A residential contractor is any person or business who contracts orally or in writing directly with a person holding an interest in real estate, or such person’s agent, for the construction of any improvement to or repair of real estate involving a house, duplex, triplex or quadraplex.
During the last legislative session, HB 1594, a bill concerning materialmen’s and mechanic’s liens, was passed into law as Act 454 of the Regular Session of 2009.
Generally speaking, the law has been that if a residential contractor (plumber, electrician, HVAC, roofer, garage door fixer, etc.) did work on a house, duplex, triplex or quadraplex, then he was entitled to be paid by the owner. If the owner did not pay him, then the residential contractor had two legal options available to him. First, he could sue on the contract. Second, he could sue on the equitable principle of unjust enrichment (quantum meruit is the Latin phrase for unjust enrichment). Unjust enrichment means that 1) if a contractor did something with the expectation of getting paid, 2) the owner or owner’s agent who was supposed to pay knew of the expectation and allowed the contractor to proceed and 3) the work was actually done, then the law would not allow the owner to unjustly enrich himself at the expense of the contractor by letting the owner not pay for the work done.
THIS NEW LAW DRAMATICALLY CHANGES THE LAW.
Importantly, the statute states: “If a residential contractor fails to give the notice required under this subsection, then the residential contractor is barred from bringing an action either at law or in equity, including without limitation quantum meruit, to enforce any provision of a residential contract.“ That language is very sweeping! Let me give you a couple of examples of how it will affect residential contractors.
First, let’s say that the contractor fails to give the statutory required notice to the owner before he brings ANY materials onto the property or does ANY work.
* An electrician installs a new meter box. The owner doesn’t pay.
* An HVAC company installs a new HVAC unit. The owner doesn’t pay.
* A plumber installs new plumbing throughout an entire house. The owner doesn’t pay.
* A garage door man installs a new garage door. The owner doesn’t pay.
* A carpet company installs new flooring. The owner doesn’t pay.
* A carpenter installs new cabinets. The owner doesn’t pay.
Second, what can the residential contractor do about the owner’s failure to pay. NOTHING! He is barred from bring an action either at law or equity against the owner! WOW! THAT’S HUGE.
To protect himself, a residential contractor MUST provide the required statutory notice before he does any work or supplies materials.
If you need a copy of the required notice, which was changed in the statute, or if you would like for me to review your standard form documents at a very reasonable price, please call me at 501-952-8114 or email me at Jason@jasonbolden.com.