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Such licensed persons would not have to register as home
improvement contractors so long as their work on a residential
project does not extend beyond services for which they would
need their license. Based on the experience of the author,
such licensed persons are generally familiar with this exemption,
but in many instances (where they know of the home improvement
practices regulations at all) they believe it excuses them
altogether from compliance with the related regulations for
home improvement. This misconception is a close second in
popularity to the wrong notion that home improvement subcontractors
do not need to be registered.
As stated, the requirement for separate registration as
a home improvement contractor depends on whether the scope
of work on a residential project extends beyond what can
only be done by the licensed trade. For example, if an electrician
wires a ham radio tower, she needs only her electrician’s
license, because the Electrical Contractors Licensing Act
of 1962 (N.J.S.A. 45:5A-1 et seq.) defines electrical contracting
as “the business of contracting to install, erect,
repair or alter electrical equipment for the generation,
transmission or utilization of electrical energy,” and
wiring a ham radio tower is certainly within that definition.
Contrariwise, if she builds a radio shack on which to anchor
that tower, she is acting outside the scope of practice of
the electrical profession while engaged in home improvement,
outside the exemption of N.J.A.C. 13:45A-17.4(a)4, and in
addition to her electrician’s license she would need
to hold a home improvement contractor’s registration.
Contrast this issue with whether a licensed electrician
needs to comply with the home improvement practice regulations.
Whether she wires the tower or builds the radio shack, she
is involved in “home improvement” within the
meaning of N.J.A.C. 13:45A-16.1A, and must comply with the
home improvement practices regulations found in the New Jersey
Administrative Code at N.J.A.C. 13:45A-16.1 to 16.2. A contractor’s
failure to comply with any of these regulations in the course
of home improvement constitutes automatic consumer fraud,
whether she intends sharp practice or not. These “per
se” violations entitle the aggrieved consumer to his
attorney’s fees incurred in proving the violation,
regardless of whether the violation has caused him an ascertainable
loss. If he can show that the contractor’s violation
of the regulation caused a loss, he will be awarded three
times his damages by the court.
On their websites, both the Board of Master Plumbers and
the Board of Examiners of Electrical Contractors include
among their statutes and regulations the home improvement
practice regulations - the necessary implication being that
these regulations apply to the respective licensed trades.1
After the Contractors' Registration Act was passed, the home
improvement practices regulations were renumbered, and former
N.J.A.C. 13:45A-16.1, Definitions, was recodified to N.J.A.C.
13:45A-16.1A. A new section 16.1 was added, to spell out
the purpose and scope of the revised regulations:
“13:45A-16.1 Purpose and scope
“(a) The purpose of the rules in this subchapter
is to implement the provisions of the Consumer Fraud
Act, N.J.S.A. 56:8-1 et seq., by providing procedures for
the regulation and content of home improvement contracts
and establishing standards to facilitate enforcement of
the requirements of the Act.
“(b) The rules in this subchapter shall apply to
all sellers as defined in N.J.A.C. 13:45A-16.1A and to
all home improvement contractors as defined in N.J.A.C.
13:45A-17.2 whether or not they are exempt from the provisions
of N.J.A.C. 13:45A-17.”
What subsection (b) of new
Section 16.1 means in plain English, is that whether or not
a contractor is required to register with the Division of
Consumer Affairs, it still has to comply with the home improvement
practices regulations any time it engages in the business
of making or selling “home
improvements” as broadly defined in N.J.A.C. 13:45A-16.1A:
"Home improvement" means the remodeling, altering,
painting, repairing, renovating, restoring, moving, demolishing,
or modernizing of residential or noncommercial property
or the making of additions thereto, and includes, but is
not limited to, the construction, installation, replacement,
improvement, or repair of driveways, sidewalks, swimming
pools, terraces, patios, landscaping, fences, porches,
windows, doors, cabinets, kitchens, bathrooms, garages,
basements and basement waterproofing, fire protection devices,
security protection devices, central heating and air conditioning
equipment, water softeners, heaters, and purifiers, solar
heating or water systems, insulation installation, siding,
wall-to-wall carpeting or attached or inlaid floor coverings,
and other changes, repairs, or improvements made in or
on, attached to or forming a part of the residential or
noncommercial property, but does not include the construction
of a new residence. The term extends to the conversion
of existing commercial structures into residential or noncommercial
property and includes any of the above activities performed
under emergency conditions.”
Given the breadth of these regulations, and recapitulation
of the point in the latest revision, one might expect the
question of who is and who is not subject to the home improvement
regulations to be a settled topic, but the case law continues
to evolve. For example, a case just decided February 6, 2008,
Czar v. Thomas, 398 N.J. Super. 133 (2008), held that a specialty
contractor (in that case a cabinetry contractor) dealing
directly with owners of a new house under construction by
a third party builder, is a home improvement contractor within
the meaning of the home improvement practice regulations,
and cannot avoid liability under the regulatory exclusion
for new home construction.
The new section on the purpose and scope of the home improvement
practices regulations needs a plain language re-write, so
that it says what it means and any contractor can understand
it. Until that day comes, the word needs to go out - the
home improvement practices regulations apply to the licensed
trades.
===============================================================================
Robert J. Incollingo
1As of this writing, the New Jersey Board of Examiners
of Electrical Contractors is a bit behind the curve, in that
its website carries an outdated version of the regulations
as they existed before passage of the Contractors' Registration
Act.
