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Why Contractors Need a Written Contract: Maine’s Home Construction Contract Act

Maine’s Home Construction Contract Act requires that any contract to build, remodel or repair a residence (including structural work, electrical, plumbing, heating, carpeting, window replacement and other non-structural work) for more than $3,000.00 must be in writing and signed by both the contractor and home owner.

The Act also requires that each contract include the following information:

  • The name, address and phone number of the contractor and the owner(s);
  • The location of the residence or property;
  • The estimated start date and estimated date of substantial completion;
  • The contract price;
  • The method of payment;
  • A general description of the work and materials to be used;
  • A warranty statement (providing that the work will be free from faulty materials, done to code, and performed in a skillful manner);
  • A dispute resolution provision (selecting arbitration or mediation);
  • A change order provision (requiring all contract changes to be in writing an signed by the parties);
  • Certain disclosures regarding insulation and energy efficiency standards (if applicable);
  • Consumer protection information (i.e., a copy of the Attorney General’s consumer protection information on home construction and repair, which includes information on contractors successfully sued by the State); and
  • Attorney General’s website, address and phone number (as well as a statement advising consumers to visit the website to learn about their rights).

The Act also requires that all change orders be: (a) in writing; (b) signed by the contractor and the homeowner(s); (c) state the previous contract price and the revised contract price; and (d) describe all of the changes to the original contract that resulted in a change of the contract price.

In addition, the Act prohibits a contractor from requiring an initial down payment of more than one-third of the total contract price.

The burden is entirely on the contractor to make sure the parties have a contract that complies with the Act. The purpose of the Act is to protect the homeowner. Therefore, the contractor, and not the homeowner, will be subject to fines and penalties in the event of non-compliance.

For instance, a contractor’s failure to comply with the Act will be considered prima facie evidence of an unfair trade practice under Maine law, and should a homeowner successfully sue the contractor for such a violation, the contractor will be liable for the homeowner’s attorney’s fees and costs, as well as any damages sustained by the home owner. In addition, each violation of the Act constitutes a civil violation that carries with it a fine of up to $1,000.00.

The Act does allow parties to exempt themselves from its requirements (so long as the contractor expressly informs the homeowner of his or her rights under the Act). Nevertheless, contractors should always use a written contract that complies with the Act. A written contract helps ensure that the terms of the parties’ agreement are clearly understood, and minimizes the risk of any confusion or disagreement regarding the scope and cost of work to be performed.

In drafting or reviewing an existing contract, contractors must be aware that the Act requires specific language and information to be included in each contract. Accordingly, contractors should consult an attorney to review any contract that will be used on jobs exceeding $3,000.00 to make sure they will not be liable for a violation of the Act.

Perkins Thompson regularly advises contractors and homeowners about the requirements of the Home Construction Contract Act. If you would like to speak with the firm about Home Construction Contract Act issue, you can send an e-mail to Joe Talbot or call him directly at 207-774-2635.