When a homeowner engages with a contractor for a home improvement project (or any renovation of a residential home), one Wisconsin law that the parties should be aware of is the Wisconsin Home Improvement Practices Act (HIPA). In addition to certain homeowner safeguards, the HIPA provides requirements for construction contracts and procedures that construction companies must be aware of. This article explores the HIPA’s broad requirements and protections.
- What must the contract include?
As an initial matter, written contracts are not always required. The HIPA requires written contracts where the homeowner provides payment for services which are not yet completed (i.e. a deposit), or where the contractor initiates the project over the phone. Despite this, it is best practice to have a written contract to govern the terms of the engagement between homeowner and contractor.
If a written contract is required, there are provisions that must be included under the HIPA. These include specific language regarding the contractor’s right to cure any defects, dates and times the work will be completed, a description of any security interest to be taken by the contractor, and the total price of the contract. If the original contract is altered or amended, the contractor must seek written approval of such alterations. To the extent a contractor violates the HIPA which causes the homeowner damages, the HIPA provides for a private cause of action to pursue damages and costs from the contractor. For contractors, consulting with an attorney to draft the necessary language will ensure that any dispute that may arise under the agreement does not give rise to liability under the HIPA.
- How does the HIPA protect homeowners?
Among the several protections the HIPA affords homeowners, one large benefit is the enumerated right to receive lien waivers when requested. The HIPA requires that, where requested by the homeowner, a contractor providing home improvement services must provide the homeowner with the lien waiver upon receiving proper payment. This ensures that the contractor cannot leverage their lien rights to negotiate a change order or seek additional compensation outside of what was agreed to. The HIPA also prohibits contractors from beginning work until all necessary permits are issued. There is an exception to allow “subprojects” to move forward, but a contractor must notify the homeowner of what permits are necessary for the project. Additionally, the HIPA requires that any prepayment by the homeowner is only used for the actual provision of services in the written contract. Any prepayment received by the contractor is held in trust, and must only be used to purchase materials or provide labor for the agreed-upon services. Where a contractor violates these protections, the homeowner may have a private right of action to seek damages, plus costs, from the contractor.
In any project where a contractor provides services to a residential building, the HIPA comes into play. Whether you are a contractor seeking to comply with the HIPA, or a homeowner seeking guidance to deal with an unsatisfactory contractor, reaching out to an experienced HIPA attorney will ensure you are adequately protected under the law.
