My company did the work, can’t get paid and is responsible for attorney’s fees if I try to collect?

What the heck?

Owning a contracting business in the state of New Jersey can be a profitable way to make a living, but only if you play by the rules. The New Jersey Contractor’s Statute and Consumer Fraud rules that is.  New Jersey boasts of having arguably the most consumer friendly protections in the nation.  This is great news for the consumer, but if you do business in New Jersey you need to become familiar with and, more importantly follow, the rules.

Here are three of the most common ways we see contractors violate the consumer fraud rules:

  1. I’m not a construction contractor, so the rules don’t apply to me, right?

Think again.  It is not just general contractors who need to follow these stringent rules. Any form of independent contractor in New Jersey who deals with home improvement needs to follow the contractor’s statute and the consumer fraud rules.  Examples of other types of contractors include landscapers, painters and restoration services companies.

  1. Don’t forget to sign on the dotted line…

Any proposals presented to a New Jersey homeowner for more than $500 dollars MUST be made AND ACCEPTED in writing. Without a written and signed proposal you are in direct violation of the Home Improvement Contractors Statute in the State of New Jersey. The written proposal must also include all information required by the law including your name and registration number, start and end dates for the work, details about the work and details about labor, material and products. Overall the compliance list is not exhaustive, but the implications of non-compliance can most certainly be devastating.  If you do not have a signed proposal, do the work and try to get paid from a savvy homeowner you may have to not only walk away from your work without payment, but pay any attorneys’ fees the homeowner incurs if you try to collect.

  1. The importance of insurance

General Liability Insurance is a vital part of owning a business, but simply being covered is not enough. You are required by law to present anyone you do work for with a copy of your general liability insurance so that they have proof of coverage. Non-compliance is a technical violation of the statute and exposes you to liability as well as risking that you will not be paid.

These rules may seems basic, and they are, but you would be surprised how often they are not followed.  Many contractors have had to walk away from both their work and payment when violations of the act occur.  If you violate the Act you can be liable for treble (triple) damages under the New Jersey Consumer Fraud Act as well as attorney’s fees.

Don’t put your company at risk.  Contact Bergmann & Good with any questions or to schedule a review of your proposals, contracts and procedures for compliance with the New Jersey Consumer Fraud Statute.

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