The rights and ability of a contractor to collect payment for his work performed is essential to the livelihood and existence of his business. However, the rights of the consumer are equally as vital and require protection as well. That was the legislative intent with the passage of the Home Repair & Remodeling Act (the “Act”) in 2000. 815 ILCS 513/1, et al. Because the Act itself is fairly new, only three cases have interpreted its meaning in the judicial system. The most recent case is the unpublished 4th District opinion in Smith v. Bogard, No. 4-07-0240 (Ill.App. December 26, 2007).
In Smith, Cory and Angela Bogard employed Dan Smith, doing business as Dan R. Smith Building Services, to complete a remodeling project on their home. The parties met in person and discussed the details of the project, with Smith giving the Bogards an oral estimate of approximately $20,000. In the end, completion of the project took longer than expected and cost more than expected.
The Bogards refused to pay the unpaid balance and Smith filed suit against them based on breach of contract and unjust enrichment. In granting a motion to dismiss filed by the Bogards, the court found that Smith had failed to comply with the explicit requirements of the Home Repair & Remodeling Act and was therefore barred from his claim. On appeal, the 4th District affirmed the holding.
According to the Act, any “person engaged in the business of home repair or remodeling” must comply with certain requirements when they agree to do home repair or remodeling with a consumer for a price over $1,000.00. Among these is the requirement that consumers are to be provided with a written contract including all costs, as well as the consumer rights brochure, “Home Repair: Know Your Consumer Rights.” Distribution of this brochure is required even for projects costing under $1,000.
The purpose of the Act is “to improve communications between consumers and persons engaged in the business of home repair or remodeling in order to ‘increase consumer confidence, reduce the likelihood of disputes, and promote fair and honest practices’.” Bogard, No. 4-07-0240, citing 815 ILCS 513/5 (West 2004). The Act is not taken lightly, and violations are deemed to invalidate an otherwise valid contract.
In Smith, the Bogards never received a written contract and were never provided with the consumer rights brochure. Smith argued that he should be considered a subcontractor and therefore exempt under the Act. For his argument, Smith relied on the 2nd District case of MD Electrical Contractors, Inc. v. Abrams, 369 Ill. App. 3d 309 (Ill.App. 2006). In Abrams, the subcontractor was not required to follow the requirements of the Act because there was a written contract signed with a general contractor. However, it was noted that the subcontractor never had face-to-face negotiations with the consumer. The Smith court distinguished the two cases because the Bogards never hired a general contractor and Smith specifically had in-person negotiations with the Bogards. Therefore, the Act applied to Smith, and his failures cost him the ability to recover the unpaid balance for his work.
Without meeting the Act’s strict requirements, a valid and enforceable contract does not exist. The contractor is then barred from his claim and he has no basis for the filing of a mechanics lien. Although one may think that this allows for unjust enrichment of consumers, the Smith court disagreed and held that to do so “would run afoul of the legislature’s intent” and “reward deceptive practices,” therefore violating public policy.
