New Stormchaser Law Impacts All Exterior Residential Contractors

Beginning January 1, 2014 residential contractors will be subject to new rules when contracting for exterior remodeling work under a newly adopted State Statute, Wis. Stat. 100.65.  The new rules, as summarized below, will require contractors to change the way they advertise, negotiate and contract for exterior construction, especially when the work relates to a property insurance claim.  Although the new law is intended to curb abuses by stormchasers, the rules affect all exterior residential contractors and the way they communicate with a customer’s homeowner’s insurance company.

Who is subject to the law:

The law applies to any contractor who enters into a written or oral contract with a consumer to repair or replace a roof system or to perform any other exterior repair, replacement, construction, or reconstruction of residential real estate.

Prohibited trade practices:

No residential contractor may advertise or promise to pay or rebate all, or any portion of, a property insurance deductible as an incentive to enter into a contract for exterior repair or replacement work.

Requirements for the Contract: 

1. Contractors must provide the following statement in the Contract in at least 10-point bold font.  The Customer must indicate whether the work is related to an insurance claim by checking the appropriate box. If the work is related to an insurance claim, the Contractor must keep the original and provide a copy to the Customer.

Please indicate whether, to the best of your knowledge, the work contemplated by this contract is related to a claim under a property insurance policy:

______ YES, to the best of my knowledge, the work contemplated by this contract is related to a claim under a property insurance policy.

______ NO, to the best of my knowledge, the work contemplated by this contract is not related to a claim under a property insurance policy.

Date                     

Customer’s signature                   

Residential contractor’s signature                                          

You may cancel this contract at any time before midnight on the third business day after you have received written notice from your insurer that the claim has been denied in whole or in part under the property insurance policy. See the attached notice of cancellation form for an explanation of this right.               

1. With the Contract, the Contractor must provide notice of the Customer’s right to cancel by attaching two copies of the following form in at least 10-point bold font: :

NOTICE OF CANCELLATION

If you are notified by your insurer that the claim under the property insurance policy has been denied in whole or in part, you may cancel the contract by personal delivery or by mailing by 1st class mail a signed and dated copy of this cancellation notice or other written notice to (name of contractor) at (contractor’s business address) at any time before midnight on the third business day after you have received the notice from your insurer. If you cancel the contract, any payments made by you under the contract, except for certain emergency work already performed by the contractor, will be returned to you within 10 business days following receipt by the contractor of your cancellation notice.

 

I CANCEL THIS CONTRACT

Date                                                     

Customer’s signature                                   

Contractor duties if Customer elects to Cancel Contract:

Within ten business days after receiving notice of cancelation of the Contract from the Customer, the Contractor must return any payments, deposits or any note for indebtedness related to the Contract.  The Contractor is entitled to keep the reasonable value of any emergency services performed to prevent damage to the Customer’s property, but only if the Customer has acknowledged such services in writing.

Restrictions placed on discussion with an insurance company:

A Contractor may not represent, or advertise that it will, represent the Customer or negotiate on behalf of the Customer regarding an insurance claim for the work that involves repair or replacement of a roof system or exterior repair, replacement, construction or reconstruction of the Customer’s real estate.

With the express consent of the Customer the Contractor may do each of the following:

(a)    Discuss damage to the Customer’s property with the Customer or the insurance company representative

(b)   Submit an estimate for the repair work directly to the insurance company;

(c)    Discuss options for the work with the Customer or the insurance company representative

Penalties for violation:

A forfeiture of between $500 to $1,000 for each violation.

Compliance with HIPA

At the same time you review your contracts before the New Year to to comply with the Stormchaser Law, it is also a good time to double-check that your contracts and practices comply with Wisconsin’s Home Improvement Practices Act (HIPA).  HIPA broadly prohibits remodeling contractors from making misrepresentations when contracting with residential homeowners, however, it also requires Contractors to include in their contracts certain information regarding the identify of the Contractor, the work and products to be installed, the total price, dates of commencement and completion, security interests, any other documents incorporated in the contract, and the terms of any warranty or guarantee for the product.   Violations of HIPA subject a contractor to double damages and attorneys’ fees.

Brian R. Zimmerman is a shareholder of Hurtado S.C., Counselors at Law, practicing in construction law.  For more information or specific questions about the Stormchaser Law or the Home Improvement Practices Act, please feel free to contact Mr. Zimmerman at bzimmerman@hurtadosc.com or call 414-727-6250.  www.hurtadosc.com.