Consumer Fraud Act: Building Contractors Must Abide by the Contract

Homeowners who are contemplating or undergoing major home-improvement projects must know their rights when dealing with contractors.  The first step is SIGN A CONTRACT.  Long gone are the days of handshake deals with the local contractor.  It is imperative that homeowners insist on obtaining a detailed bid and contract before any work begins and certainly before writing any checks.

We all know that major renovations often encounter “unanticipated” construction problems.  Usually, these “unanticipated” issues should have been anticipated by a careful contractor and accounted for in the contract.  Unfortunately, many contractors take advantage of homeowners by underbidding the job, securing the contract, beginning work, and then trying to coerce homeowners into paying more money for “unanticipated” problems.  By doing so, they are essentially altering the contract in midstream – and it always means more money. 

Homeowners take one look at their incomplete house — with a dumpster in the front yard, drywall stacked against the walls, and holes in the roof — and say to themselves, “I guess we have to pay the extra money.  What else can we do?” 

While that reaction is understandable, homeowners must understand that you signed a contract for a reason.  If there are “unanticipated” problems with the job, it’s not your fault.  It is the fault of the contractor, who is supposed to have the expertise to anticipate the necessary work, and to be able to estimate beforehand what the job will take and what it will cost.  If the contractor is wrong about the estimates, and completing the job ends up costing more than the contract price, it is the contractor, not the homeowner, who must bear those extra costs. 

For example, in a recent New Jersey case, a contractor agreed to remove and replace the homeowners’ roof as well as other smaller tasks.  The parties signed a contract.  Soon after, the contractor told the homeowners that the contract was not priced correctly and tried to get them to sign a new contract which was for the same price but called for less work to be done.  The homeowners signed this new contract and made a downpayment. 

But when the contractor felt the job was completed, the homeowners disagreed, saying that the contractor had promised to do a lot more work under the original contract.  The contractor then had the nerve to try to get the homeowners to sign a THIRD contract to complete the work he had promised to do in the original contract, but had omitted from the second contract.  The homeowners were smart, and they refused to pay the balance of the second contract and did not sign the third. 

To add insult to injury, the contractor sued the homeowners for the balance on the second contract.  The homeowners counter-sued under New Jersey’s Consumer Fraud Act.  The Court was not amused, finding in favor of the homeowners.  The contractor was not allowed to change the original contract, because he bears the risk of underbidding the job, not the homeowners.  As the court stated, “If in fact a job is underbid, it is the bidder who bears that risk…This is a horribly botched job, which begins with an underbidding and then continues with a … lack of finishing or having an acceptance signed by the homeowners.”  Thus, the homeowners were justified in withholding payment on the balance of the contract.   And, the court awarded treble damages under the Consumer Fraud Act.  That is, the contractor had to pay three times the costs to fix the shoddy work and complete the original job. 

If you are remodeling or building a home, and your contractor has changed the contract in midstream, you may be the victim of consumer fraud.  Under the Consumer Fraud Act, and you may be entitled to compel the contractor to pay you three times the amount it takes to finish the job.   

Contact Peter B. Paris, Esq. at Maselli Warren if your contractor has violated your rights under the Consumer Fraud Act.

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