Building Contractors: Contract Requirements

I have represented residential building contracts who have the same problem with their contracts: the omission of the statutorily required cancellation language.

Residential building contractors are required to have two cancellation provisions in their agreements. Both, or neither, may be applicable, but the omission of a required right to cancel notice can lead to sanctions, the wrong side of a lawsuit, and lost money.

If the building contractor's payment is to come from an insurer for the homeowner, then the homeowner must be provided with a notice that states the homeowner can cancel the agreement within three days of the insurer denies the claim. You, as the building contractor, should have a good idea if there is insurance coverage at play before entering into the agreement.

The second required notice applies when the building contractor initiates the relationship. In that situation, a specific disclosure must be given that informs the homeowner that the homeowner has three days to cancel the contract.

If the situation is applicable, neither of these cancellation notices can be waived. Be careful with your contracts and know the law. Losing a job due to a properly canceled contract is less expensive than the alternative.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney. All information contained in links are the property of the linked site.

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