Home Improvement Contractors and Licensing Requirements

I am Planning to Hire a Contractor to Renovate My Home. Does It Matter Whether My Home Improvement Contractor is Licensed?

Yes, it is highly recommended that you hire a “licensed” home improvement contractor. First, hiring a licensed home improvement contractor helps to ensure that you will not be hiring someone that is minimally qualified to understand local building customs and practices. Contractors must meet certain statewide standards before the State of New York will issue a license. Individuals operating without this license have not established that they have met those standards and could be a scam artist or otherwise unqualified to do the work. Second, a licensed home improvement contractor will know the law and will provide you with a written contract if the cost of the renovation exceeds Five Hundred Dollars ($500.00).

Throughout New York, and in the Hudson Valley, consumers/homeowners are protected by state and local laws. For example, if the Contractor fails to properly escrow (protect/sequester) prepaid deposits and fees [i.e., receives funds from a homeowner], the contractor is required to handle such deposits as an escrow/trust account. These funds cannot be used for any other project or for the benefit of the contractor until such fees are earned (read the fine print). The bottom line is that the contractor must keep accurate books and records that identify the particular project with respect to the use of the funds; and you have the right to have these books and records inspected. A contractor who uses the funds provided by a homeowner for any other purpose may be guilty of larceny (NYS Lien Law Article 3A, Sections 75, 76, 79), and you may file complaints with local governing authorities.

Home Improvement Contracts must be in plain English and require the Contractor to specify the approximate or estimated dates the work will begin, when it will be completed, and contingencies that may delay completion of the work. A description of the work to be performed, the material to be provided by the owner, and the agreed upon cost for the material and consideration for the work must also be provided, as well as an acknowledgment that the contractor is required to place any advance funds into an escrow account, stating whether there is an agreed upon payment schedule (NYS General Business Article 36-A, Section 770-774).

County laws also prohibit home improvement contractors from abandoning the project or failing to perform in any other way, making substantial misrepresentations or false promises or committing acts of fraud with respect to the contract or any other document related to project. There are similar laws in Suffolk, Nassau, Putnam, Rockland and Westchester counties as well as the five boroughs of New York City.

In Rockland County, New York, for example, you can find licensed businesses at the Rockland County Department of Weights and Measures. The stated goal of the legislature in enacting Chapter 286 (Home Improvement Contractors) was:

“to safeguard and protect employees, the homeowners and the consumer against abuses on the part of swimming pool contractors and itinerant home improvement contractors by regulating the home improvement, remodeling and swimming pool repair business, by licensing of persons engaged in such business and by mandating that contractors are responsible for their employees. The legislature finds that a need exists for a more complete understanding between customers and contractors engaged in swimming pool construction and home improvement business regarding the content and conditions of transactions for swimming pool construction and home improvement. The legislature also finds that many misunderstandings have arisen because of the lack of a standard body of requirements relating to such transactions and that certain sales and business practices and construction practices have worked financial and safety hardship upon the people of Rockland county.”

In Westchester County, New York, the home improvement license law is administered by the Westchester County, Department of Consumer Protection. In a fairly aggressive stance, the Department actually compiled a list of “renegade renovators” advising consumers to avoid such contractors (presumably because they had prior problems). Beware also if your home improvement contractor directly or indirectly arranges or facilitates financing of your home improvement contract, because they must complete a disclosure form to explain their connection to the financing. Your consumers bill of rights clearly outlines this requirement and provides a form.

For further tips on how to be a smart consumer before hiring a home improvement contractor, you can review tips from the New York State Attorney General’s Office here.

What Kinds of Work Require a Licensed Contractor?

Where Home Improvement Contractors are regulated, the definitions include “repair, replacement, remodeling, alteration, conversion, modernization, demolition or removal of, or improvement or addition to any land or building, or that portion thereof which is used or designed to be used as a private residence, dwelling place for not more than six (6) families, a condominium dwelling unit or a cooperative dwelling unit, and shall include, but not be limited to, the installation, construction, replacement or improvement of driveways, swimming pools, roofs, porches, garages, fallout shelters, central vacuum-cleaning systems, storm windows, awnings, installed floor coverings, landscaping, interior and exterior painting, wallpaper and wall covering installations and other improvements to structures or upon land which is adjacent to a dwelling house.”

Bottom Line, if you are undertaking a home improvement, you should hire a licensed contractor in the following scenarios:

• construction, repair, remodeling, or renovation of a new or existing structure used as a private residence, a cooperative apartment, or a condominium
• improvements or additions to any dwelling
• construction, repair, replacement or improvement to features on the land including a driveway, swimming pool, patio, terrace, porch, garage, fence, etc.

I Hired a Contractor and He Started Work But I Just Found Out My Home Improvement Contractor is Not Licensed. Can I Do Anything About It?

If you find out that your contractor is not licensed, you can ask the contractor to stop working on your home and refuse to pay the contractor. New York State law states that a contract signed by an unlicensed contractor is not enforceable (invalid).

The contractor may be subject to civil penalties and criminal penalties for conducting work without a license. You may report the unlicensed contractor to your local Department of Consumer Protection.

What If I Never Signed a Contract With My Contractor?

New York State General Business Law mandates that every home improvement contract that involves a total price of Five Hundred Dollars ($500) or more must be in writing. The contract must also specify the type of work that will be performed (ex. driveway repairs, plumbing work, etc.) among other requirements. Other counties have lower thresholds for when a contract is required and require that the homeowner have a three (3) day right of rescission of the contract if it is not for “emergency work.”

Will I Need to Obtain a Building Permit?

It depends. It is important to research whether your home improvement project may require a building permit. Many relatively small home improvement projects, such as installing a fireplace, will require a building permit in small towns like Nyack.

For more information, please review this blog post by Peter Klose.

I hired a home improvement contractor to renovate my home. The contractor performed all work correctly and I am very happy with the results. However, I am having difficulty paying my contractor the remainder of the balance owed. What will happen?

You should first look at your contract to see what the contract says about a default in payment. You should also note that the home improvement contractor may file a mechanic’s lien against your home for the amount of the unpaid balance. A lien is a document that evidences a debt, which is filed against your property. In order to sell your property, the lien must be repaid. A lien is similar to a mortgage because both legal documents demonstrate debts that must be repaid before you can sell your home.

Has a home improvement contractor filed a lien against your home? If so, review this article by Peter Klose discussing the issue.

Home Improvement Contractors and Mechanic’s Liens Filed Against Your Home in New York.

You may want to consider hiring an attorney to assist you with this mechanic’s lien. For a detailed review of mechanic’s lien law and how hiring an experienced attorney like Peter Klose can help protect your interests, click here.

How Can I Locate My Local Department of Consumer Protection?

To locate the Rockland County Department of Consumer Protection, click here.

You can report an unlicensed home improvement contractor using the forms on that website.

To locate the Westchester County Department of Consumer Protection, click here.