Contractor Frequently Asked Questions
Below are commonly asked questions about Pennsylvania’s Home Improvement Consumer Protection Act. These questions highlight key areas of the law, however, are not a complete explanation of the statute and is not a legal opinion. It is recommended that you carefully review the Home Improvement Consumer Protection Act and consult with a private attorney if you have any questions about the law or need legal advice.
The Home Improvement Consumer Protection Act (“HICPA”) was adopted by Pennsylvania’s General Assembly in October, 2008, and signed by the Governor as Act 132 of 2008. The law establishes a mandatory registration program for contractors who offer or perform home improvements in Pennsylvania. The statute also establishes minimum insurance requirements for contractors; requires contractors to provide their registration number in their ads and contracts; establishes required contract terms for home improvement contracts; prohibits unfair business practices; and creates a criminal penalty for home improvement fraud.
Home improvement includes all of the following activities when they are done in connection with land or a portion of the land adjacent to a private residence or a building or a portion of the building which is used or designed to be used as a private residence for which the total cash price of all work agreed upon between the contractor and owner is more than $500:
- Repair, replacement, remodeling, demolition, removal, renovation, installation, alteration, conversion, modernization, improvement, rehabilitation or sandblasting.
- Construction, replacement, installation or improvement of driveways, swimming pools, pool houses, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, fences, gazebos, sheds, cabanas, landscaping work (other than work performed under the Plant Pest Act), painting, doors and windows and waterproofing.
- Without regard to affixation, the installation of central heating, air conditioning, storm windows or awnings.
No, the construction of a new home is not considered a home improvement under the law.
Under the law, a home improvement contractor is defined as:
Any person who owns and operates a home improvement business or who undertakes, offers to undertake or agrees to perform any home improvement. The term includes a subcontractor or independent contractor who has contracted with a home improvement retailer, regardless of the retailer’s net worth, to provide home improvement services to the retailer’s customers. The term does not include any of the following:
- A person for whom the total cash value of all of that person’s home improvements is less than $5,000 during the previous taxable year.
- A home improvement retailer having a net worth of more than $50,000,000 or an employee of that retailer that does not perform home improvements.
Anyone who owns or operates a home improvement business or who offers, performs, or agrees to perform home improvements in Pennsylvania must register with the Office of Attorney General unless they fall within two exceptions: small contractors (less than $5,000 of work in a calendar year) and large retailers (net worth or more than $50 million). All contractors, including self-employed contractors and sole proprietorships, subcontractors and independent contractors, and corporations, partnerships and all other types of business entities must be registered, unless they fall into the two exemptions above.
Contractors can register by online or by sending in the registration form. Click here for more information.
A non-refundable fee of $50.00, payable to Commonwealth of Pennsylvania must accompany each application.
The law requires contractors to submit a completed application which includes among other information:
- Contact and identifying information for the applicant, including information on any prior home improvement businesses operated by the applicant;
- For corporations and business entities, information on partners, officers, managers and other parties with an interest in the business;
- Information on other contractor licenses and registrations held by the applicant;
- A description of the applicant’s business;
- Background disclosures, including information on prior bankruptcies and criminal pleas or convictions;
- Insurance policy information showing at least $50,000 of personal injury liability coverage and $50,000 of property damage coverage (this is not related to contractor performance or quality of work);
- A signed and dated certification by the applicant; and
- A non-refundable application fee of $50.00, payable to Commonwealth of Pennsylvania.
Effective October 22, 2014, HICPA was amended to require that contractors update the information supplied in their application for registration within thirty (30) days of any change. Any changes should be reported to the Bureau, including, but not limited to, changes in:
- address and telephone numbers
- organizational structure (for instance, an individual has incorporated his or her business operation)
- the names under which the business operates
- the principals and shareholders of the business
- insurance information.
What is the toll-free telephone number for the Bureau of Consumer Protection that needs to be included in home improvement contracts?
The number is 1-888-520-6680. Consumers are able to call this number to check whether a contractor is registered with the Office of Attorney General.
Any home improvement contractor who is not registered is prohibited from offering or performing home improvements. The failure to register is a violation of the law and unregistered contractors face legal action, including civil penalties of $1,000 or more.
