Why and When You Need a Contract for Home Improvements in Indiana

I regularly represent both consumers and construction professionals in general business and home improvement litigation matters. Often times, initial disputes between a consumer and contractor pertain to a quality of workmanship issue; however, such disputes can quickly evolve into a statutory compliance matter for a contractor. In such circumstances, the consumer enjoys many statutory protections and the contractor may have significant exposure/liability.

There are a number of statutes which apply to home improvements under Indiana law; however, this article provides a high-level overview of one of the principal statutes that governs home improvements, the Home Improvement Contract Act (“HICA”) (codified at: I.C. § 24-5-11 et seq.).

The HICA governs any home improvement (defined as any alteration, repair, replacement, reconstruction, or other modification of residential real property[1]) that has a price exceeding $150.00. Accordingly, the HICA’s reach extends to the vast majority of home improvement work between a consumer and contractor. All home improvements governed by the HICA are required to be distilled in a written contract. The HICA sets forth a number of actions the contractor must make regarding executing the contract as well as a number of required contractual provisions.

Prior to beginning work on a consumer’s residential structure, the HICA requires a contractor to obtain all necessary licensing and permitting. Additionally, a contractor must sign the contract prior to providing it to the consumer and provide an executed copy of the contract to the consumer after the consumer signs it.

In addition to the foregoing acts, a contractor must provide the consumer with a written contract which contains at least the following provisions:

1.     The name and address of the property being improved;

2.     The name, address, email and phone number of the contractor;

a.     The name, telephone number, and email address for each owner, officer, employee, or agent to whom consumer problems and inquiries can be directed.

3.     The date the contract was provided to the consumer and any limitation on when the consumer can accept the contract;

4.     A “reasonably detailed” description of the improvements;

a.     If the description does not include specifications, a statement that specifications will be provided before work begins and will be subject to the consumer’s written approval of the specifications;

5.     The approximate starting and finishing time of the work;

6.     A statement of contingencies that would materially change the completion date;

7.     A statement of whether any third-party will furnish materials or labor (notice of use of sub-contractors);

8.     The price of the improvements;

9.     Signature lines for contractor and consumer with legibly printed names of both below or next to signature line;

10. The contract must be in a form that is easy for a consumer to read and understand;

11. The contract must include a specifically worded and formatted (provided by statute) Notice of Consumer Rights and Cancellation along with a separate detachable Notice of Cancellation; and

12. If disclaiming implied warranties, a specifically worded notice under the Indiana Home Improvement Statutory Warranty Act (codified at I.C. § 32-27-1-13, though not discussed in this Article).

If insurance proceeds are used in a whole or part for a home improvement, then the contractor must comply with a host of other requirements, such as: not submitting any claims directly to the consumer’s insurer and not offering any offer or promise to pay any rebate or part of an insurance deductible to get a consumer to sign the contract.

Each instance of non-compliance with each and every requirement of the HICA automatically constitutes a deceptive act under the Deceptive Consumer’s Sales Act (“DCSA”) (codified at: I.C. § 24-5-0.5). Each deceptive act is actionable by both the Indiana State Attorney General and the harmed consumer under the DCSA.

The Home Improvement Fraud statute (I.C.§ 35-43-6-12), DCSA and HICA provides criminal and civil liability for uncured and/or incurable deceptive acts. Deceptive acts can potentially rise to the level of the level A Misdemeanor, Home Improvement Fraud. Under Indiana law, A Misdemeanors potentially carry a sentence of court fines and costs and up to a year in prison. Additionally, the DCSA provides that a consumer may void the contract and receive up to three times actual damages as well as an award of court costs and attorney’s fees. Moreover, the Indiana State Attorney General may impose hefty sanctions and fines on a non-compliant contractor. That said, a contractor potentially has a significant amount of exposure for simply failing to abide by the HICA. On the other hand, such non-compliance by a contractor avails very generous remedies to the consumer.

So, in sum: as a business you likely need a compliant home improvement contract for most home improvements (the Indiana Appellate Court has even held that spraying for termites constitutes a “home improvement” under the Home Improvement Fraud Statue which defines home improvement almost identically to the HICA (Tucker v. State, 646 N.E.2d 972 (Ind. Ct. App. 1995)). As a consumer, there are a myriad of time sensitive notice requirements which very likely require the skilled hand of an attorney to preserve your statutory claims. In my experience, involving an attorney very early on can make a significant difference in the availability of damages and valuation of those damages in a contractor dispute.

With the foregoing in mind, the statutes pertaining to home improvements in Indiana interact, are precise, and can be difficult to navigate. While this article is not intended in any way to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 can provide legal assistance to you are a consumer who has a dispute with a contractor or if you are a contractor that has a legal question or issue pertaining to statutory compliance or construction litigation. You are urged to consult an attorney on any specific legal questions concerning your particular situation.

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[1] The HICA defines “real property” or “residential real property” as any real property that: (1) contains one (1) to four (4) units; and (2) is used in whole or in part as a dwelling of a consumer. The term includes all fixtures to, structures on, and improvements to the real property. Essentially, this covers most homes, duplexes, apartments and the like. Additionally, the HICA covers any fixture on the real property such as garages, decks, pergolas, and pools.

