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ATTORNEY GENERAL’S MODEL

HOME CONSTRUCTION OR

REPAIR CONTRACT

§ 18. 1.

Introduction

This consumer rights chapter provides information on the State’s requirement that home

construction or repair work costing more than $3,000 be based on a written contract. It contains the

following sections:

§ 18. 2.

Description of Home Construction Contract Law

§ 18. 3.

10 M.R.S.A. c. 219-A, Home Construction Contracts

§ 18. 4

The Attorney General’s Model Home Construction

Contract and Change Order

§ 18. 2.

Description of Home Construction

Contract Law

The Maine Home Construction Contracts Act

requires that any home construction or repair work

for more than $3,000

in materials or labor must be based on a written contract containing specific

information such as price, a description of the work and estimated completion date. Further, any

“change orders” that change the contract price must also be in writing. If contractors do not use a

written contract to meet the requirements of this law they are subject to civil penalties (payable to the

State) of up to $1,000. Further, consumers dissatisfied with construction work can claim in court that

their contractor committed an Unfair Trade Practice by failing to use a written contract that meets the

State standards.

This construction written contract law is not inflexible. Section 1489 allows the contractor and the

homeowner to agree to exempt themselves from the law in part or even entirely. However, in order to

properly qualify for an exemption, the contractor must specifically inform the homeowner of the

homeowner’s rights under this law. The parties must then mutually agree to a contract or change order

that does not meet the requirements of the written contract law.

10 M.R.S.A. §§1486-1490. This 1988 law has been the subject of numerous Maine court decisions. See e.g., Strouts v.

Craig and MacIntosh, No. CV-96-179 (Me. Super. Ct., Penob. Cty., April 28, 1998) (plaintiff is entitled to attorney fees

directly attributed to enforcement of Home Construction Contracts Act); VanVoorhees v. Dodge, 679 A.2d 1077

(Me.1996) (builder violated Home Construction Contracts Act and Unfair Trade Practices Act; attorney fees of $3,500

and damages of $73,000); William Mushero, Inc. v. Hull, 667 A.2d 853 (Me. 1995) (violation of Home Construction

Contracts Act and Unfair Trade Practices Act; damages and attorney fees awarded); Dudley V. Wyler, 647 A.2d 90

(Me.1994) (even though Home Construction Contracts Act violated, consumer denied relief because he had not suffered

a loss of money or property); Parker v. Ayre, 612 A.2d 1283 (Me. 1992) (after violating Home Construction Contracts

Act builder received damages only on basis of quantum meruit).

Effective September 13, 2003, this amount was increased from $1,400 to $3,000.

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Another important feature of this law is that it allows (but does not require) the parties to select one

of three dispute resolution options (e.g., mediation or arbitration).

If the parties do select one of these

options, disputes may be more readily resolved than through the use of the court system.

At the end of this chapter (§ 18.3), there is a copy of this written contract law. You should read it

carefully and make certain that the contract you are contemplating meets its requirements. Also

included (§ 18.4) is a model construction contract designed to meet the requirements of this law. If

there are provisions a contractor does not wish to have in its standard contract, the contractor should

make clear to the homeowner precisely which requirements of the new law are not met by its contract,

so that if the homeowner enters a contract that falls short of the statutory requirements, it is done

knowingly.

Perhaps the best way to accomplish this would be for the contractor to design and have printed a

contract that specifically states the parts of the new State law that its contract does not meet. For

example: the new home construction contract requires that the contract state that the initial down

payment cannot exceed one-third of the total contract price. What should a contractor do whose normal

operating procedures require an initial down payment of 40% of the total contract price? This

contractor could have a printed contract which requires a 40% down payment and which also

specifically discloses to the homeowner that State law limits the down payment to one-third of the

contract price but that the homeowner explicitly agrees to exempt himself from that statutory

provision.

Contractors could also use another exemption method: design a contract with a blank section

allowing for exemptions to be inserted as the need arises. For example, such a section might look like

this:

Contract Law Exemptions. The Maine Home Construction Contracts law

at 10 M.R.S.A. § 1489 specifically allows the parties to agree to exempt

themselves from its contract requirements. The parties hereby agree to

exempt themselves from the following requirements of this law:

__________________________________________________________

Finally, a form contract could also have a section for “additional provisions” that deal with such

issues as whether “time is of the essence” in completing the contract; when the contract is to be

considered completed (e.g., “This contract will be considered completed upon approval of the

homeowner or lessee, provided that approval cannot be unreasonably withheld”); whether the

homeowner is entitled to damages if the work is completed later than estimated; and how removal of

debris is to be handled (e.g., “At the end of each day’s work the contractor agrees to clean all debris

from the work area”).

