Construction Law

CONSTRUCTION LAW FOR THE LITTLE GUY

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Ronald Reagan once said, “You can’t be for big government, big taxes and big bureaucracy and still be for the little guy.” Homeowners often feel overwhelmed during a construction or remodeling of their homes. This is understandable. It is your home that is involved–where you sleep, where you store your valuable treasures. No matter how small the project, the disruption of your life seems huge. So do the unforeseen costs and defects that sometimes keep popping up.

In Illinois construction and remodeling law, homeowners have certain rights. One right is to be notified in writing through a state-required brochure of their rights under the Illinois Home Repair and Remodeling Act. The brochure is entitled “Home Repair: Know Your Consumer Rights.” That law also requires the contractor to use a written contract. Specifically, that brochure must state:

“HOME REPAIR: KNOW YOUR CONSUMER RIGHTS

As you plan for your home repair/improvement project, it is important to ask the right questions in order to protect your investment. The tips in this fact sheet should allow you to protect yourself and minimize the possibility that a misunderstanding may occur.

AVOIDING HOME REPAIR FRAUD

Please use extreme caution when confronted with the following warning signs of a potential scam:

(1) Door-to-door salespersons with no local connections who offer to do home repair work for substantially less than the market price.
(2) Solicitations for repair work from a company that lists only a telephone number or a post-office box number to contact, particularly if it is an out-of-state company.
(3) Contractors who fail to provide customer references when requested.
(4) Persons offering to inspect your home for free. Do not admit anyone into your home unless he or she can present authentic identification establishing his or her business status. When in doubt, do not hesitate to call the worker’s employer to verify his or her identity.
(5) Contractors demanding cash payment for a job or who ask you to make a check payable to a person other than the owner or company name.
(6) Offers from a contractor to drive you to the bank to withdraw funds to pay for the work.

CONTRACTS

(1) Get all estimates in writing.
(2) Do not be induced into signing a contract by high-pressure sales tactics.
(3) Never sign a contract with a blank space or one you do not fully understand. If you are taking out a loan to finance the work, do not sign the contract before your lender approves the loan.
(4) Remember, you have three business days from the time you sign your contract to cancel any contract if the sale is made at your home. The contractor cannot deprive you of this right by initiating work, selling your contract to a lender, or any other tactic.
(5) If the contractor does business under a name other than the contractor’s real name, the business must either be incorporated or registered under the Assumed Business Name Act. Check with the Secretary of State to see if the business is incorporated or with the county clerk to see if the business has registered under the Assumed Business Name Act.
(6) Homeowners should check with local and county units of government to determine if permits or inspections are required.
(7) Determine whether the contractor will guarantee his or her work and products.
(8) Determine whether the contractor has the proper insurance.
(9) Do not sign a certificate of completion or make final payment until the work is done to your satisfaction.
(10) Remember, homeowners should know who provides supplies and labor for any work performed on your home. Suppliers and subcontractors have a right to file a lien against your property if the general contractor fails to pay them. To protect your property, request lien waivers from the general contractor.

BASIC TERMS TO BE INCLUDED IN A CONTRACT

(1) Contractor’s full name, address, and telephone number. Illinois law requires that persons selling home repair and improvement services provide their customers with notice of any change to their business name or address that comes about prior to the agreed dates for beginning or completing the work.
(2) A description of the work to be performed.
(3) Starting and estimated completion dates.
(4) Total cost of work to be performed.
(5) Schedule and method of payment, including down payment, subsequent payments, and final payment.
(6) A provision stating the grounds for termination of the contract by either party. However, the homeowner must pay the contractor for work completed. If the contractor fails to commence or complete work within the contracted time period, the homeowner may cancel and may be entitled to a refund of any down payment or other payments made towards the work, upon written demand by certified mail.
(7) A provision stating the grounds for termination of the contract if you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy. You may cancel the contract by mailing or delivering written notice to (name of contractor) at (address of contractor’s place of business) at any time prior to the earlier of midnight on the fifth business day after you have received such notice from your insurer or the thirtieth business day after receipt of a properly executed proof of loss by the insurer from the insured. If you cancel, any payments made by you under the contract will be returned to you within 10 business days following receipt by the contractor of your cancellation notice. If, however, the contractor has provided any goods or services related to a catastrophe, acknowledged and agreed to by the insured homeowner in writing to be necessary to prevent damage to the premises, the contractor is entitled to the reasonable value of such goods and services.
Homeowners should obtain a copy of the signed contract and keep it in a safe place for reference as needed.
To file a complaint against a roofing contractor, contact the Illinois Department of Financial and Professional Regulation at 312-814-6910 or file a complaint directly on its website.

IF YOU THINK YOU HAVE BEEN DEFRAUDED OR YOU HAVE QUESTIONS

If you think you have been defrauded by a contractor or have any questions, please bring it to the attention of your State’s Attorney or the Illinois Attorney General’s Office.

Attorney General Toll-Free Numbers
Carbondale          (800) 243-0607
Springfield          (800) 243-0618
Chicago                 (800) 386-5438″.
(Source: P.A. 97-235, eff. 1-1-12.)