Does the law contain a "grandfather" clause for businesses that have been doing work for a long time or do they still need to register?
All home improvement contractors must register, with the exception of those performing less than $5,000 of work in a calendar year and retailers with a net worth of $50 million. The law does not grandfather existing businesses.
Home improvement contractor registrations are valid for two years, and must be renewed biennially.
The law exempts from the registration requirements contractors who perform less than $5,000 worth of home improvements in a calendar year.
Do subcontractors who are paid directly by a general contractor and who never enter into contracts with consumers need to register?
Yes, subcontractors who perform home improvements must register even if they do not enter agreements directly with consumers.
Do hardware stores or businesses that supply products and equipment used in home improvements need to register?
Retail businesses are not required to register unless the retailer offers or performs home improvements, which includes performing installations themselves or subcontracting installation work to others who will perform the services.
Landscapers whose work is limited to services performed under Pennsylvania’s Plant Pest Act do not need to register. However, landscapers who perform other work at private residences including, but not limited to: the placement of retaining walls, fountains or drainage systems, or the construction, replacement, installation or improvement of buildings, driveways, swimming pools, porches, garages, roofs, siding, insulation, solar energy systems, security systems, flooring, patios, non-decorative fences, doors, lighting systems, concrete walkways and windows must register and comply with the act.
Do building superintendents or the maintenance staff for apartment buildings, condominiums, or community associations need to register?
Employees of apartment buildings, condominiums, and community associations who are performing work on the property within the scope of their employment with these businesses do not need to register. However if an employees perform home improvements on private residential properties on their own, outside the scope of their employment, and that works totals $5,000 or more in a calendar year, then the employee must register as a contractor.
Do engineers, architects, land surveyors, electrical contractors, master plumbers, locksmiths, burglar alarm businesses, fire alarm businesses, and similar businesses need to register?
If these individuals/businesses perform home improvements including, but not limited to, repairs, replacements, remodeling, installations, alterations, or improvements on private residences, these individuals/businesses are considered contractors under the law and must register and comply with the act.
Do contractors need to show their registration to their customers or display the registration in their business?
The law does not require contractors to show copies of their registration. After registering, a home improvement contractor registration certificate will be issued to the contractor. If contractors wish to display it, they may but they are not required to do so. However, contractors must include their registration number in their advertisements, contracts, estimates and proposals.
The law requires registration numbers in any advertisements used by contractors. If a contractor has an ad for their business on their vehicle, the ad must include their registration number. If the vehicle does not have advertising promoting the business, then the contractor is not required to display their registration number on the vehicle.
No. Charities and non-profits, and those acting on their behalf, must register and comply with the act if they offer or perform home improvements in Pennsylvania which includes entering into a contract with the homeowner.
No. The law only applies “private residences” which is defined as: single family dwellings; multifamily dwellings consisting of not more than two units; and single units located within any multifamily dwelling, including condominiums and cooperative units.
Does the Home Improvement Consumer Protection Act affect the licensing or registration of home improvement contractors by counties, cities or towns?
Yes. Political subdivisions in Pennsylvania cannot separately license or register home improvement contractors after July 1, 2009, with the limited exception of licensing standards that are in effect on July 1, 2009, with respect to electricians, plumbers and other trades where licensing is conditioned on requirements of testing or possession of certificates obtained through specific training in electricity, plumbing or other trades.
Yes. The law prohibits various unfair business practices such as abandoning a home improvement project or failing to complete the work. The law also creates a criminal penalty for home improvement fraud, as defined by the statute. The act also requires all contracts for home improvements of more than $500 to be in writing and be signed by the consumer and the contractor. These contracts must also include important provisions like a description of the work; an approximate start date and completion date; the total price of the contract; and notice of the consumer’s right to cancel the contract. The law also limits down payments or deposits for any home improvement project for which the total price is more than $5,000.
Generally speaking a down payment of one-third of the total contract price or one-third plus the cost of special ordering materials is appropriate.
The law does not address how the balance should be paid. Discuss and negotiate between the consumer and contractor for incremental payments as work progresses, with a final payment upon completion.
