In our Summer 2009 Newsletter, we discussed in detail the new Pennsylvania Home Improvement Consumer Protection Act, which requires contractors performing home improvements to register with the State. The Act also requires that certain terms be included in any home improvement contract, and prohibits certain terms from appearing in the contract that were considered detrimental to the homeowner. The Act states that if a home improvement contract contains certain prohibited clauses, the contract shall be voidable by the owner.
Does that mean that if a home improvement contract does not comply with the Act, the owner can keep the improvement without paying anything for it? Not quite.
In Shafer Electric & Construction v. Mantia the homeowners contracted for an addition to their garage. After a dispute arose between the homeowners and the contractor, the homeowners responded to the contractor’s claim for the balance due by challenging the agreement as being invalid and unenforceable under the Act. Both the lower court and the Pennsylvania Superior Court agreed that, although there was a written contract, it was not valid or enforceable due to its failure to comply with the requirements of the Act.
The question was whether the contractor could recover for the value of his work on some other legal theory.
The Court pointed to Section 517.7(g) of the Act which states that if a contractor has complied with subsection (a), which requires a written contract, even though that written contract does not conform to the requirements of the Act, the contractor is not precluded from recovering payment for work performed based on the reasonable value of services which were requested by the owner if a court determines that it would be inequitable to deny such recovery.
Where does this leave the contractor? Assuming, for example, that the contractor has been paid a partial amount for his work, it must prove that the reasonable value of its services exceeded the amount that he or she has been paid in order to recover the difference. In addition, the court must determine that it would be inequitable to deny the contractor such recovery, whatever that may mean in a particular case.