A recent New Jersey construction law development will greatly affect contractors.
The New Jersey Legislature passed a new law regulating home improvement and home elevation contractors, which Governor Murphy signed into law on January 8, 2024. The
Applicability: Every Job Over $500
The new law applies to both home improvement contractors and home elevation contractors. It applies to all home improvement jobs with a value of over $500, but includes new regulations for “principal” home improvement and home elevation contractors on jobs of $120,000 or more. Employees and subcontractors of home improvement contractors or home elevation contractors are not libel for violation of the law. By definition, a home improvement contractor or home improvement contract does not apply to the construction of a new residential property, but only to improvement of an existing one.
New Regulatory Agency Created
The New Jersey Department of Consumer Affairs (“DCA”) has long governed home improvement contracts and contractors. However, the new law creates the New Jersey State Board of Home Improvement and Home Elevation Contractors (the “Board”) within the DCA to administer and enforce the law.
When Effective
The requirements for contractors are not yet effective. They will become effective two years after the Governor appoints a majority of the Board members, which he must do within ten months.
Licensing Requirement
Previously, home improvement contractors and home elevation contractors only had to register with DCA. Now, however, both home improvement contractors and home elevation contractors must obtain a license to operate, or even to offer home improvement or home elevation services. The license has new examination, experience and continuing education requirements. The Board is tasked with developing the continuing education requirements and a licensing exam, as well as a code of ethics, although it has not done so yet.
The new law sets the requirements for becoming a home improvement and home elevation contractor. The applicant must:
- Be at least 18 years old.
- Successfully graduated high school or obtained a GED.
- Complete an apprenticeship program approved by the United States Department of Labor; or, have at least two years of experience in home improvement or elevation, working for a licensed contractor, or its equivalent in another state.
- Complete the educational requirements and pass an examination to be developed by the Board.
- Prove financial stability.
- Disclose any criminal convictions.
- Pay applicable fees (not yet announced).
- Submit proof of general liability insurance (at least $500,000 per occurrence) and workers compensation insurance.
- Submit a compliance bond, letter of credit, money or other security in a minimum amount of $50,000 for jobs of more than $120,000, or if there prior year contracts totaled $750,000 or more (Class A contractors); $25,000 for jobs between $10,000 and $120,000, or if thee contracts in the prior year totaled between $150,000 and $750,000 (Class B contractors); and $10,000 for contracts below $50,000, or if the contractor’s prior year contracts totaled less than $150,000 (Class C contractors). These must provide that consumers may make claims on the bond or security with the Board.
- A home improvement or home elevation business must employee at least one licensed home improvement or home elevation contractor, as appropriate.
- Home elevation contractors must submit proof of a minimum of $1,000,000 of cargo insurance.
License numbers must be prominently displayed in their place of business, advertisements, business documents, correspondence (including emails), contracts, and on the contractor’s vehicles. Invoices, contracts and correspondence must prominently display a toll free number for the consumer to contact the contractor.
Certificates of all required insurance must be provided to the homeowner before the start of any project.
Denial and Revocation of Licenses
Licenses may be denied or revoked by the Board for:
- Fraud, dishonesty or misrepresentation in the application process. This may also result in fines of between $10,000 and $25,000.
- The use of fraud, deception, misrepresentation, false promises or dishonesty.
- Gross negligence, gross malpractice or gross incompetence.
- Repeated acts of negligence, malpractice or incompetence.
- Professional or occupational misconduct.
- Conviction of a criminal offense related to home improvement or home elevation work.
- Prior revocation or suspension.
- Violation of law or regulation.
Contractors and applicants have the right to a hearing before denial or revocation.
Identification Badges
The Board will issue identification badges to licensed contractors. They must be worn on the upper left torso of the contractor and clearly visible when the contractor is performing home improvement or home elevation services. Display of an identification badge when not authorized, such as when the license is suspended or revoked, is a fourth degree crime punishable by up to 18 months in prison.
Grandfather Provisions
Home improvement contractors who have been registered with the DCA for at least 5 years, or who has at least five years of experience in home improvement or home elevation services with a registered contractor may be issued a license without the examination, education or other experience requirements. However, they will still be required to comply with all the other requirements, including the continuing education requirements.
Obtaining Permits
Municipalities may not issue permits for home improvement or home elevation work unless the contractor is licensed.
Requirements for Contracts
The voluminous requirements for home improvement contracts remain intact, and now apply to home elevation contracts. A brief sampling of these are registration/license numbers, start and stop dates, notice of 3 day right of rescission, warranties, products and materials to be used, insurance certificates, detailed price, notices regarding not signing if there are blank spaces in the contract, and emergency contact numbers.
New requirements apply. Two copies must be provided, including a copy in the consumer’s first language if they regularly use a language other than English. If the contract value is $120,000 or more and necessitating approval by more than one subcode, the contract must state that a principal home improvement contractor will oversee the project.
Continuing Education
All home improvement and home elevation contractors – even those grandfathered in – must comply with the continuing education requirements. A minimum of 6 credits of continuing education approved by the Board must be completed to renew a license. (One credit equals one hour.) Courses may be in person or via video or internet.
Liability
In addition to the fines and criminal liability explained above, homeowners may sue for violations as allowed before. Thus, violation of the contract or registration and licensing requirements can open the contractor up to liability to the homeowner for triple damages plus being required to pay the homeowner’s attorneys fees.
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