The COVID-19 pandemic is impacting many of the day-to-day activities of the remodeling industry. Homeowners many contact remodelers wanting to delay home improvement projects or try to cancel contracts. With many building inspection departments closed, they are unable to issue permits or conduct inspections. Subcontractors may be short of labor due to the health crisis and unable to complete work by previously agreed deadlines. The National Law Review highlights several legal issues that the remodeling industry is likely to face because of the global health situation and outlines steps that can be taken to address these issues.
The Home Improvement Practices Act governs trade practices in the home improvement industry including a mandate that home improvement contracts and any changes to those contracts be in writing. The Act further contains specific requirements on what terms must be addressed in the written contracts. For example, the Act requires that each contract include the “dates or time period on or within which the work is to begin and be completed”. To satisfy this requirement, home improvement contractors normally either (a) include specific start and end dates in the contract or (b) provide that the work will commence within X days and be completed within Y days thereafter. Any changes to these dates must be set forth in writing under the Act.
Projects are now being delayed for a variety of reasons arising from the COVID-19 pandemic. Determining a party’s right to delay (or even cancel) performance, and how to document the change or termination, is fact intensive. Each situation needs to be analyzed on its merits. If the home improvement contractor must delay the project, then the Act requires that the contractor give the homeowner notice of the delay, including specific reasons for the delay and new proposed deadlines. In the current environment, it will be very difficult to propose new deadlines. Further, the Act provides that these new proposed deadlines will not be effective unless the homeowner agrees in writing. What if the homeowner won’t agree to the new dates? The Act provides that the contractor will not be responsible for delays if the delay was caused by tornado, flood, fire, or “disruptive civil disorder” such as strike, hostile action or war. Does a pandemic qualify as disruptive civil disorder? It is not clear.
On the other hand, what happens if the homeowner wants to delay the contract or even cancel? The terms of the contract must be carefully analyzed to determine each party’s right to cancel or delay. There are numerous provisions of a contract that could provide guidance, including the contract’s force majeure clause.Read More