New Jersey Laws for Home Improvement Contractors

Home improvement fraud is one of the most widespread types of consumer fraud in New Jersey. In response to growing consumer complaints about shoddy workmanship, missed deadlines, and home improvement contractors' failures to complete work or to start projects at all, the State of New Jersey enacted the Home Improvement Practices Act.

The goal of New Jersey's Home Improvement Practices Act is to ensure that homeowners are protected from misrepresentation, fraud, and deception in contracts for home improvement work.

What Is the New Jersey Home Improvement Practices Act?

New Jersey's Home Improvement Practices Act protects homeowners when using contractors in their homes. You can find this law in the New Jersey Administrative Code §§ 13:45A–16.1A through 13:45A–16.2.

Who Is a Home Improvement Contractor?

Under New Jersey's Home Improvement Practices Act, contractors are defined as persons engaged in the business of making and selling home improvements. Specifically, home improvement contractors include individuals and companies that provide the following services:

• general contractors who hire sub-contractors to perform the work
• landscaping services
• clearing or restorative services, and
• any other persons performing home improvement and/or repairs for a homeowner. (N.J. Admin. Code § 13:45A–16.1A).

Do Home Improvement Contractors Have to Be Licensed in New Jersey?

Home improvement contractors are required to register with the New Jersey Division of Consumer Affairs annually. (N.J. Stat. § 56:8-138). Those who don't register with the Division of Consumer Affairs will not be issued municipal construction permits and will not be permitted to perform home improvement work in New Jersey.

Contact the Division of Consumer Affairs to verify a contractor's registration with the state. Certain individuals or companies that are licensed by the State of New Jersey, such as architects, aren't required to register as home improvement contractors.

What Are Considered "Home Improvements" Under the New Jersey Home Improvement Practices Act?

Home improvements under the law are defined as the "remodeling, altering, painting, renovating, restoring demolishing, or modernizing of residential or noncommercial property or the making of additions thereto, and includes, but is not limited to, the construction, installation, replacement, improvement, or repair of central heating and air conditioning equipment." (N.J. Admin. Code § 13:45A–16.1A).

Things to Include In Your New Jersey Home Improvement Contract

All home improvement contracts in excess of $500 must be in writing and must include:

• the name, address, and state registration number of the contractor
• the start and end date of the work
• a description of the work to be done
• the total contract price to be paid by the homeowner, including finance charges
• a description of any mortgage or security interest to be taken in connection with the sale or financing of the home improvement
• a statement of any guarantee or warranty with regard to products, materials, labor, and services provided by the contractor, and
• a description of principal products and materials to be used or installed in performance of the contract. (N.J. Admin. Code § 13:45A–16.2).

What Are Your Rights as a Homeowner Under New Jersey Law?

Home improvement contractors must not engage in any of the following practices:

• demand final payment before a job is done, for example, prior to final municipal inspections being conducted
• misrepresent the products or materials to be used
• begin the work before all construction permits are obtained
• make misrepresentations and disparaging remarks about a competitor
• fail to begin work in a timely manner (any changes to dates and time periods stated in the contract must be agreed to by the homeowner and contractor)
• offer gifts or free items without disclosing the terms and conditions of the offer
• use "bait and switch" tactics such as discouraging lower priced products in order to induce the homeowner to purchase higher priced products, and
• fail to provide the homeowner with copies of the contract, warranties, and other disclosures. (N.J. Admin. Code § 13:45A–16.2).

The contractor must provide the homeowner with a copy of its general liability insurance, which is required under the law. In addition, any changes to the original contract must be in writing.

The contractor must also disclose to the homeowner that any signed contracts may be canceled by the homeowner for any reason before midnight of the third business day.

How to Protect Yourself From Home Improvement Scams in New Jersey

Homeowners can best protect themselves by understanding the requirements of the Home Improvement Practices Act before entering into an agreement for home improvements. In addition, you should:

Check on licensing and complaints. Contact the local Consumer Affairs office to ensure that the home improvement contractor you are looking to hire is registered with the state and inquire if any complaints have been filed against the contractor.

Get three estimates. Get written estimates from at least three different home improvement contractors.

Sign and understand the contract. Before you sign the contract, make sure you fully understand it.

Don't misrepresent who is doing the work. If you, as the homeowner, are obtaining the construction permits from the municipality, be sure to provide the municipality with the complete name, address, and license information of the contractor. Don't attempt to say that you are performing the work yourself when, in fact, you're using a contractor. If you misrepresent who is actually doing the work, you may forfeit the protections afforded by the Home Improvement Practices Act.

Do not pay for the job upfront, and don't pay cash. The customary arrangement is one-third in advance, one-third halfway through the project, and one-third upon completion.

Don't make the final payment until inspections are done. Make sure that all final inspections have been completed before making final payment to the contractor.

What if You Have a Complaint Against a Home Improvement Contractor?

If you have a problem with a home improvement contractor, first try to resolve the issue with the contractor directly and give the contractor an opportunity to fix the issue.

If you can't get the issue resolved with the contractor, you can file a complaint with the Division of Consumer Affairs. Consumer Affairs will serve as a mediator in resolving the dispute.

Or, you can contact a consumer law attorney for further assistance.

What Are the Penalties for Violations of the New Jersey Home Improvement Practices Act?

Noncompliance with the requirements of the Home Improvement Practices Act can be costly. A violation of the Home Improvement Practices Act is also a violation of New Jersey's Consumer Fraud Act, which enables New Jersey homeowners to seek triple the amount of any losses caused by a home improvement contractor. Additionally, the homeowner might be able to recover attorneys' fees and costs in a lawsuit.

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