Robert J. Incollingo FAQ

I've been sued and the deadline has passed for me to file an answer. What can happen?

Should I spend money I don't have to bring my contracts into line with today's legal standards? What's the hurry?

I'm not making any money bidding private jobs. How do I get into public work?

I am already licensed as a plumber (or electrician, or other licensed trade). Do I have to comply with the home improvement practices rules?

My subcontract has a Pay When Paid clause. If the owner never pays the prime contractor, does that mean I give up my right to be paid altogether?

My contract has a choice of forum clause that obligates me to resolve any contract claims in another state. Is this enforceable?

How many days do I have to reject a construction contract and demand a refund?

My contract has an arbitration clause. Can I get out of it?

What's the difference between a construction lien and a mechanic's lien?

The Contractors' Registration Act looks like a good beginning for consumer protection, but what can I do to avoid sharp practice by a contractor?

Queston - I've been sued and the deadline has passed for me to file an answer. What can happen?
Answer - At the end of the process, sheriffs with guns will come and sell your house and your belongings. As a reasonable alternative, you may be able to hold some of your stuff with a bankruptcy. Far better, of course, to get help from an experienced lawyer and manage the crisis the right way.

Should I spend money I don't have to bring my contracts into line with today's legal standards? What's the hurry?
Answer - It depends on whether you want to lose a lawsuit for nothing more than shortcomings in your paperwork, or whether you want to collect your contract price, or have your agreement voided as illegal should push come to shove. Failure to comply even in technical respects with the complicated New Jersey Consumer Fraud laws, regulations and case opinions may result in per se violations of the law, opening your liability to the complaining party for injunctions and award of triple damages, refunds, costs and attorney's fees.

I'm not making any money bidding private jobs. How do I get into public work?
Answer - A good place to start is by registering with the Department of Labor and Workforce Development of the State of New Jersey under "The Public Works Contractor Registration Act" (34:11 56.48 et seq.) Advance registration is legally required for contractors and subcontractors who work or bid on public jobs. For 100 percent State funded projects, bidders must be registered at the time of bid. For Federally funded projects, the bidder must be registered prior to execution of the contract. Registration is the beginning of the public work qualification process. Check with counsel for further guidance.

I am already licensed as a plumber (or electrician, or other licensed trade). Do I have to comply with the home improvement practices rules?
Answer - Yes. The home improvement practice regulations, found in the New Jersey Administrative Code at N.J.A.C. 13:45A 16.1 to 16.2, interpret the New Jersey Consumer Fraud Act, N.J.S.A. 56:8 1 to 20, in the field of residential construction. More than twenty years after their adoption, a fair amount of uncertainty remains regarding the applicability of these regulations to the licensed trades. Look at any work order for plumbing or electrical services, and odds are it comes up short against the clear requirements of the home improvement practice regulations. Ask the man who uses it, and he will likely (and wrongly) respond that those regulations don't apply to his business. The truth is that licensed tradesmen, and the companies associated with them, are subject to the home improvement practice regulations even when they operate within a limited scope of work which requires their particular license. For more information, click here. The Home Improvement Practices Regulations Apply to the Licensed Trades.

My subcontract has a 'Pay When Paid' clause. If the owner never pays the prime contractor, does that mean I give up my right to be paid altogether?
Answer - No, but you may have to wait a reasonable amount of time. A pay when paid clause conditions a subcontractor=s right to be paid on the prime contractor's receipt of payment from the owner. In New Jersey, the courts will refuse to excuse a prime contractor from relying on a pay when paid clause to stiff a subcontractor. Instead, the courts will construe a pay when paid clause as a timing provision which fixes the subcontractor's right to payment within a reasonable time after the work is performed regardless of when the general contractor is paid by the owner. For more information, click here.