 

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Why you Probably Needed a Will Like Yesterday

Creating a will is one of the most procrastinated legal events for the average American. Most believe that they only need a will after they retire and death by old age seems imminent; however, in most cases this is a myopic assumption. If you have pets, children, own property (real estate, personal items, financial assets), and/or have concerns or reservations about how and to whom your property is being distributed, you need a will—no matter what age you are ( as long as you are at least 18). As more and more families experience divorce at some point, obtaining a will is especially important for ensuring the people you want to have your property get it.

 If you do not have a will the State of Indiana has laws about to whom and how your property gets distributed and who gets to decide that—for example, if you have a family heirloom that has been passed down through generations to the eldest daughter in your family and you would like to do the same, if you do not have a will, you do not have a say in how anything gets distributed. However, a will affords you the opportunity to nominate personal representatives you trust to carry out your intentions of property distribution as memorialized in the will.

That said, a will can be more than just a document which dictates how an item of personal property gets passed along. There are many types of legal tools which can be contained in a will. That is, a will can be, and is often, more than just what is called a simple will—simply stating what property goes to what heir. 

The State of Indiana permits testamentary trusts, for example. By way of background a trust is a legal entity which is governed by a trustee (person in charge of the trust) who manages and distributes property of the trust. Unlike a will, a trust permits the settlor (person making the trust) to place significant restrictions on the distribution of the res, or property, of the trust. For example, as a settlor you may place $50,000 in trust to be distributed to your son upon the age of 18 only to be used for college tuition. Under a will if you were to die and you had $50,000 which you wanted to leave to your son, the property would be distributed at the time of death.  A testamentary trust is a trust that is created in your will which springs into existence the moment you die. There are other types of trusts and many types of restrictions and instructions on how property gets distributed through a trust. Often a trust is an effective tool for estate planning to save money and shelter it from certain taxes.

Obtaining a will can be as simple as having a document drawn up by an attorney which states who gets what property you own or as complex as you want to make it with testamentary trusts and other types of distributions. A will is an invaluable legal resource to help create certainty and remove emotion from an otherwise tumultuous time when it is actually needed.

As referenced above, if you have children, own and property (real estate, personal items, financial assets), and/or have concerns or reservations about how and to whom your property is being distributed, you need a will and the best time to do it is now. You can always change your will. The best time to change a will is anytime there is a new legal event in your life: getting married, getting divorced, having a child, adopting a child, obtaining new property, selling property etc. Often these changes are quick and easy to make.

While this article is not intended in any way to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 would be happy to meet with you to discuss any will or trust drafting. Beers Mallers is recognized as one of northern Indiana’s preeminent elder law firms, with over 350 years of combined legal experience.

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Home Improvement Law: Contractor Requirements and Remedying Workmanship Issues

If you own a home or are contemplating buying a home you have likely considered some form of remodeling. Be it a relatively inexpensive DIY or a larger project there are various Indiana laws which govern construction projects. These laws become especially important when your DIY becomes a larger undertaking that requires a construction professional to step-in and/or if it involves a construction professional from the beginning.

All too often homeowners are unwary consumers in the world of construction contractors. This manifests itself in many ways including: dealing with significant delay, damage to your home by construction professionals during a project, wrong or substandard materials being used, and/or just poor workmanship. The Indiana legislature has enacted various laws to protect consumers and level the playing field between a sophisticated contractor and lay consumers. Two main Acts which afford protections to consumers are the Indiana Home Improvement Statutory Warranty Act and the Home Improvement Contract Act.

Both set forth various prerequisite requirements and general requirements for a home improvement contract. For example, a contractor is required to obtain a building permit prior to beginning work and must furnish the homeowner with a signed copy of the contract prior to the homeowners signing it.  Indiana courts strictly construe these requirements against construction professionals. That said, if you are a contractor it is prudent to ensure you are meeting all the statutory requirements and if you are a homeowner, it is important to make sure the contract you are signing is compliant with the statute.  

Additionally, the Home Improvement Statutory Warranty Act provides requirements for homeowners and construction professionals in making complaints and remedying disputes. For example, when a dispute arises with your contractor, most homeowners do not want to give them an opportunity to cure their defective work/damages; however, under salient Indiana law a homeowner must give the contractor an opportunity to do so before pursuing legal action.

The statutes pertaining to home improvements in Indiana are precise and can be difficult to navigate. While this article is not intended in any way to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 can provide legal assistance to you if you believe you have a legal question or issue pertaining to construction litigation. 

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MECHANIC’S LIENs IN THE CONSTRUCTION BUSINESS

Knowledge and regular practice of mechanic’s liens should be a part of every construction professional’s general business practice. By way of background: a lien is a recorded interest on a real or personal property. Under the law, real property is essentially land and real estate and personal property are basically personal possessions. All that said, within the context of construction, a mechanic's lien is a legally enforceable statement to the rest of the world that you have a right of ownership to a piece of land or a car, for example, due to the fact that you helped improve the value of that property.

