Home Repair and Construction

If you are like most Illinoisans, your home is your most valuable financial asset. Performing upgrades on your home in the form of a new roof, new kitchen, or addition can increase its value, but home improvements can also be needlessly expensive and frustrating if you pay for work that is not performed, work that does not meet the building codes in your town, or work that is of poor quality. For these reasons, it’s important to take extra care when you hire someone to work on your home. Of the more than 20 thousand complaints received each year by the Office of the Illinois Attorney General, approximately 20 percent involve disputes between home owners and home repair contractors. Home owners can protect themselves by following some important rules and asking the right questions.

Remember, you have three business days to cancel any contract, if the sale is made and signed at your home. The contractor CANNOT take this right away from you by initiating work, selling your contract to a lender, or any other tactic. (See the Illinois Attorney General fact sheet, Three Day Right to Cancel Home Repair Contracts.)

Paying for Home Repair Projects
Beware of contractors who ask you to pay for the entire job up front. Negotiate a payment schedule that is based on completion of specific stages of the job. Your down payment should be as little as you can negotiate with the contractor. You and the contractor may agree to deposit the contract money with an independent escrow agent, such as a bank or title company. By doing this, payments can be made as the work progresses and only if you are satisfied that the work is performed to your expectations and that subcontractors have been fully paid.

If you need to borrow money to pay for your home repairs, shop around first. The financing offered by a contractor may be expensive, so check with your local banks or your credit union to see if you can find better rates. Be extremely cautious about using your home as security for a home improvement loan. If you fail to repay the loan as agreed, you could lose your home. If you choose to take out a loan to pay for your home repairs, you should have a private attorney review the loan documents before you sign an agreement. (See the Illinois Attorney General fact sheet, Things You Should Know About. . .Financing Home Repairs.)

Mechanic’s Liens and Lien Waivers

A mechanic’s lien protects a subcontractor in the event that the general contractor fails to pay for the subcontractor’s services or supplies. In that event, the subcontractor can ask a court to put a lien, or hold, on your property until the debt is paid. As the property owner, you are responsible for the debt, and you will not be able to sell or finance your property until all liens are paid or lifted.

Duties of the General Contractor and Subcontractors
Under Illinois law, the homeowner must request—and the contractor must provide—a written list of the names and addresses of "all parties furnishing materials and labor and of the amounts due or to become due to each." This list, or affidavit, must appear either as part of the contract or in a separate printed statement, and it must contain the following language:

"THE LAW REQUIRES THAT THE CONTRACTOR SHALL SUBMIT A SWORN STATEMENT OF PERSONS FURNISHING MATERIALS AND LABOR BEFORE ANY PAYMENTS ARE REQUIRED TO BE MADE TO THE CONTRACTOR."

The law also requires every subcontractor listed in the affidavit to notify the homeowner, either personally or by certified letter, when he or she has furnished materials or performed labor on the homeowner’s remodeling project. This notice preserves the subcontractor’s right to put a lien on your property, and it must contain the name and address of the subcontractor or material provider, the starting date of the work performed, the type of work performed or materials provided, and the name of the general contractor who requested the work to be done. This notice is required by law to contain the following statement:

"NOTICE TO OWNER"

The subcontractor providing this notice has performed work for or delivered material to your home improvement contractor. These services or materials are being used in the improvements to your residence and entitle the subcontractor to file a lien against your residence if the services or materials are not paid for by your home improvement contractor. A lien waiver will be provided to your contractor when the subcontractor is paid, and you are urged to request this waiver from your contractor when paying for your home improvements."

Lien Waivers
By giving you a signed lien waiver, a supplier of materials or services for your home repair project acknowledges that he or she has no right to file a mechanic’s lien against your property. In other words, the supplier acknowledges having been paid in full for those materials or services. It is important that you get these written and signed waivers from every subcontractor who has worked on your home in the course of the project. Do not make the final payment to the contractor until you are satisfied with the work and have obtained signed waivers showing that every subcontractor has been paid. You can find blank "waivers of lien" forms at home stores, print shops, and on the Internet.

Protecting Yourself During the Project
Keep all paperwork related to your home repair project in one place. This includes copies of the contract, change orders (approving a substitution of materials or services), and correspondence with your contractors and suppliers. Keep a log of all phone calls, conversations, and activities associated with the project. You also might want to take photographs recording the work’s progress. These records will prove important if problems arise with your project, during or after construction.

Before making the final payment and signing off, make sure that: the work meets the standards spelled out in the contract; the job site has been thoroughly cleaned up; you have written warranties for materials and workmanship; and you have written proof that all subcontractors and suppliers have been paid.

What You Can Do if You are the Victim of a Home Repair Scam
If you have a problem with your home improvement project, first try to resolve it with the contractor. Many disputes can be  resolved at this level. Follow any phone calls with a letter summarizing the conversation. Send the letter to the contractor by certified mail, return receipt requested. The receipt will be your proof that the contractor received your letter. Keep a copy of the letter and receipt in  your files.

You can also contact the Office of the Illinois Attorney General to file a consumer complaint for cooperative mediation at any time you feel you need help.

If you can’t get satisfaction through personal negotiation or cooperative mediation, consider consulting a lawyer to explore what options you have for resolving your dispute in court. Keep in mind that there are time deadlines to cancel sales contracts and pursue legal claims. The Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/) allows you to sue if you have been damaged by unfair or deceptive acts or practices. You may be able to file a lawsuit for monetary damages and your attorney’s fees. Finally, don’t be afraid or embarrassed to call the police if you are in a situation that makes you uncomfortable.

Much more information on home repair is available on the Web site of Illinois Attorney General Lisa Madigan, including:

Financing Home Repair
http://www.illinoisattorneygeneral.gov/consumers/finanhomerep0404.pdf

Three Day Right to Cancel Home Repair Contracts
http://www.illinoisattorneygeneral.gov/consumers/3dayright.pdf 

OFFICE OF THE ATTORNEY GENERAL STATE OF ILLINOIS
LISA MADIGAN - ILLINOIS ATTORNEY GENERAL

Please Visit: http://www.illinoisattorneygeneral.gov/