"Service and Repair Contracts" are roughly an agreement between a contractor or contractor's salesperson and a homeowner or a tenant for the performance of a home improvement that conforms to the following requirements:
1.The contract amount is seven hundred fifty dollars ($750) or less.2.The prospective buyer initiated contact with the contractor to request the work.3.The contractor does not sell the buyer goods or services beyond those reasonably necessary to take care of the particular problem that caused the buyer to contact the contractor.4.No payment is due, or accepted by the contractor, until the work is completed.
Please note that the Service and Repair Contract has severe limitations. It can only be used for contracts under $750.00 and there can be no up-selling whatsoever. In other words, you can only touch what the person called you out there for. If you were called out for a clogged pipe you can only work on that clogged pipe, not tell them that they need all new pipes and thereby give a quote for that replacement.
Additionally, if the wrong form is used, you are then in violation of the law.
Because of this, we have seen many contractors using the Home Improvement Contract in place of the Service and Repair Contract, even if they are doing Service and Repair work. Using the Home Improvement Contract negates the risk of up-selling or the job going over $750.00. Plus, there is only the cost of purchasing and printing one form.
The requirements are as follows:
Do not forget that both the owner and the contractor should sign the contract.
The contract must contain the contractor's legal name, telephone number, address, and contractor's license number on the contract.
The minimum text on any Service and Repair Contract, unless otherwise specified, is at least 10-point type and all headings are to be in boldface type.
The contract must be in writing, as well as any attachments which are also to be signed by the parties as acknowledgment.
The Service and Repair Contract must have the date that the contract was signed on the contract.
A copy of the fully executed Service and Repair Contract must be given to the owner prior to work being started.
The title of the contract "Service and Repair" needs to be in at least 10-point boldface type.
The heading "Contract Price" followed by the amount of the contract in dollars and cents.
If the contract is estimated by a time and materials formula, the heading "Estimated Contract Price" is to be on the contract followed by the estimated contract amount in dollars and cents.
The contract must also disclose the set rate and the estimated cost of materials as well as how time will be computed (i.e. increments of quarter hours, half hours, or hours).
Also to be included is the following statement:
The actual contract amount of a time and materials contract may not exceed the estimated contract amount without written authorization from the buyer.
Assuming there is a finance charge, the heading "Finance Charge" followed by the amount of the contract written in dollars and cents is required.
If a service charge is charged, the heading "Amount of Service Charge" followed by the service charge in dollars and cents as well as the statement:
You may be charged only one service charge, including any trip charge or inspection fee.
The required heading "Description of the Project and Description of the Significant Materials to be Used and Equipment to be Installed" is to be followed by a description of the project and a description of the significant materials to be used and equipment to be installed.
The following required statement is to be included:
The law requires that the contractor offer you any parts that were replaced during the service call. If you do not want the parts, initial the checkbox labeled "OK" for contractor to take replaced parts.
A checkbox labeled:
OK for contractor to take replaced parts.
If applicable, the heading "List of Documents to be Incorporated into the Contract," followed by the list of documents to be incorporated into the contract.
A notice explaining the requirements for Service and Repair Contract in at least 12-point boldface type, which is to be signed and dated by the buyer/owner, as follows:
Notice to the Buyer: The law requires that service and repair contracts must meet all of the following requirements:
(A) The price must be no more than seven hundred and fifty dollars ($750).(B) You, the buyer, must have initiated contact with the contractor to request the work.(C) The contractor must not sell you goods or services beyond those reasonably necessary to take care of the particular problem that caused you to contact the contractor.(D) No payment is due and the contractor may not accept any payment until the work is completed.
As well as a notice regarding signed copies of the contract in at least 12-point boldface type as follows:
Notice to the Buyer: You are entitled to a completely filled in and signed copy of this agreement before any work may be started.
The required notice concerning commercial general liability insurance is required and may be provided as an attachment to the contract if the contract includes the following statement:
A notice concerning commercial general liability insurance is attached to this contract.