Please do not hesitate to contact the Attorney General’s Consumer Mediation Service if you have

any questions concerning home construction contract law.

For a list of possible mediators or arbitrators, contact the Office of Court Alternative Dispute Resolution (207-822-0792,

http://www.courts.state.me.us/courtservices/adr). The Administrative Office of the Courts maintains a list of persons skilled

in dispute resolutions.

If a down payment is required, you should ask for copies of receipts in order to confirm that the needed materials have

been paid for.

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§ 18. 3.

10 M.R.S.A. c. 219-A, Home

Construction Contracts

The provisions of this statute, 10 M.R.S.A. c. 219-A, are reproduced below. To repeat: the law

requires that home construction work for a price exceeding $3,000 be based on a written contract

containing the information required by §§ 1487-1488. Change orders must also be in writing and

contain the revised contract price. Such contracts are mandatory unless the parties specifically agree to

alter or ignore altogether the required terms.

Violations of this statute constitute prima facie evidence of

an unfair trade practice.

10 M.R.S.A. Chapter 219-A is enacted to read:

CHAPTER 219-A

HOME CONSTRUCTION CONTRACTS

§ 1486. Definitions

As used in this chapter, unless the context otherwise indicates, the following terms have the

following meanings:

1. Change orders. “Change orders” means a written amendment to the home construction

contract which becomes part of and is in conformance with the existing contract.

2. Down payment. “Down payment” means all payments to a home construction

contractor prior to or contemporaneous with the execution of the home construction

contract.

3. Materials. “Materials” means all supplies which are used to construct, alter or repair a

residence.

4. Home construction contract. “Home construction contract” means a contract to build,

remodel or repair a residence, including not only structural work but also electrical,

plumbing and heating work; carpeting, window replacements; and other non-structural

work.

5. Residence. “Residence” means a dwelling with 3 or fewer living units and garages, if

any. Buildings used for commercial or business purposes are not subject to this chapter.

A contract in violation of the Home Construction Contracts Act can be considered an “illegal” contract and you can argue

that the court should refuse to enforce it. See Allstate Insurance Co. v. Elwell, 513 A.2d 269, 272 (Me. 1986) (“A contract

that contravenes public policy will not be enforced by our courts.”) Nonetheless, contractors may be able to recover some

of their expenses under the equitable theory of quantum meruit (“as much as deserved”). See Parker v. Ayre, 612 A. 2d

1283, 1284-85 (Me. 1992).

Private remedies under the Maine Unfair Trade Practices Act include damages or restitution and attorney fees (see 5

M.R.S.A. § 213). In the case of Gillespie v. Sparks, No. CV-89-253 (Me. Super. Ct., Kenn. Cty., July 31, 1990), the

Court awarded attorney’s fees of $7,900 for a violation of the Home Construction Contracts law. In Parker v. Ayre, 612

A.2d 1283, 1284-85 (Me. 1992), the court found that the contractor did not violate the Maine Unfair Trade Practices Act

because the consumer had not suffered any “loss” as required by 5 M.R.S.A. § 213. The contractor was entitled to

reimbursement due to the theory of quantum meruit. But see Kinney v. Daggett and Laplante, No. SKO-91-CV-481

(Me.Dist.Ct., 12, Som., May 3, 1993), in which the contractor’s quantum meruit award was decreased by $400 because

the homeowner reasonably believed he was due that much in savings and was, therefore, harmed by the lack of a written

contract.

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§ 1487. Home Construction Contracts

Any home construction contract for more than $3,000

in materials or labor must be in writing

and must be signed by both the home construction contractor and the homeowner or lessee. Both

the contractor and the homeowner or lessee shall receive a copy of the executed contract prior to

any work performance. This basic contract must contain the entire agreement between the

homeowner or lessee and the home construction contractor and must contain at least the following

parts:

1. Names of parties. The name, address and phone number of both the home construction

contractor and the homeowner or lessee;

2. Location. The location of the property upon which the construction work is to be done;

3. Work dates. Both the estimated date of commencement of work and the estimated date

when the work will be substantially completed. The estimated date of commencement of

work and the completion date may be changed if work cannot begin or end due to

circumstances beyond the control of the contractor, including, but not limited to, the lack

of readiness of the job site or the unavailability of building materials;

4. Contract price. The total contract price, including all costs to be incurred in the proper

performance of the work, or, if the work is priced according to a “cost-plus” formula, the

agreed-upon price and an estimate of the cost of labor and materials;

