HOME IMPROVEMENT PROTECTION
Established in 1974, the Wisconsin Home Improvement Trade Practices Code sets the laws that govern home improvement transactions and contracts as well as the guidelines for remedying contractor disputes and improprieties.
The code outlines specific details and components that are required to be in a construction contract in order for the contract to be considered valid — to protect the homeowner and provide a firm legal basis for reclaiming any damages if the agreed-upon contract is not followed.
By signing a contract that does not meet the code, contract requirements, or proper disclosures, homeowners are unknowingly and voluntarily giving up their rights.
The most important thing to know about this Code and how to use it to protect yourself is that the details in your construction contract are critical. The more detailed the specifications are on the contract regarding your project, the better protected you are.
Most construction contracts openly violate the provisions and disclosures in the statutes in order to shift the liabilities off the contractor and onto the homeowner. Contractors know that there is no enforcement of compliance.
Not complying with ATCP-110 is extremely beneficial for contractors because it allows the contractor to remain very vague with what they are contractually doing, and pushes much of the legal and financial risk burdens of performing home improvement work onto the homeowner.
Signing a contract that does not comply with the ATCP-110 requirements can result in a homeowner voluntarily giving up their consumer protection rights and severely limiting their legal options if the project goes wrong.
Make sure that the contract you sign contains specifications for your project that are detailed and exact. Eliminate all vague language. See more examples of correct and incorrect contracts above.
If the dollar figures involved with the project are significant, it would be in your best interest to have a construction lawyer look over the contract.
Prior to 2005, because of the incredibly high dissatisfaction level of consumers with their home improvement projects, there were thousands of cases taken to court over disputes. The “Right to Cure” law is a State of Wisconsin mandated dispute resolution process that must be followed before any litigation can occur.
What homeowners need to know is that this document outlines the specific steps that need to be followed by BOTH consumers and contractors in the event of a dispute. Failure by the homeowner [claimant], contractor, or supplier to follow the process can result in delay or dismissal of legal or arbitration actions.
If you are not presented with the Right to Cure Law brochure with your contract, that should be a major red flag because that particular contractor is in violation of 2005 Wisconsin Act 201, the “Right to Cure Law.”
Contractors know that most homeowners are unaware that the “Right to Cure” law exists. They also know there is no policing of whether they hand out the brochure or follow the process. Even though the contractor may be 100% wrong, did terrible work, did not fulfill the contract, or just flat out lied — these cases are often thrown out of court without being heard because the contractor can claim the homeowner did not follow the “Right to Cure” process.
2005 Wisconsin Act 201, the “Right to Cure Law,” says consumers at the time of contracting for construction or remodeling work for dwellings must be provided with this brochure describing requirements for making any future claims of construction defects. If you don’t receive it, your legal options are limited.
Make sure the contractor provides you with the Right to Cure brochure at the time of contracting. Read the steps outlined in the brochure so you understand the dispute resolution process before you sign.
If the dollar figures involved with the project are significant, it would be in your best interest to have a construction lawyer look over the contract.
The standard advice given to homeowners looking for a contractor is to make sure that the contractor hired is “licensed and insured.” The following explains the 4 different insurances applicable to home improvement, their definitions, and why they are important.
The 4 types of applicable Construction Risk Insurance policies in Wisconsin are:
See full policy definitions, video explanations, and verification steps →
Worker’s Compensation Insurance covers any accidents or injury incurred by any employee of a business operating in Wisconsin. Required for any business that operates with employees. Protects you against lawsuits and liabilities of worker-related injuries while your project is being constructed.
Contractors operate without Worker’s Compensation policies to avoid the expense and pocket more profit. It is illegal in Wisconsin to operate with employees and no Worker’s Comp. Contractors can be fined by the state if caught — but there is no pro-active enforcement mechanism in place to police compliance.
If you hire a contractor without proper Worker’s Compensation Insurance, you are considered the General Contractor and take on ALL liabilities and worker-related project risks.
General Liability insures against accidents that could occur while your project is under construction, or any damage caused to your home or a neighbor’s home or property while the project is being completed. It does not provide any coverage after the project is complete.
Contractors do not carry General Liability to avoid the expense — once again to make more money. There is no risk or penalty to contractors for not carrying it. Properly licensed contractors must maintain a current General Building Contractor Certification and Financial Responsibility Certification ($250,000 liability OR $25,000 bond). The only enforcement mechanism is municipalities requiring the certification number on permit applications. There is no pro-active enforcement.
If there is no General Liability policy in place, YOU are considered the general contractor and take on all the construction liabilities and project risks. Make sure any contractor you consider has enough coverage to exceed the value of your home and belongings, with excess coverage for incidentals.
Products and Completed Operations insures against losses arising out of services performed by building contractors after the project is completed. It covers that your project was properly installed as specified — and protects against future workmanship-related defects. Often the only way to recover losses on a finished project.
Products and Completed Operations insurance is voluntary in Wisconsin — not required as a condition of contractor licensing.
If a Products and Completed Operations policy is not in place, you will likely have no recourse for improperly installed projects, and no way to enforce product warranties or contractor workmanship guarantees.
Errors and Omissions — also known as Professional Liability Insurance — insures against claims arising from a failure to render professional services. For construction projects, it insures that proper specifications were designed.
Errors & Omissions is voluntary in Wisconsin — not required as a condition of contractor licensing.
If your contractor has no Errors & Omissions policy in place, there is no legal recourse for incorrectly specified projects that fail prematurely.
First, decide what insurances are important to you and your project. The absolute minimum any contractor should carry is Worker’s Compensation. The other three policies are voluntary in Wisconsin, but they exist to protect you — they should be highly considered.
You need to call the insurance company yourself and verify the validity of all insurance policies that are presented to you. Don’t take the contractor’s word for it.
Most homeowners overpay because no one diagnosed the real problem first. Let’s fix that.