Homeowners also have the right to be told the truth about materials used in their home, extra costs, and about mistakes and shoddy construction. Untrue statements about these topics by insurers or contractors can constitute fraud or deceptive practices. Often, Illinois law allows a homeowner to recover his attorneys fees, if he has to file suit to get justice.

Illinois homeowners also have the right to deduct from final payment to a contractor the reasonable cost of completing the work and the reasonable cost of correcting any defective work. Sadly, some defects don’t become apparent until many months after you have seen the last of the contractor. That is when other Illinois legal remedies need to be examined. Use care, however, not to sign any documents waiving your rights to recover from the contractor for defective work. Such documents could have innocent looking language that appears to just approve the condition of all the work.

Also, if something doesn’t feel right, hire a home inspector to look over the home before you make the final payment. If you don’t know a home inspector, call an attorney. Most construction law attorneys know several home inspector that they could refer you to. A reputable contractor will not be insulted by this.

If a defect is noted, get any promises to repair it in writing. Be sure also to have that writing state that it is being repaired at no cost or specifying any applicable cost.

If you would like more information on this topic, or to seek help in remedying a construction law problem, do not hesitate to contact our office.

United States Bankruptcy Court, Northern District of Illinois

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COURT ANNOUNCEMENTS

Important Announcement About Telephone Scam

We’ve recently been given information about a new type of scam directed at both lawyers and their clients. We’re sending this update because the scam is directly linking attorneys and their clients.

Here’s how the scam works:

*    The client receives a phone call.

*    The caller ID shows the number belongs to the attorney.

*    The client is told that they need to pay additional money.

*    The client is then given a toll-free number to call.

*    When the client calls, they are directed as to how to pay the money.

The scam works through a process called “Caller ID Spoofing.” “Spoofing” allows a caller to create a new caller ID for their phone. Previous “spoofing” scams, for example, have involved callers using a number that belongs to the IRS.

What makes this especially troubling is that the scammers have linked the attorney with the client. While this information may be publicly available through court documents, we have not seen it used in this way.   A  recent case involved  a bankruptcy court and the client was told they needed to pay more money to a creditor. Fortunately, the scam was caught in time and no money was lost.

Attorneys should consider advising clients about the potential for this type of scam and to make sure they double check before any additional money is sent. If this happens to you and your client, please file a report with the FBI’s Internet Crime Complaint Center athttp://www.ic3.gov.

To view this information from our website select the following link: Court Announcement

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Comments or questions? Contact Us

Eastern Division Office:
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Implied Warranty of Habitability

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A condominium association claims that various parties involved in the design, construction, and sale of a condominium complex breached the implied warranty of habitability by incorporating latent defects into the units via the design, material, and construction.

The theory of implied warranty of habitability initially arose because the application of the common law principles of caveat emptor and merger meant that a new home buyer had little or no recourse against a builder that constructed a defective residence. Caveat emptor prevented a new home buyer from suing the builder if he failed to discover any defects before taking possession. However, the doctrine of caveat emptor is based on the expectation that the buyer and seller possess comparable skill and experience and could use their own judgments to come to a conclusion. The implication of a warranty of habitability came as a judicial response to the fact that in the twentieth century, new home buyers and sellers were no longer in an equal bargaining position. As the ordinary home buyer no longer had the skill or training to make a meaningful inspection and discover latent defects, caveat emptor fell out of favor.

In this case, the record demonstrates that each Condominium Purchase Agreement disclaimed implied warranties on behalf of the developer-seller and its agents. Though the condominium association argues that the language in the purchase agreement was not called to the buyers’ attention or worded properly, a seller is not required to specifically point out a disclaimer in a written contract or use a particular method to bring it to the buyer’s attention. A disclaimer is deemed legally effective if it (1) is a conspicuous part of the agreement, (2) refers to the warranty by name, and (3) discloses the consequences of its inclusion. The court rules that the included provision meets the criteria of an effective disclaimer.

Generally speaking, only builders or builder-sellers warrant the habitability of their construction work. Engineers and design professionals – such as the defendant architectural firm in this case – provide a service and do not warrant the accuracy of their plans and specifications. Breach of implied warranty of habitability claims against design professionals have consistently been rejected in Illinois and most other jurisdictions. This court holds that the designer’s role did not subject it to a claim for breach of the warranty of habitability of the builder’s work. The developer-seller is also dismissed from these proceedings due to the effective waiver.

The court then must consider whether the wording of the Agreement encompasses the other defendants. The contract defines the seller, but does not define officers, agents, or other representatives. An agent is commonly understood to be a person “who is authorized to act for or in the place of another.” The allegations that the contractors provided development services and held themselves out as knowledgeable developers and contractors do not allege that the contractors were authorized to act on behalf of the developer-seller. Therefore, they do not fall under the scope of “agents” and were improperly dismissed at the trial level. The case is affirmed in part, reversed in part, and remanded for further proceedings.
Board of Managers of Park Point at Wheeling Condominium Association. v. Park Point at Wheeling, LLC, 2015 IL App (1st) 123452 (December 31, 2015).