Yes. Any contractor who offers or performs home improvements in Pennsylvania must comply with the law.
The law says that registration numbers must be included in all advertisements, contracts, estimates and proposals - how do I display my number?
You must include the abbreviation “PA” and the number assigned to you (example: PA123456). You do not need to include extra zeroes which come before your number but you must have these letters and your actual registration number. For instance, if you were assigned PA000372, you may list your number that way, or simply use PA372.
Although it is not required by the law, you can more fully explain the meaning of the number to consumers in your advertisements and in contracts, by displaying the number as: Pennsylvania Home Improvement Contractor Registration Number: PA123456.
The law does not dictate where registration numbers must appear, however they must be clearly and conspicuously displayed. You should place your registration number in a spot where consumers will be able to see it and read it clearly.
We suggest that you include the following language in your contracts, and display it prominently so your customers can review it:
“The official registration number of [contractor name] can be obtained from the Pennsylvania Office of Attorney General’s Bureau of Consumer Protection by calling toll-free within Pennsylvania 1-888-520-6680. Registration does not imply endorsement.”
Under the Home Improvement Consumer Protection Act, every contract for home improvements needs to be written, legible and signed by the consumer and the contractor (or their representatives). Contracts must also include important provisions, including the total price of the project; estimated start and completion dates; and a description of the work. The terms that are required to be in every home improvement contract, and provisions that cannot be included, are set forth in Section 517.7 of the law which you can review here.
Yes: HICPA was amended on October 22, 2014, to allow contractors to offer time and materials contracts to Pennsylvania consumers, provided the contractor:
Informs the consumer in writing that the time and materials contract will not exceed 10% above an initial cost estimate agreed to by the homeowner; and
Informs the consumer in writing that any cost beyond the contract price (initial cost estimate plus 10%) must be agreed to by the homeowner in a written change order.
The amendment added a definition of time and materials:
“Time and materials.” A construction practice where the contractor and owner agree that the contractor will perform the home improvement and the owner will pay the contractor under the home improvement contract based on the actual cost of labor at a specified hourly rate and the actual costs of materials and use of equipment, plus an agreed upon percentage of the total actual costs or a fixed amount, over and above the actual costs, to cover the contractor’s fee and overhead costs reasonably incurred in the performance of the home improvement.
The amendment also requires additional written disclosures about the cost of “time and materials” contracts in the form of a written initial cost estimate and within the actual home improvement contract. Section 517.7(a)(8) requires the following elements in order for a “time and materials” contract to be valid and enforceable, along with all the other requirements set forth in Section 517.7(a):
(8) Includes . . . a time and materials provision wherein contractor and owner agree in writing to the performance of the home improvement by the contractor and payment for the home improvement by the owner, based on time and materials. If the contract includes a time and materials provision:
(i) The contractor shall provide an initial cost estimate in writing to the owner before any performance of the home improvement commences.
(ii) The contract shall state:
(A) The dollar value of the initial cost estimate for the services to be performed under the time and materials provision.
(B) That the cost of the services to be performed under the time and materials provision may not exceed 10% above the dollar value indicated in the initial cost estimate.
(C) The total potential cost of the services to be performed under the time and materials provision, including the initial cost estimate and the 10% referenced in clause (B), expressed in actual dollars.
(D) A statement that the cost of the services to be performed under the time and materials provision shall not be increased over the initial cost estimate plus a 10% increase without a written change order signed by the owner and contractor.
Under the Home Improvement Consumer Protection Act, any work performed under the emergency work provisions of Section 201-7 of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law is not considered a home improvement. A link to that law is provided here.
Please note that this exception is limited to emergencies meeting the criteria set forth in Section 201-7 of the Unfair Trade Practices and Consumer Protection Law and the contractor must obtain the emergency waiver required by the law in each case.
Section 201-7 of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law contains a sample notice of cancellation you may wish to use in your contracts. A copy of that law can be found here.
It is a business’ responsibility to provide the written notice of cancellation, exactly as written in the law, otherwise if the consumer has not been notified of his rights, the entire contract may be voidable even after the three days has passed.