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§4.07 Home Improvement Contracts—Prohibitions, Penalties, and Relief

 
Lesson 4:
Home Repair & Licensing

Prohibited acts and penalties and nonstatutory relief include the following:

  • Fraud on the buyer: A person who is induced to contract for a work of improvement, including a home improvement, in reliance on knowingly made false or fraudulent representations or false statements, may sue and recover from the contractor or solicitor (a) a penalty of $500, (b) reasonable attorney fees, and (c) any damages caused by the statements or representations. [B&PC §7160.] False or misleading advertising, false completion certificates, misrepresentation in processing the contract, false promises, and fraud are misdemeanors. [B&PC §§7158(a), 7161.]
  • Natural disasters: A homeowner or tenant who has been defrauded in connection with repairs to damage caused by a natural disaster is entitled to full restitution, as well as a fine determined by the defendant’s ability to pay. [B&PC §7158(b).]
  • Swimming pools: Any contract for the construction of a swimming pool that does not comply with the requirements of B&PC §7159 is void and unenforceable by the contractor. [B&PC §7167.] In an action arising out of a swimming pool contract, you must award reasonable attorney fees to the prevailing party. [B&PC §7168.]
  • Financing: Unless certain requirements are satisfied, a home improvement contract is unenforceable against the buyer when obtaining third-party financing is a condition precedent to the contract, the contractor provides financing, or the contractor assists the buyer to obtain financing. [See B&PC §7163(a).] If the contract is unenforceable, the contractor must return any money or consideration to the buyer. [B&PC §7163(c).] The buyer’s rights and remedies are nonexclusive and cumulative, and any waiver of these provisions is unenforceable. [B&PC §7163(f)–(g).] When a swimming pool contract is to be financed by a third-party lender and specified conditions are met, certain other requirements may be substituted for some of the requirements specified in B&PC §7163. [B&PC §7165.]
  • Unjust Enrichment: Although home improvement contracts are required to be in writing and signed by the parties, courts have permitted recovery on an oral agreement when failing to enforce the contract would lead to unjust enrichment. Courts are more likely to waive certain contract requirements when the buyer is a sophisticated actor and the parties have a custom and practice of business that does not comply with the statutory contract requirements.
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