More Violations of the Massachusetts Home Improvement Contractor Law

Massachusetts Attorney General: Full Article http://www.ago.state.ma.us/sp.cfm?pageid=986&id=1684
1 of 1 1/23/07 9:19 AM
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FORMER NORTH ANDOVER MAN FACES 95 INDICTMENTS
INVOLVING VIOLATIONS OF HOME IMPROVEMENT
CONTRACTOR LAW
June 21, 2006
CONTACT: BETH STONE
(617) 727-2543
BOSTON -- A former North Andover man who operated a now defunct sunroom installation company has been indicted on charges
he violated the home improvement contractor statute in his dealings with 32 homeowners from across the state, Attorney General
Tom Reilly announced today.
James Brien, 56 years old, formerly of North Andover was indicted by an Essex County grand jury on one count of larceny by false
pretenses and 94 counts of violating the Home Improvement Contractor Statute. He is scheduled to be arraigned on July 6, 2006 at
Essex Superior Court in Salem.
Brien was the president and owner of North Andover-based American Sunroom Co. Inc., a sunroom installation business he
operated for approximately 14 months.
The indictments allege that Brien violated the Home Improvement Contractor statute in three different ways.
First, the indictments allege that Brien breached contracts he entered into with 30 homeowners by failing to deliver and install the
sunrooms homeowners ordered through Brien's company. Under the Home Improvement Contractor statute, it is a crime to
breach a contract without justification.
Second, the indictments allege that Brien violated the Home Improvement Contractor statute by failing to include in contracts with
32 homeowners the dates on which he was going to start and complete the installations of the sunrooms they ordered.
Finally, the indictments further allege that Brien violated the Home Improvement Contractor statute by failing to include in 32
contracts the information that contractors and subcontractors must be registered and information on how homeowners can check a
contractor's registration status.
Defendants are presumed innocent until proven guilty.
Assistant Attorney General Beth Merachnik of AG Reilly's Criminal Bureau is prosecuting the case, which was investigated by State
Police and the Financial Investigations Division, also of AG Reilly's Criminal Bureau.
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Violations of Massachusetts Home Improvement Contractor Act-Criminal Penalties

Massachusetts Attorney General: Full Article http://web.archive.org/web/20041215000150/www.ago.state.ma.us/s...
1 of 2 1/23/07 10:10 AM
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WATERTOWN CONTRACTOR PLEADS GUILTY TO VIOLATING
HOME IMPROVEMENT CONTRACTORS ACT
Contractor to pay restitution of $14,100 to 12 consumers
May 5, 2003
CONTACT: BETH STONE
(617) 727-2543
BOSTON -- A Watertown man has pleaded guilty to multiple home improvement contract violations in connection with work done for 12
consumers from April 2000 through May 2001, Attorney General Tom Reilly announced today.
James Pallone, 46, of Watertown, pleaded guilty to 12 counts each of operating as a home improvement contractor without certification,
requiring a deposit on a home improvement contract in excess of that permitted by law, and failing to specify start and completion dates
on a home improvement contract. Middlesex Superior Court Judge Elizabeth Donovan sentenced Pallone to serve probation of five years
and pay restitution of $14,100 to be paid within the first year of probation. As part of today's sentencing, Pallone also was barred from
doing any work that would require a supervisor's license in Massachusetts for five years.
Pallone operated Middlesex Contractors, a landscaping, masonry and general home improvement business. Pallone consulted with
consumers and offered estimates on jobs before a contract was signed.
The investigation found that between April 2000 and May 2001, 12 separate victims contracted Pallone to do various improvement jobs
ranging in price from $2,000 up to $60,000, on their homes. The work Pallone was contracted to perform for the consumers falls under the
Massachusetts Home Improvement Contractors Act and therefore required Pallone to have a license. Pallone was not licensed to perform
home improvement contracting work, as required under the law.
Consumers signed contracts drawn up by Pallone that did not list start and completion dates for the home improvement jobs, as is
required by Massachusetts state law. Pallone also required that customers pay approximately half of the contracted price up front, a
violation of Massachusetts state law which requires only 1/3 of the total be paid ahead of construction.
Victims who contracted Pallone's services are from Arlington, Belmont, Newton, Waltham, Watertown and Weston.
Consumers with questions about home improvement contractors should contact the Attorney General's Consumer
Hotline at (617) 727-8400.
Assistant Attorneys General Madeline Leone and Kathy Chen, both of AG Reilly's Corruption, Fraud and Computer Crimes Division
prosecuted the case, which was investigated by State Police assigned to the Attorney General's Office, Investigator Ashley Dizel of AG
Reilly's Public Protection Bureau and Investigators Paul Stewart and Jon Murphy of AG Reilly's Financial Investigations Division.
Massachusetts Attorney General: Full Article http://web.archive.org/web/20041215000150/www.ago.state.ma.us/s...
2 of 2 1/23/07 10:10 AM
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More Contract Clauses

