Penalties for using an illegal construction contract in Pennsylvania:
- Pennsylvania's Home Improvement Consumer Protection Act requires that a long list of disclosures appear in the contract – such as start and finish dates, names and addresses of subs, insurance coverage and a phone number for the Pennsylvania Bureau of Consumer Protection. Any contract which omits these disclosures is void and unenforceable. The Act also makes unenforceable any contract that includes one of eleven clauses commonly found in some home improvement contracts. Failure to comply with the Act is an unfair trade practice and gives an owner the right to recover three times actual damages plus attorney fees. Failure to comply is also a misdemeanor if the contract is for $2,000 or less. If for more than $2,000, violation is a third degree felony. Penalties are higher for repeat violations and if the owner is 60 years old or more. Failure to get a change order in writing carries the same civil and criminal penalties.
- An arbitration clause in a contract is not enforceable if it omits certain issues or is in text face (rather than bold type).
- The Home Improvement Finance Act requires several disclosures, including disclosure of the right of rescission and a statement in 10-point bold type directly above the signature of the owner. A fine of up to $500 can be imposed for a first violation. Second and later violations earn the same fine plus a year in jail. In addition, the district attorney is authorized to seek an injunction against the contractor. Any violation of that injunction carries a penalty of up to $1,000.
- Failure to make federal truth in lending disclosures requires restitution of the overcharge.
- Failure to include the disclosures required by 12 Code of Federal Regulations § 226.15 extends the right of rescission to three years (rather than three days).
- Omitting insulation disclosures required by 16 Code of Federal Regulation § 460 can result in an $11,000 fine.
The contracts linked below will help Pennsylvania contractors avoid these penalties by complying with state and federal law
The contracts linked below also comply with current Pennsylvania and federal court decisions