5. Payment. The method of payment, with the initial down payment being limited to no more

than one-third of the total contract price;

6. Description of the work. A general description of the work and materials to be used;

7. Warranty. A warranty statement which reads:

In addition to any additional warranties agreed to by the parties, the

contractor warrants that the work will be free from faulty materials;

constructed according to the standards of the building code applicable

for this location; constructed in a skillful manner and fit for

habitation or appropriate use. The warranty rights and remedies set

forth in the Maine Uniform Commercial Code apply to this contract;

8. Resolution of disputes. A statement allowing the parties the option to adopt one of 3

methods of resolving contract disputes. At a minimum, this statement must provide the

following information:

If a dispute arises concerning the provisions of this contract or the

performance by the parties, then the parties agree to settle this dispute

by jointly paying for one of the following (check only one):

(1) Binding arbitration as regulated by the Maine Uniform

Arbitration Act, with the parties agreeing to accept as final the

arbitrator’s decision (______);

(2) Nonbinding arbitration, with the parties free to not accept the

arbitrator’s decision and to seek satisfaction through other means,

including a lawsuit (______);

(3) Mediation, with the parties agreeing to enter into good faith

negotiations through a neutral mediator in order to attempt to resolve

their differences (______);

Effective September 13, 2003, this amount was increased from $1,400 to $3,000.

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9. Change orders. A change order statement which reads:

Any alteration or deviation from the above contractual specifications

that result in a revision of the contract price will be executed only

upon the parties entering into a written change order;

10. Door-to-door sales. If the contract is being used for sales regulated by the consumer

solicitation sales law, Title 32, chapter 69, subchapter V or the home solicitation sales

law, Title 9-A, Part 5, a description of the consumer’s rights to avoid the contract, as set

forth in these laws;

11. Residential insulation. If the construction includes installation of insulation in an existing

residence, any disclosures required by chapter 219, Insulation Contractors; and

12. Energy standards. A statement by the contractor that chapter 214 establishes minimum

energy efficient building standards for new residential construction, and whether the new

building or an addition to an existing building will meet or exceed those standards.

§ 1488. Change Orders

Each change order to a home construction contract must be in writing and becomes a part of

and is in conformance with the existing contract. All work shall be performed under the same terms

and conditions as specified in the original contract unless otherwise stipulated. The change order

must detail all changes to the original contract that result in a revision of the contract price. The

previous contract price must be stated and the revised price shall also be stated. Both parties must

sign the change order.

§ 1489. Exemption

Parties to a home construction contract may exempt themselves from the requirements of this

chapter only if the contractor specifically informs the homeowner or lessee of his rights under this

chapter and the parties then mutually agree to a contract or change order that does not contain the

parts set forth in sections 1487 and 1488.

§ 1490. Penalties

1. Violation. Any violation of this chapter shall constitute prima facie evidence of a violation

of the Unfair Trade Practices Act, Title 5, chapter 10.

2. Civil penalty. Each violation of this chapter constitutes a civil violation for which forfeiture

of not less than $100 nor more than $1,000 may be adjudged. No action may be brought for a civil

violation under this subsection more than two years after the date of the occurrence of the

violation. No home construction contractor may be held liable for a civil violation under this

subsection if the contractor shows by a preponderance of the evidence that the violation was

unintentional and a bona fide error, notwithstanding the maintenance or procedures reasonably

adopted to avoid any such error.

§ 18. 4.

The Attorney General’s Model

Home Construction Contract And

Change Order

This model contract was drafted by the Attorney General’s Consumer Protection Division in an

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attempt to meet the requirements for a written home repair contract, as mandated by 10 M.R.S.A. §

1486-90. This model contract does not satisfy the additional contract provisions required for door-to-

door transient home repair contractors.

You are free to copy the following model contract and change order and use them for your home

construction project.

THE ATTORNEY GENERAL’S

MODEL HOME CONSTRUCTION CONTRACT

This model contract is for home construction, repair, or remodeling. It was drafted by the

Consumer Protection Division of the Maine Attorney General in an attempt to meet the

requirements of 10 M.R.S.A. §§ 1486-90, Home Construction Contracts. This contract is required

to be used for home construction or repair projects costing more than $3,000. You are free to copy

this contract and use it for your home construction project. The Maine Attorney General does not

guarantee that this model contract satisfies all legal requirements.