In my last post, I included some clauses for consideration when putting together a contract for a renovation project.

These clauses are in no specific order, but all offer additional protection for both parties:


1. PEOPLE AUTHORIZED TO MAKE DESIGN DECISIONS AFFECTING THE COST OF THE WORK: The following people are authorized to make design decisions which affect the Cost of the Work: _____________________________________ _____________________________________ (Please fill in line(s) above at time of signing Agreement)

2. CONFLICT OF DOCUMENTSIf any conflict should arise between the plans, specifications, addenda to plans, and this Agreement, then the terms and conditions of this Agreement shall be controlling and binding upon the parties to this Agreement.

3. MATCHING EXISTING FINISHESWhere Contractor's work involves the matching of existing finishes or materials, Contractor will use his best efforts to match existing finishes and materials. However, Contractor does not guarantee an exact match due to such factors as discoloration due to the aging process, difference in dye lots, and difficulty of exactly matching certain finishes, colors, and planes.

4. OWNER’S SEPARATE CONTRACTORS: Contractor to supervise, coordinate, and otherwise specified charge 20% profit and overhead on Owner's separate Subcontractors who are working on site at same time as Contractor.


5. CONTRACTOR NOT TO BE RELIED UPON AS ARCHITECT, ENGINEER, OR DESIGNER:

Contractor is not an architect, engineer, or designer. Contractor is not being hired to perform any of these services. To the extent that Contractor makes any suggestions in these areas, Owner acknowledges and agrees that Contractor’s suggestions are merely options that Owner may want to review with the appropriate design professional for consideration. Contractor’s suggestions are not a substitute for professional engineering, architectural, or design services, and are not to be relied on as such by Owner. Contractor is not responsible for ascertaining whether details in Owner’s plans conform to all applicable building and planning codes. Contractor is not responsible for the cost of correcting errors and omissions by Owner’s design professionals and separate contractors.

6. INSURANCE Owner shall pay for and maintain “Course of Construction” or “Builder’s Risk” or any other insurance that provides the same type of coverage to the Contractor’s completed work and work in progress during the course of the project, including profit and overhead. It is Owner’s express responsibility to insure dwelling, all materials delivered to the worksite, and all work in progress against all damage caused by theft, vandalism, fire and Acts of God such as earthquakes or floods. Owner shall increase insurance on property to reflect the value at completion of project. Owner shall name Contractor as a “loss payee” on the homeowners policy. Owner shall provide Contractor with a property binder or a certificate of property insurance.

7. ENTIRE AGREEMENT, SEVERABILITY, AND MODIFICATION This Agreement represents and contains the entire agreement between the parties. Prior discussions or verbal representations by the parties that are not contained in this Agreement are not a part of this Agreement. In the event that any provision of this Agreement is at any time held by a Court to be invalid or unenforceable, the parties agree that all other provisions of this Agreement will remain in full force and effect. Any future modification of this Agreement must be executed in writing in order to be valid and binding upon the parties.

8. ADDITIONAL LEGAL NOTICES REQUIRED BY STATE OR FEDERAL LAW

REGISTRATION: All home improvement contractors and subcontractors shall be registered. Any inquiries about a contractor or subcontractor relating to a registration should be directed to: Director, Home Improvement Contractor Registration One Ashburton Place Room 1301, Boston MA 02108Tel: (617) 727-8598 (This is required in Massachusetts-check your state laws).

The Contractor-Finding the Right Contract

I have discussed contracts frequently on this blog because they offer the best protection to both the homeowner and the contractor when commencing a renovation project. There are some excellent samples of contracts to be found, and like any document, they can always be improved. The Office of Consumer Affairs and Business Regulation in Massachusetts offers one online that is in compliance with our state's laws. The link is:

http://www.mass.gov/Eoca/docs/sampcont.pdf

Recently, a contractor-colleague asked me to review her contract. It was quite good, but I suggested the following clauses. Please keep in mind that these are in no specific order, but address problems that might arise throughout the course of the project.

