Indiana’s Home Improvement Contracts Act (the “Act”) is a statutory consumer protection law that sets forth terms to be included in all real property improvement contracts exceeding $150. A contractor who violates the Act commits a “deceptive act” as defined in the Indiana Deceptive Consumer Sales Act, which is actionable by the consumer and even the Attorney General. Contractors may, however, violate the Act simply by failing to follow proper notice procedures or failing to include certain statutory information in a real property improvement contract entered into with a consumer.
The following is a highlight of recent amendments to the Act:
- Coverage. The Act was revised to re-designate “home improvement contract” a “real property improvement contract.” The statute applies to all interior and exterior improvements to residential structures that are used in whole or in part as a dwelling for a consumer, regardless of whether the consumer owns, rents or leases the residential real property that is the subject of the improvement. While the Act applies to all fixtures to, structures on, and improvements to the real property, it does not apply if the structure is more than four units.
- Notice of Consumer’s Right to Cancel. Before entering into any real property improvement contract with a consumer, the contractor must notify the consumer, in writing, of their right to cancel the contract within the first three (3) days after it is signed by both parties. If applicable, the commencement of this three (3) day period is delayed to the date the consumer receives written notice from their insurance company of a final determination as to whether all or part of a claim or the contract is a covered loss under the consumer’s insurance policy. The contractor must also attach to the contract, in duplicate, a “Notice of Cancellation” form that can be signed and returned by the consumer. Further, the Act now allows the consumer to submit the cancellation via electronic mail.
- Additional Contract Terms Required. The real property improvement contract must now also provide:
- The email address of the contractor and each owner, officer, employee, or agent to whom consumer problems and inquiries can be directed;
- A statement as to whether any subcontractor or vendor, not a party to the contract, will lease or furnish any labor, services, materials, equipment, or machinery to, or on behalf of, the contractor;
- If the contract is entered into for damage, loss, or expenses to be paid from the proceeds of an insurance policy or for which a third party is liable, a statement that neither the contractor nor its subcontractor or vendor may initiate or pursue a claim with the consumer’s insurance company; and
- A contract price that reflects the full amount of the real property improvement contract less any discounts offered.
- Certain Assignments Prohibited. The Act now explicitly prohibits the assignment of the consumer’s rights to any contractor or third party.
Contractors and subcontractors that provide any type of real property improvements to consumers are advised to review and update their contracts to comply with the recent changes to the Indiana Home Improvement Contracts Act.
For additional information regarding real property improvement contracts or any construction law matter, please contact attorney Shannon Frank at sfrank@KDDK.com or (812) 423-3183, or contact any member of the KDDK construction law practice team.
About the Author
Shannon S. Frank, a Partner at Kahn, Dees, Donovan & Kahn, LLP (KDDK), in Evansville, Indiana, has more than 25 years’ experience in the practice of business law, construction law, estate planning and probate administration, health care law, and real estate law. Shannon takes prides in giving exceptional service to her clients, recognizing that relationships with clients play a significant and essential role in providing tailored and comprehensive legal advice.