The notice shall include the heading "Commercial General Liability Insurance (CGL)," followed by whichever of the following statements is both relevant and correct:
(A) (The name on the license or 'This contractor') does not carry commercial general liability insurance.
(B) (The name on the license or 'This contractor') carries commercial general liability insurance written by ____________ (name of the insurance company). You may call the (insurance company) at __________ to check the contractor's insurance coverage.
(C) (The name on the license or 'This contractor') is self-insured.
(D) (The name on the license or 'This contractor') is a limited liability company that carries liability insurance or maintains other security as required by law. You may call _______________ (name of the insurance company or trust company or bank) at _______________ to check on the contractor's insurance coverage or security.
Please note that if this notice is attached to the contract that the title "Commercial General Liability Insurance (CGLI)" should be listed in the "List of Documents to be Incorporated into the Contract."
The required notice concerning workers' compensation insurance may be provided as an attachment to the contract if the contract includes the statement:
A notice concerning workers' compensation insurance is attached to this contract.
The notice shall include the heading "Workers' Compensation Insurance" followed by whichever of the following statements is correct:
(A) (The name on the license or 'This contractor') has no employees and is exempt from workers' compensation requirements.(B) (The name on the license or 'This contractor') carries workers' compensation insurance for all employees.
The following notice must be part of the contract and be in immediate proximity to the space reserved for the buyer's signature in at least 12-point boldface type as well as being dated and signed by the buyer:
YOUR RIGHTS TO CANCEL BEFORE WORK BEGINS(A) You, the buyer, have the right to cancel this contract until:
1. You receive a copy of this contract signed and dated by you and the contractor; and2. The contractor starts work.
(B) However, even if the work has begun you, the buyer, may still cancel the contract for any of the reasons specified in items 1 through 4 of this paragraph. If any of these reasons occur, you may cancel the contract within three business days of signing the contract for normal service and repairs, or within seven business days of signing a contract to repair or correct conditions resulting from any sudden or catastrophic event for which a state of emergency has been declared by the President of the United States or the Governor, or for which a local emergency has been declared by the executive officer or governing body of any city, county, or city and county:
1. You may cancel the contract if the price, including all labor and materials, is more than seven hundred fifty dollars ($750).2. You may cancel the contract if you did not initiate the contact with the contractor to request the work.3. You may cancel the contract if the contractor sold you goods or services beyond those reasonably necessary to take care of the particular problem that caused you to contact the contractor.4. You may cancel the contract if the payment was due or the contractor accepted any money before the work was complete.
(C) If any of these reasons for canceling occurred, you may cancel the contract as specified under paragraph (B) above by e-mailing, mailing, faxing, or delivering a written notice to the contractor at the contractor's place of business within three business days or, if applicable, seven business days of the date you received a signed and dated copy of this contract. Include your name, your address, and the date you received a signed copy of the contract and this notice.
If you cancel, the contractor must return to you anything you paid within 10 days of receiving the notice of cancellation. For your part, you must make available to the contractor at your residence, in substantially as good condition as you received it, any goods delivered to you under this contract. Or, you may, if you wish, comply with the contractor's instructions on how to return the goods at the contractor's expense and risk. If you make the goods available to the contractor and the contractor does not pick them up within 20 days of the date of your notice of cancellation, you may keep them without any further obligation. If you fail to make the goods available to the contractor, or if you agree to return the goods to the contractor and fail to do so, then you remain liable for performance of all obligations under the contract.
If the above notice is an attachment to the contract then the following applicable statement along with a checkbox must be in at least 12-point boldface type:
The law requires that the contractor give you a notice explaining your right to cancel. Initial the checkbox if the contractor has given you a 'Notice of Your Right to Cancel.'
OR
The law requires that the contractor give you a notice explaining your right to cancel contracts for the repair or restoration of residential premises damaged by a disaster. Initial the checkbox if the contractor has given you a 'Notice of Your Right to Cancel.'
REMEMBER THIS IS A COMPLICATED AREA OF LAW AND YOU SHOULD SEEK THE AID AND ADVICE OF COUNSEL BEFORE USING THESE FORMS.