Press Release
Jan. 16, 2008 For immediate release
Local attorney wins accolade from
consumer-protection organization
Robert J. Incollingo, a Glendora attorney,
has been named 2007 Man of the Year by the New Jersey Remodelers
Association.
Incollingo was honored Jan. 9 for his work with the Collingswood-based association,
whose mission is to protect South Jersey homeowners by holding the 80 contractors
and suppliers in the group to strict ethical standards. Through its Operation
Good Samaritan, the group even sends contractors out — at no cost to
selected homeowners — to fix faulty or unfinished work done by nonmembers.
Incollingo belongs to the association because construction law is one of the
primary focuses of his practice, which also encompasses business and real estate
litigation.
New Jersey Remodelers Association Executive Director John T. Gasper III cited
the large commitment of time Incollingo has donated to the group over the past
10 years, and noted that Incollingo rewrote the rules for the group’s
Consumer Arbitration Board, which settles disputes between homeowners and member
contractors.
“Bob is always focused on getting us
more members and getting the best and newest industry education
to our members,” Gasper said. “We appreciate
what he does.”
Incollingo said he was “thrilled” to receive the honor, adding
that “it’s especially gratifying coming from a group committed
to such high standards of fairness and justice.”
A practicing attorney for 26 years, Incollingo
is a graduate of Temple University and its school of law.
He also attended the construction development and management
certificate program at the University of California, Irvine,
and completed the construction management certificate course
at Camden County Community College.
Incollingo is co-vice chair of the New Jersey State Bar Association Construction Law Section and a member of the Burlington County and Camden County bar associations and the unified State Bar of California. He serves as a commercial arbitrator by appointment of the Superior Court in Camden and Burlington counties.
Incollingo is also a founding member of, and counsel to, the Delaware Valley Chapter of the Roof Consultants Institute, and a member of the Builders League of South Jersey and its parent group, the National Association of Home Builders.
He is a frequent speaker at professional conferences on construction topics and is a contributing author of “Residential Construction & Renovation: A Legal Guide for New Jersey Homeowners,” published by the New Jersey State Bar Foundation.
Members of the press: Please direct questions to Beth Fand Incollingo at Texterity, LLC by calling 609.351.5990 or e-mailing a1scoop@hotmail.com.
Robert Incollingo’s Web address is www.rjilaw.com and the address for the New Jersey Remodelers Association is www.thenjra.com. Feel free to include these in the article, or use them for background information.
Final Invoice Disclosure and Limit on Charges for Pulling a Permit
by Robert J. Incollingo
On January 9, 2006, N.J.S. 56:12-2.1 was added to the New Jersey consumer contracts law (N.J.S. 56:12-1 to -18), which includes the Plain Language Act and the Truth-In-Consumer Contract, Warranty and Notice Act, and protects the public by requiring that consumer contracts be clearly written and understandable. Under new section 2.1, a contractor must now list on the final invoice to the consumer the cost of all permits required to complete a residential construction project, along with any associated administrative or processing fees charged by the contractor. The new law limits the related charges to the actual cost to the contractor to obtain the permit and to record any necessary documents.
Failure to comply with the new requirement exposes a contractor to a $500 penalty for each separate violation, upon written complaint filed by a consumer with the Division of Consumer Affairs (DCA) in the Department of Law and Public Safety.
The law applies to any work on a residence which will require a permit to be obtained under the State Uniform Construction Code Act ( N.J.S. 52:27D-119 et seq.). or the associated regulations, but it does not apply to work on a new home subject to the New Home Warranty and Builders' Registration Act, (N.J.S. 46:3B-1 et seq.) and for which a certificate of occupancy has been issued.
Although the new statute is sandwiched into the consumer contracts law which elsewhere allows for private enforcement leading to damages and attorney's fees, the residential permit disclosure law offers no such remedy to the consumer. Presently, violations are to be enforced pursuant to the Penalty Enforcement Law of 1999 (N.J.S. 2A:58-10 et seq.) by the DCA, and only "upon written complaint filed by a consumer." The remedy inures to the State, rather than to the aggrieved consumer.
This is a law which has little in the available record concerning the reasoning behind it, and the statement which accompanied its introduction does no more than paraphrase the proposed text. Presumably, there was a felt need to avert unforeseen charges by rapacious residential contractors, and the statute as originally drafted required disclosure of all permit costs in the original contract. Because all permit costs cannot be known for certain before application, the law was revised to instead require that those fees be stated on the final invoice. Reconsidered with this change, the measure found overwhelming acceptance in the Legislature, passing in the Assembly 76-0-1 and the Senate 39-0.
The new statute suggests the need for interpretation, by limiting associated administrative or processing fees charged to the contractor's "actual cost" to obtain the permit and to record any necessary documents. "Actual cost" is not defined; it could arguably include direct cost or indirect cost, or both. As enacted, the law is silent on the extent to which the contractor's indirect job costs (e.g., home office overhead) can be charged to procurement of permits, which under accepted cost accounting principles could be prorated and assigned in part to a particular project, as in Eichleay formula calculations widely used in construction delay cases. Nor does the new law offer limitations on attenuated direct cost items such as fuel, administrative time for application preparation and revision, payroll associated with meetings with officials, or office supplies. The law says nothing about the propriety of externalizing these "actual" contractor costs which under former law could be approximated and passed through as administrative or processing fees.
Given the relatively small penalty involved for any violation, the lack of any financial incentive for consumers to vindicate their rights, and the obscurity enjoyed by the new statute to date, these issues are likely to remain undecided for a very long time.
11/29/07
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