Contractors and Complying with
 
the Home Repair and Remodeling Act
 
Written by Abigail C. L. Waeyaert
Published in the December 2010 Edition of the Quad City Times Business Journal
 
 
 
The Home Repair and Remodeling Act (HRRA) became effective January 1, 2000. It was originally enacted to increase consumer confidence, reduce the likelihood of disputes, and promote fair and honest practices in the home repair and remodeling business in Illinois. In certain circumstances, the HRRA requires that the contractor and the consumer have a written contract including specific terms and that the contractor provide the customer with a consumer rights brochure and maintain a certain amount and type of insurance, among other things.
 
Originally the HRRA had some devastating results for contractors. In some cases Illinois courts ruled that homeowners could get out of paying for the improvements made to their homes simply because the contractor failed to provide a written contract. Thankfully for contractors, however, the Illinois legislature recently amended the Act, which now requires that homeowners who are suing their contractors under the Act must show they have suffered actual damages because their contractor failed to comply with one of the HRRA requirements.
 
While the recent amendment alleviated many of the harsh results that were being seen in the courts, there are still consequences for contractors who fail to comply with the HRRA. A consumer who has suffered actual damages based on a contractor’s violation of the HRRA can bring a legal action under the Consumer Fraud and Deceptive Business Practices Act. Additionally, the Attorney General or the State’s Attorney can bring an action against a contractor for violations of the HRRA. If the action is successful, the contractor could face penalties like the suspension or revocation of his or her license to do business in Illinois or a civil penalty of up to $50,000 (or more if the consumer is over age 65).
 
The following are just some of the requirements under the HRRA that contractors should keep in mind:
 
  • Have a written, signed contract for home repair or remodeling work over $1,000. Among other things, the contract should contain the total cost, parts and materials, and the name and address of the contractor’s business.

  • Provide the consumer with a consumer rights brochure. Both parties must sign and date it and keep a copy as indicated on the pamphlet. 

  • If the contract contains an arbitration clause, the consumer must be informed before the contract is accepted and signed. The HRRA requires that consumers acknowledge that they accept or reject any arbitration clause. To satisfy this requirement, the consumer must sign his or her name and write the word "Accept” or "Reject” in the margin next to the arbitration clause in the contract. If the consumer rejects the arbitration clause, contractors can treat it as a counter offer and may reject it. If contractors fail to have the consumer acknowledge the arbitration clause, the arbitration clause is considered void and cannot be enforced against the consumer. 

  • Maintain specific amounts of public liability and property damage insurance, unless the business has a net worth $1,000,000 or more (as determined by the most recent financial statement, prepared within the last 13 months).
 
It is a good idea for the contractor to keep a copy of the contract and the brochure given to the consumer in the file folder maintained for each project. Following the above will help the contractor maintain compliance with the HRRA and will also help in defending a legal action brought against the contractor.
 
For more information on this topic please contact Califf & Harper, P.C. by calling 309-764-8300 or 1-888-764-4999. This article is intended to provide general information regarding the topic discussed herein but is not intended to constitute individual legal advice.