Non-compliance with Home Improvements Contract Act does not necessarily make the contract unenforceable

Contracts used by home improvement contractors must comply with the Indiana Home Improvements Contract Act and must include certain information required by the HICA.  While failure by a contractor to use a proper home improvement contract can expose the contractor to significant liability, a recent Indiana case shows that the contract may still be enforced by the contractor.

In Imperial Restoration & Remodeling v. Costello, Imperial entered into a home improvement contract to repair water damage in the Costellos’ home.  James Costello signed the contract for the work, but the contract did not contain the provisions necessary to comply with the HICA.  The repairs were completed, Costello received a check from his insurance company for the amount invoiced by Imperial, Costello cashed the check and failed to pay Imperial, and Imperial sued for the amount owed under the contract.  Costello claimed that the contract with Imperial for the home improvement repairs should be void, and Imperial should not be allowed to collect the amount due, because the contract did not comply with the HICA.

The Indiana Court of Appeals ruled that the contract was not void, in part, because the statute does not specifically provide that a non-conforming contract is void or voidable and because the homeowner has other specific remedies under the statute.  The homeowner’s proper recourse would have been to sue Imperial for a deceptive act (failure to provide a contract containing all of the information required under the HICA) under the Indiana Deceptive Consumer Sales Act.  Since Costello did not sue Imperial directly or file a counterclaim in the Imperial lawsuit claiming Imperial had committed a deceptive act, he was not allowed to avoid paying the invoice by claiming the home improvement contract is void.

The lesson for home improvement contractors is to make sure the contracts with homeowners comply with the HICA.  Even though the homeowner in the Imperial case was not able to avoid paying the amount owed under the contract, Imperial escaped liability only because the homeowner failed to exercise his proper remedy under the HICA.  If the homeowner had made a claim for a deceptive act as a result of Imperial’s failure to comply with the HICA, Imperial could have been liable for damages actually suffered by the homeowner but a minimum of $500.  At the very least, Imperial would have lost almost the entire $669 amount owed under the contract.

By:  George Abel