My contract has a choice of forum clause that obligates me to resolve any contract claims in another state. Is this enforceable?
Answer - Probably yes, but maybe not if you can come in under the amended New Jersey Prompt Payment Law, N.J.S.A. 2A:30A 1 and 2. Generally such agreements are prima facie valid and enforceable in New Jersey, and New Jersey courts will decline to enforce a clause only if it fits into one of three exceptions to the general rule: (1) the clause is a result of fraud or "overweening" bargaining power; (2) enforcement would violate the strong public policy of New Jersey; or (3) enforcement would seriously inconvenience trial. The burden falls on the party objecting to enforcement to show that the clause in question fits within one of these exceptions. For more information, click here. The good news is that effective September 1, 2006, the amended prompt payment statute governing construction contracts, besides setting specific times within which payment must be made for construction work, made New Jersey the exclusive venue for payment disputes involving construction projects in New Jersey. In theory, the amended Prompt Payment Law would trump the choice of forum clause if you're not a a subcontractor or subsubcontractor who has agreed in writing to something other than the law allows.

How many days do I have to reject a construction contract and demand a refund?
Answer - None, if you contract for commercial work. Three days, usually, for residential work, but the running of the three days may start on different dates. There are three different statutes that may apply - under the "Contractors' Registration Act" a home improvement contract may be cancelled by a consumer for any reason at any time before midnight of the third business day after the consumer receives a copy of it. N.J.A.C. 13:45A 17.13; N.J.S.A. 56:8 151. The Door to Door Home Repair Sales Act provides that you must furnish to the home repair contractor a notice of intent to rescind the home repair contract by certified mail, return receipt requested, postmarked not later than 5 p.m. of the third business day following the day on which the home repair contract is executed. N.J.S.A. 17:16C 99. For purposes of these state laws, "business day" means any day other than a Saturday, Sunday or holiday. Under the Federal Trade Commission's Cooling Off Rule, if you buy goods or services in your home or at a location that is not the seller's permanent place of business, your right to cancel for a full refund extends until midnight of the third business day after the sale. Under the Cooling Off Rule, Saturday is considered a business day; Sundays and federal holidays are not. INTERESTING FACT: The Door to Door Home Repair Sales Act was enacted by our Legislature in 1968, but was never construed in any recorded decisions by the courts of this State until fourteen years later, when a small claims case concerning the sale of storm windows and doors went up on appeal in Swiss v. Williams, 184 N.J. Super. 243, 445 A.2d 486 (1982).

My contract has an arbitration clause. Can I get out of it?
Answer - Probably not, unless the other party agrees to waive its right to arbitrate. Enforceability is determined under state contract law principles by considering the intentions of the parties as reflected in the on the face of the contract. In New Jersey, the Uniform Arbitration Act of 2003, N.J.S.A. 2A:23B 1 to 32, authorizes courts to recognize and enforce arbitration agreements, and public policy that favors the use of arbitration proceedings as an alternative to litigation. For more information, click here.

What's the difference between a construction lien and a mechanic's lien?
Answer - Before the law changed in 1993, construction liens were called mechanic's liens in New Jersey. These days, locally, the term mechanics lien is used in the context of public projects, and is more correctly termed a municipal mechanics lien. A construction lien on a private project is enforced by foreclosure and sale of the improved property, while enforcement of a municipal mechanics lien results in a judgment against money still owing by the municipal project owner under the construction contract.

The Contractors' Registration Act looks like a good beginning for consumer protection, but what can I do to avoid sharp practice by a contractor?
Answer - You might read the actual statute and home improvement practices regulations on the NJ Division of Consumer Affairs website, for a start. You might hire a lawyer to review any contract worth more than you can comfortably squander. Assuming you won't, always insist on proof of current registration, and always insist on a detailed written contract drawn up in compliance with the law. Most of all, don't agree to anything sleazy. Don't agree to pay cash under the table to get a discount. Don't enter into a side deal with an employee working for your contractor. Don't hire illegal aliens. Don't let greed hook you into scams like buying the extra driveway sealer or mulch from a job down the road. Don't agree to draw up your own plans in order to get around the need for an architect or engineer's seal. Don't list yourself as your own contractor so your real contractor can avoid proof of registration to obtain permits. Don't understate the fair value of the work on the permits. Don't be a crook yourself.