The practical import for a construction business in regularly engaging in lien practice is that it ensures the construction business will maintain a source of payment for their work in the event the customer does not pay up. That is, by timely recording one’s interest on an item of real or personal property, the lien-holder can pursue litigation in court and have the property sold to compensate it for its work.

As an independent contractor, subcontractor, laborer, or journeyman you are entitled to file a Mechanic’s lien under Indiana law for the construction/improvement you have done on your job.  Based on the type of structure you built or otherwise contributed labor and materials to, there are different time-frames you have in which to bring a mechanic’s lien from the last day you worked on the job. Generally, for industrial/commercial construction you have 90 days and for all other types, such as a residential home, you have 60 days in which to file your lien with the county recorder where the job site is. While seemingly arbitrary, this time-frame is strictly adhered to by Indiana Courts. That said, it is vital for you as a contractor/worker to keep record of your last day worked and when your 60 or 90 days expires. A good way to keep track of this is to set 60 or 90 days from the date you or a construction professional/employee acting on your behalf completed a punch-list of the job.

A person or entity filing a Mechanic’s Lien must take great care in doing so as there are specific requirements which a mechanic’s lien must contain in order to perfect it. Perfecting a lien basically means that you have filed a lien which fully complies with the statutory requirements. Requirements under Indiana Law for filing a valid mechanic’s lien range from a verification requirement to including a full legal description of the property in the documents you file with the county recorder. Failure to meet these requirements can result in your Mechanic’s Lien being rejected by the Recorder’s Office—even if you are within the allowable time-frame with which to file. Rejection of your lien or failure to perfect your lien means that you cannot force the property owner to sell the property you build and/or otherwise improved to compensate you for your work. Moreover, because some of these requirements take some time to obtain information to meet, such as obtaining the legal description of a property, it is unwise to wait until the last day, or even week to file your lien. Thus, good record keeping practices is essential to having an effective and fluid mechanic’s lien practice.

While this article is not intended in any way to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 would be happy to help you if you believe you need help in setting up an administrative policy that covers obtaining all the necessary information for a mechanic’s lien as part of your regular construction contract practice, and/or need help preparing and perfecting a mechanic’s lien.

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Tobacco Product Sales and Taxation in Indiana

The Indiana legislature has drafted specific laws to govern tobacco sales within Indiana. There is a specific section of the Indiana Code exclusively devoted to cigarettes (which expressly excepts cigars). Additionally, there is another area of the code which is devoted to all other “tobacco products” which encompasses: cigars, pipe tobacco, snuff, etc. This article focuses on the laws governing taxation and sales of “tobacco products”.

Under Indiana law there are two types of classifications of merchants for selling tobacco products. The first is a retailer. Retailers sell to ultimate consumers, that is, for example, the average joe or armchair aficionado looking to purchase and smoke a cigar for leisure.

 To lawfully sell tobacco products to ultimate consumers a business and/or person needs to obtain a proper certification from the State of Indiana. Retailers are responsible for collecting a sales tax from ultimate consumers.

The second type of tobacco merchant classification is called a distributor. Under the code distributors are persons and/or businesses that perform any of the following actions:

  • Manufacture, sell, barter, exchange, or distribute tobacco products (cigars) in Indiana to retail dealers for the purpose of resale; 

  • Purchase tobacco products (cigars) directly from a manufacturer of tobacco products (cigars); or

  •  Purchase for resale tobacco products (cigars) from a wholesaler, jobber, or distributor outside of Indiana who is not a distributor holding a license issued under this chapter.

To lawfully perform any of the foregoing, a business and/or person needs to obtain proper licensing from the State of Indiana. Additionally, a distributor of tobacco products, including a person who sells tobacco products through an Internet web site, is liable for” a 24% tax on the wholesale value of the tobacco product if they do any of the following:

  • Bring or cause tobacco products to be brought into Indiana for distribution; 

  • Manufacture tobacco products in Indiana for distribution; or

  • Transport tobacco products to retail dealers in Indiana for resale by those retail dealers

A distributor is responsible for filing monthly tax returns pertaining to their sales with the Indiana Department of Revenue. Upon each filing they are likely eligible for various tax deductions and credits on their sales.

It is incumbent upon the distributor to register with the State of Indiana and follow the laws and regulations pertaining to taxation and sales of tobacco products. Violation of Indiana tobacco laws carries with it misdemeanor and even felony charges. Accordingly, it is vitally important for businesses and/or individual retailers and distributors to limit their exposure and liability by ensuring they are in compliance with Indiana Law regarding proper licensing, certification, and taxation procedures.

While this article is not intended in anyway to provide any specific legal advice, Attorney Nicholas A. Podlaski of Beers, Mallers, Backs, & Salin LLP 110 W. Berry Street, Suite 1100 Fort Wayne, IN 46802 can provide legal assistance to you if you believe you have a legal question or issue pertaining to tobacco sales in Indiana, tobacco taxation in Indiana, and/or any business law issue. Attorney Podlaski can also provide legal assistance in procuring and/or maintaining any of the aforementioned certifications and/or licensing.

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