The most important required notifications in your client contracts are the customer’s right to cancel (rescind) the job within three days of signing and the fact that the transaction is creating a lien interest against their property. Failure to provide those notifications or to honor that right could subject you to penalties years after the job is actually completed.
Both the Federal Truth In Lending regulations and the State Home Solicitation and Home Improvement Acts — created to counteract unscrupulous 1950s- and ’60s-era siding salesmen — require consumer contracts to provide a three-day cancellation right and a notification to the consumer that the transaction itself is creating a security interest against their residential property. The notification of the three-day cooling-off period and lien interest must be provided with specific language in the customer contract.
While it clearly makes good business sense to provide the necessary three-day right and lien disclosures and to not provide any goods or services to the site within the three-day notice period, there are times when the customer actually needs those goods or services within those three days.
In an “emergency,” federal and most state acts provide that the consumer can waive the three-day right of rescission pursuant to a very clear process that includes the consumer providing the contractor a dated written statement that describes the emergency and specifically modifies or waives the right to rescind.
It is essential for the remodeler to ensure that customer contracts meet all federal, state, and local notification requirements, including those discussed here.
While there are several national companies that advertise compliant residential building and/or remodeling contracts, it is suggested that the remodeler should partner with his business attorney to ensure that any contract meets all contract requirements, including those required by the acts discussed. —Attorney Richard Feeley is president of Feeley Mediation & Business Law, a specialty law firm providing legal solutions for residential builders and remodelers.
This article is for informational purposes only and should not be construed as legal advice.
Read more about parting amicably with clients.