Contract No.________________________

1. Parties To This Contract:

A. Contractor ________________________________ ________________

Name

Phone

_____________________________________________________________

Address

B. Homeowner or Lessee ________________________________ ________________

Name

Phone

_____________________________________________________________

Address

2. Location Of Work: ___________________________________________________

3. Completion Dates:

A. Estimated date of commencement _____________________________________________

B. Estimated date of completion _________________________________________________

4. Contract Price (if a “cost-plus” formula the cost of labor and materials must be estimated):

______________________________________________________________________________________________

5. Method of Payment (initial down payment is limited to no more than 1/3 of the total contract

price): ________________________________________________________________________

_____________________________________________________________________________________________

6. Description of the Work: _______________________________________________________________

_____________________________________________________________________________________________

7. Warranties: The contractor provides the following express warranty: ______________________

_____________________________________________________________________________________________

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In addition to any additional express warranties agreed to by the parties, the contractor warrants

that the work will be free from faulty materials; constructed according to the standards of the

building code applicable for this location; constructed in a skillful manner and fit for habitation.

The warranty rights and remedies set forth in the Maine Uniform Commercial Code apply to this

contract.

8. Resolution of Disputes. If a dispute arises concerning the provisions of this contract or the

performance by the parties, then the parties agree to settle this dispute by jointly paying for one of

the following (check only one):

(1) Binding arbitration as regulated by the Maine Uniform Arbitration Act, with the parties

agreeing to accept as final the arbitrator’s decision (______);

(2) Nonbinding arbitration, with the parties free to not accept the arbitrator’s decision and to

seek satisfaction through other means, including a lawsuit (______);

(3) Mediation, with the parties agreeing to enter into good faith negotiations through a neutral

mediator in order to attempt to resolve their differences (______);

The parties are not required to select one of these dispute resolution methods. They are optional. If

the parties do not select one of these dispute resolution options, check here: ______.

9. Change Orders. Any alteration or deviation from the above contractual specifications that

involve extra cost will be executed only upon the parties entering into a written change

order.

10. Additional Provisions: _______________________________________________________

_____________________________________________________________________________________________

PLEASE NOTE: if this contract is being used by contractors who sell door-to-door it must

meet any applicable requirements of the Consumer Solicitation Sales Act, 32 M.R.S.A. §§

4661-4671, the Door-to-Door Home Repair Transient Sellers Act, 32 M.R.S.A. §§ 14501-

14512, and The Credit Home Solicitation Sales Act, 9-A M.R.S.A. §§ 3-501-3-507,

including a description of the consumer’s 3 day right to cancel the contract. If this contract

includes installation of insulation in an existing residence it must contain a detailed

description of the insulation as required by 10 M.R.S.A. § 1482. If this contract includes

construction of a new residential building or a new addition to an existing residence, it must

contain a statement that 10 M.R.S.A. §§ 1411 - 1420 establishes minimum energy efficient

building standards for new residential construction, and whether this building or addition will

meet or exceed those standards.

11. Contract Acceptance:

Signature:________________________________________________________ Date: ____________________

(Homeowner or Lessee)

Signature:________________________________________________________ Date: ______________________

(Contractor)

EACH PARTY MUST RECEIVE A COPY OF THIS SIGNED CONTRACT BEFORE WORK

CAN BE STARTED.

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THE ATTORNEY GENERAL’S

MODEL HOME CONSTRUCTION CONTRACT

CHANGE ORDER

Pursuant to 10 M.R.S.A. § 1488, each change order to an existing home construction contract

must be in writing and becomes a part of and is in conformance with the original contract. All work

shall be performed under the same terms and conditions as specified in the original contract unless

otherwise stipulated. The change order must detail all changes to the original contract that result in

a revision of the contract price. The previous contract price must be stated and the revised price

shall also be stated. Both parties must sign the change order.

Contract No.________________________

1. Parties To This Change Order:

A. Contractor ________________________________ ________________

Name

Phone

_____________________________________________________________

Address

B. Homeowner or Lessee ________________________________ ________________

Name

Phone

_____________________________________________________________

Address

2. Date Original Contract Signed: __________________________________________________

3. Changes in the Work Originally Contracted For: ____________________________________

______________________________________________________________________________

_____________________________________________________________________________________________

4. Price Change:

A. Original Contract Price $ _________________

B. Revised Contract Price $ _________________

5. Acceptance of Change Order:

Signature:________________________________________________________ Date: ____________________

(Homeowner or Lessee)

Signature:________________________________________________________ Date: ______________________

(Contractor)

EACH PARTY MUST RECEIVE A COPY OF THIS SIGNED CHANGE ORDER BEFORE THE

REVISED WORK CAN BE STARTED.