution separate from the contractor’s other funds. The contractor must notify the consumer of the banking institution at which the deposit is kept.

Two years ago, notice letters were sent out to 400 contractors informing them of the statutory requirements. The effort was meant to educate contractors of the law. Staff at the Attorney General's Plattsburgh Regional Office noticed the amount of consumer complaints involving contractors had not decreased following the letters.

In May 2011, Attorney General Schneiderman's office began an investigation, starting with a survey sent to more than 100 area contractors regarding compliance with the law. The results were shocking: over 30 percent of contractors, nearly one in three contractors, failed to provide a written contract. An additional 50 percent of contractors failed to provide even the most basic contract provisions required by law, such as the unconditional three-day right to cancel. Almost none of the contractors put customer deposits in a separate account.

In July 2011, the Attorney General sent notices of violation to approximately 47 area contractors for failure to comply with the law. These contractors have entered into settlement agreements with Attorney General Schneiderman's office. They have agreed to do home improvement work only under written contracts that comply with the law and to put all advance deposits into a customer account at a local banking institution. Each of these contractors paid penalties and costs ranging up to $1,500.

The need for such written contracts is demonstrated in these examples:

  • An elderly homeowner was verbally quoted estimate of $13,000 for remodel of home. After work was completed, she received a bill for $25,000. This situation could have been avoided had the contractor provided a written contract with the cost and scope of work as required by law.
  • One homeowner was shocked to learn that a lumber company had filed a lien on his house for $10,000 for materials used by a contractor but not paid for from contract funds. This situation might have been avoided if the contract had complied with the law and warned the homeowner that subcontractors and material-men who are unpaid can put a lien on the home. 

Consumers should take the following precautions when hiring home improvement contractors:

  • Be specific about what work you want done
  • Educate yourself about the required permits - don't rely solely on the contractor
  • Shop around
  • Get references and check them
  • Get proof of insurance from the contractor
  • Check licenses (if required)
  • Never pay the full price upfront
  • Always put work to be done in writing
  • Know where your payments are going
  • Never do business with a contractor who is unwilling to abide by any of the conditions above

If consumers feel they have been victimized, they are urged to contact the Attorney General's Plattsburgh office: (518) 562-3282.