Indiana home improvement contractors should be aware of the requirements of Indiana’s Home Improvement Contract Act, Indiana Code § 24-5-11-1 et seq. (“HICA”), which imposes certain requirements on contracts for home improvements on residential property located in Indiana.  This article explores HICA’s requirements and the consequences for home improvement contractors who fail to comply with those requirements.

What is HICA, and when does it apply?

The Indiana General Assembly enacted HICA to require that home improvement contracts contain certain basic terms for the protection of the homeowner. Such protection was deemed necessary because “few consumers are knowledgeable about the home improvement industry[.] The consumer’s reliance on the contractor coupled with well-known abuses found in the home improvement industry served as an impetus for the passage of [HICA], and contractors are therefore held to a strict standard.”[i]

HICA applies to contracts for more than $150 for the improvement of residential property, i.e., a house, and includes the fixtures, structures, and improvements of that residential property.  Notably, HICA does not apply to the original construction of a dwelling, but instead applies only to “home improvements,” including but not limited to interior remodeling, remediation work, electrical work, plumbing work, mechanical work (heating and air), and exterior work, such as siding, decking, and roofing.

What terms must be included in a home improvement contract?

HICA requires that home improvement contracts contain the following terms:

• Name of the consumer and address of the real property that will be improved.
• Name and address of the real property improvement supplier along with an email address.
• Name, telephone number, and email address of each owner, officer, employee, or agent of the real property improvement supplier. This is so the consumer will know to whom they may direct questions.
• Date the contract was submitted to the consumer.
• Any time limitation on the consumer’s acceptance of the contract.
• A reasonably detailed description of the proposed improvements, or in the alternative, a statement that the specifications will be provided and that the consumer must sign and date an approval of the specifications before any work begins.
• Approximate start and completion dates of the improvements.
• Statement of any contingencies that may alter the completion date.
• Contract price.
• A statement whether a subcontractor, vendor, or any other third party will be used to complete the home improvements or furnish any labor, services, material, equipment, or machinery.
• Signature lines for the supplier or supplier’s agent and for each consumer who is a party to the contract, with each person’s name typed or printed legibly below the signature line.

Not only do the above provisions need to be incorporated into the contract, but they must be worded so that a person of average intelligence and experience would understand them.

What if a third party, such as an insurance company, will be paying for the home improvements?

Often, the cost of home improvements will be funded by a homeowner’s insurance company.  In that event, certain of HICA’s requirements are relaxed, as follows:[ii]

• Description, completion dates, and statement of contingencies should be identified in the contract, but only to the extent reasonably known by the home improvement supplier.
• The start and completion dates may be stated in terms of number of days elapsed from the date the insurance carrier approves the contractor’s estimate.
• The contract price can be expressed in terms of the consumer’s liability for payment after the insurance proceeds are applied.
• An insured consumer may issue written authorization of the commencement of work before receiving complete specifications, and if so, the insured consumer is obligated to pay for the real property improvements.

HICA also prevents a home improvement supplier from advertising, offering, or promising to pay or rebate any part of an insurance deductible to induce a consumer to enter into a home improvement contract.[iii]

Cancellation Rights

To relieve homeowners from high pressure sales tactics, HICA provides that homeowners have the right to cancel a home improvement contract by delivering written notice of cancellation to the home improvement supplier no later than midnight of the third business day after the contract is signed. If the homeowner does so, the home improvement supplier must honor the cancellation and refund all monies paid by the homeowner (except for payment for work performed before the notice of cancellation was received). In addition to providing homeowners with a fully signed copy of the home improvement contract, home improvement suppliers must provide homeowners with notice of their cancellation rights and a form that homeowners can sign and deliver to the home improvement supplier to exercise those cancellation rights.

What needs to be done to modify the contract?

A modification can occur only if the modification is in a writing signed by the consumer. Oral modifications to home improvement contracts are not enforceable under HICA.[iv]

What if a home improvement supplier does not comply with HICA?

The consequences for failing to comply with HICA can be painful for a home improvement supplier. Any violation of HICA constitutes a “deceptive act” under Indiana’s Deceptive Consumer Sales Act, Indiana Code §24-5-0.5-1 et seq., and is subject to the remedies and penalties provided by that Act, which allows homeowners to recover their actual damages sustained due to the deceptive act as well as the homeowners’ attorney’s fees.  In addition, disgruntled homeowners who are seeking to defend themselves against collections lawsuits filed by home improvement suppliers will often assert counterclaims asserting violations of HICA, which make it more difficult and expensive for home improvement suppliers to collect payments they are otherwise owed by homeowners.

For any questions regarding home improvement contracts, we recommend seeking advice from an attorney.

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[i] Benge v. Miller, 855 N.E.2d 716, 720 (Ind. Ct. App. 2006).

[ii] If this type of contract is entered into between June 30, 2012, and July 1, 2017, and includes more than one exterior home improvement, then the real property improvement supplier must inform the insured consumer of their rights under Indiana Code § 24-5-11-10.5(b).

[iii] Indiana Code § 24-5-11-10.5.

[iv] Ambrose v. Dalton Const., Inc., 51 N.E.3d 320, 321-22 (Ind. Ct. App. 2016).

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Posted on October 20, 2021, by Travis R. Watson