1. Here is an example of a payment schedule. You need to include the information about the deposit not being more than 1/3, and the final payment not being paid until the work is done to the mutual satisfaction of the parties:

PAYMENT SCHEDULE AND PAYMENT TERMS

PAYMENT SCHEDULE:
First Payment: $ **** or ** % of contract amount due when Agreement is signed (not to exceed 1/3 of the contract price or the cost of special order items, whichever is greater): $ ****
Second Payment due +++++++++++++++++++++++ : $ ****
Third Payment due +++++++++++++++++++++++ : $ ****
Fourth Payment due +++++++++++++++++++++++ : $ ****
Fifth Payment due +++++++++++++++++++++++ : $ ****
Sixth Payment due +++++++++++++++++++++++ : $ ****
Final Payment: Balance of contract amount due upon completion of all work under contract done to the mutual satisfaction of the parties: $ ****

NO FINAL PAYMENT CAN BE DEMANDED UNTIL THE CONTRACT IS COMPLETED TO THE SATISFACTION OF THE PARTIES THERETO.

*Interest in the amount of 1% per month will be charged on all late payments under this ……………Agreement. “Late Payments” are defined as any payments not received within 7 days ……………of receipt of invoice from Contractor.


I also like the following provisions, but they are not required:

2. CHANGES REQUIRED BY PLAN CHECKERS OR FIELD INSPECTORS: Any increase in the Scope of Work set forth in these Contract Documents which is required by plan checkers or field inspectors with city or county building/planning departments will be treated as Additional Work to this Agreement for which the Contractor will issue a Change Order.

3. DELAY DAMAGES: If there is an increase in the cost of materials of 10% or more due to the delay of the homeowner, this increase will result in an automatic change order that will be charged to the client. Contractor will make every effort to keep costs within budget.

4. PERMIT NOTICE
It shall be the obligation of the Contractor to obtain permits as the owner's agent. The cost of permits is the responsibility of the owner and is included in this contract price. Owner' who secure their own construction-related permits or deal with unregistered contractors shall be excluded from access to the Guaranty Fund provided by the State of Massachusetts. The following construction-related permits are required:
1. Building Permit
2. Plumbing Permit
3. Electrical Permit
4. Other: ___________________________


I will include more contract clauses in my next post.

Choosing a Business Entity

Many contractors are particularly confused when it comes to making a decision about what kind of business entity to choose (if any) for their business. Massachusetts offers a number of different options for contractors, and they would be well-advised to seek out the advice of an attorney and an accountant when starting out. A friend and colleague, JT Mann has set up a blog to address just this issue. You can view his blog at http://brazilianbusiness.typepad.com

In addition to offering advice to businesses, he focuses on the specific business concerns of Brazilians in the United States and Brazilian companies doing business in the U.S. and vice-versa.

As JT says, spending some money up front to set up your business properly can prevent a number of problems in the future.

Dissolving the Mechanic's Lien

I have received numerous inquiries from homeowners who have had mechanic's liens placed on their property by contractors or subcontractors. They need to have the lien removed because they are trying to sell their property, refinance or obtain other loans. What can a homeowner do in this situation?

If the lien is not legitimate:

I received a recent e-mail from a homeowner who had a subcontractor place a lien on the property. The homeowner did not have a contract with the sub. His contract was with the general contractor only, and the contract specified that the GC was responsible for paying all subs.

In this case, the homeowner would have to file an action against the sub to dissolve the lien and probably bring in the GC as well. It may be possible to file an emergency application to dissolve the lien, but I assume that a court would only grant this if the lien were not properly perfected (proper steps were not taken).

If the basis for dissolving the lien comes from common law (homeowners are not liable for contractor's failure to pay subcontractors), then the homeowner would need to file a motion for summary judgment (the case could be decided on the law when the facts are not in dispute) in order to end the suit.

This is all clearly a huge hassle and expense for the homeowner. In addition, the homeowner would not be able to recover attorney's fees unless a statute provides for it. For that reason, the homeowner may end up negotiating with the sub, or posting a bond, in order to have the lien removed in the most expedient fashion possible.