The Homeowner, the Contractor and the Legal Process

The first level of protection a homeowner has against legal problems arising from their retention of a contractor is their initial research. Is the contractor registered with the Board of Building Regulations and Standards? Ask for a Certificate of Insurance for his General Liability Insurance Coverage. Does the contractor have employees that will work on the job? If so, ask for his Certificate of Worker's Compensation Insurance. If a contractor should, but does not have Workers compensation Insurance for his or her employees, the law exposes you, the homeowner, to litigation by a party injured working on the job.

Once you've determined the contractor is registered and insured, ask for references and verify them. Are they independent customers unrelated and otherwise unknown to the contractor? Was the work completed satisfactorily and on time? Were there ever any issues with sub-contractors? If possible, view a sample of a similar work product. Check the contractor's complaint history with the Attorney Generals Office and/or the Better Business Bureau. You can also contact the Office of Consumer Affairs to find out if there have been arbitration cases or Guaranty Fund claims against the contractor. Avoid contractors with a litiginous history.

Homeowners also increase their risk of exposure to loss if:

- the homeowner takes out the building permit for the work to be done (never do this!),

- the homeowner pays the contractor by the hour,

- the homeowner supplies or loans the tools and materials to get the job done,

- or the homeowner gives directions on how to perform the job.

If any of the above conditions apply, the homeowner may, in the event of a lawsuit, be found to be acting as their own general contractor and could be responsible for anything that happens to the subcontractors or their employees during the course of their work. So avoid structuring your contract in any of these ways.

In regard to the contract, always ask for a detailed written contract. It will protect you and help ensure that you and the contractor understand the scope of the job and the price. Massachusetts law requires that home improvement contracts over $1,000 be in writing. If contractors violate this provision, their registration may be suspended or revoked, and they can be fined or face criminal prosecution. Be sure the contract identifies the contractor, including the contractor's registration number; total price of the work; the payment schedule (never pay all before the job is finished; the contractor cannot collect more than one-third of the cost of the contract in advance, unless special order materials are needed); a provision for how changes will be made; a detailed list of specifications for the job; firm start and completion dates for the work; attach a copy of the contractor's insurance certificates; a permit warning you that if you secure your own building permit or hire an unregistered contractor, you will not be eligible for the Guaranty Fund; and a 3-day cancellation notice, informing you of your right to cancel your contract if you signed the agreement in your home, or at a place other than at the contractors office or business.

If you are financing your home improvements, contractors are not allowed to lend you the money, if the loan is secured by a mortgage on your home. Also, a contractor cannot offer you financing with a specific lender if your home is used as collateral. You have the right to choose any lender who is willing to negotiate your loan. Get a cost estimate from the contractor for the work that needs to be done, and then shop around for the best financing.

When Problems Arise

The Home Improvement Contractor Law (M.G.L. c. 142A) was created to protect consumers and regulate the practices of home improvement contractors. The law establishes a contractor registration requirement, an arbitration program for resolving disputes between homeowners and registered contractors and creates a Guaranty Fund to compensate consumers up to $10,000 for unpaid judgments against home improvement contractors.

There are some exceptions to the registration requirement. Contractors who do not need to be registered include installers of central heating and air conditioning, energy conservation devices, landscaping, interior painting, wall and floor coverings, fencing, freestanding masonry walls, above ground pools, shutters, awnings, ground level patios, driveways and some licensed professionals such as architects, electricians and plumbers who provide services that are exclusively within the scope of their profession. Additionally, some part-time and small job (under $500) contractors do not need to be registered.

Registered contractors must display their six-digit registration number on all advertisements, contracts and permits. Wherever you see the company or contractor's name displayed, you should also find a registration number nearby.

If you have a contract dispute or if you think that the job was done in a substandard or unworkmanlike manner, explore the following options:

Mediation: This process allows both parties to reach a mutually agreeable resolution with the help of a facilitator. Mediation is voluntary, requiring both parties consent.

Arbitration: You may be eligible for state-approved arbitration under the Home Improvement Arbitration Program. To qualify you must be able to prove that:

1. there was a written contract for the job

2. the contractor was registered at the time of the contract

3. the work was done on a 1-4 family, owner-occupied, primary residence in Massachusetts.

If you obtained your own building permit, you may be eligible for arbitration (if other qualifications are satisfied), but you may not be eligible for payment from the Guaranty Fund. If the contractor failed to include the permit notice in the contract and you meet other qualifications, you may have access to the Guaranty Fund.

A professional arbitrator hears the case presented by both parties and makes a legally binding decision. Either party may appeal the decision in court within 21 days.

Court Action: You may also pursue your claim through the court system. For claims under $2,000, small claims court is the most cost effective, however there is no appeal available to a plaintiff who loses their case. Claims that have larger damage claims are more suitable to District or Superior Court.

If you win your case in arbitration or in court and the contractor fails to pay the award or judgment, you can apply to the Home Improvement Contractor Guaranty Fund for up to $10,000 of your actual losses. The Guaranty Fund was created as a fund of last resort for consumers who have an unpaid final judgment against a contractor. The Guaranty Fund is funded by a one time fee that contractors are required to pay at the time of registration. After a consumer is paid from the Guaranty Fund, the responsible registered contractor is obligated to reimburse the Fund with interest within 30 days. Failure to repay the Fund may result in administrative fines, revocation of the contractor's registration, and potentially criminal prosecution. Applications to the Fund, must be filed within six months of the court judgment date or arbitration award. You must also demonstrate that all reasonable efforts to collect the judgment have been exhausted.

To qualify for payment from the Fund, a homeowner must be able to prove that there was a contract for the job, the contractor was registered with the Board of Building Regulations and Standards at the time of the contract; the contractor secured the building permit (with some exceptions); the contract was for work on a pre-existing 1-4 family residence in Massachusetts that is the owners primary residence; a court judgment or arbitration award in the homeowner favor has been issued, and all "reasonable efforts to collect" the judgment or award have been exhausted; a Fund application was filed within six months of the arbitration award or court judgment.

Contact Information

To check on a contractors registration:

Home Improvement Contractor Registration
Board of Building Regulations and Standards
(800) 223-0933 press 4
Search their database at:

To check a contractors complaint history or to file a consumer complaint:

Office of Consumer Affairs and Business Regulation
(Arbitration and Guaranty Fund History only)
Consumer Hotline
(617) 973-8787 or (888) 283-3757

Attorney Generals Office  (617) 727-8400

Better Business Bureau   (508) 642-4800; (508) 755-2548; (413) 734-3114

To file a formal complaint:

The Office of the Attorney General
(617) 727-8400

To obtain applications for arbitration or the Guaranty Fund, a sample contract or more information about the Home Improvement Law:

Office of Consumer Affairs and Business Regulation
(617) 973-8787 or Toll Free: (888) 283-3757