The Home Improvement Practices Regulations Apply to the Licensed Trades
The home improvement practice regulations, found in the New Jersey Administrative Code at N.J.A.C. 13:45A-16.1 to 16.2, interpret the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, in the field of residential construction. More than twenty years after their adoption, a fair amount of uncertainty remains regarding the applicability of these regulations to the licensed trades. Look at any work order for plumbing or electrical services, and odds are it comes up short against the clear requirements of the home improvement practice regulations. Ask the man who uses it, and he will likely (and wrongly) respond that those regulations don’t apply to his business. The truth is that licensed tradesmen, and the companies associated with them, are subject to the home improvement practice regulations even when they operate within a limited scope of work which requires their particular license.
Confusion on this score appears to have been increased by enactment of the Contractors’ Registration Act (N.J.S.A. 56:8-136 et seq.) which took effect December 31, 2005 as an amendment to the Consumer Fraud Act. The Contractors’ Registration Act requires contractors who sell or make home improvements in New Jersey, unless they are otherwise exempt, to be registered with the Division of Consumer Affairs in the Department of Law and Public Safety. Among those exempt from registration are architects, burglar alarm businesses, electrical contractors, professional engineers, fire alarm businesses, landscape architects, land surveyors, locksmiths, master plumbers, and any other person in any other related profession requiring registration, certification, or licensure by the State, e.g., the newly licensed heating, ventilating, air conditioning and refrigeration contractors, who are acting within the scope of practice of their trade. N.J.A.C. 13:45A-17.4(a)4.
Such licensed persons would not have to register as home improvement contractors so long as their work on a residential project does not extend beyond services for which they would need their license. Based on the experience of the author, such licensed persons are generally familiar with this exemption, but in many instances (where they know of the home improvement practices regulations at all) they believe it excuses them altogether from compliance with the related regulations for home improvement. This misconception is a close second in popularity to the wrong notion that home improvement subcontractors do not need to be registered.
As stated, the requirement for separate registration as a home improvement contractor depends on whether the scope of work on a residential project extends beyond what can only be done by the licensed trade. For example, if an electrician wires a ham radio tower, she needs only her electrician’s license, because the Electrical Contractors Licensing Act of 1962 (N.J.S.A. 45:5A-1 et seq.) defines electrical contracting as “the business of contracting to install, erect, repair or alter electrical equipment for the generation, transmission or utilization of electrical energy,” and wiring a ham radio tower is certainly within that definition. Contrariwise, if she builds a radio shack on which to anchor that tower, she is acting outside the scope of practice of the electrical profession while engaged in home improvement, outside the exemption of N.J.A.C. 13:45A-17.4(a)4, and in addition to her electrician’s license she would need to hold a home improvement contractor’s registration.
Contrast this issue with whether a licensed electrician needs to comply with the home improvement practice regulations. Whether she wires the tower or builds the radio shack, she is involved in “home improvement” within the meaning of N.J.A.C. 13:45A-16.1A, and must comply with the home improvement practices regulations found in the New Jersey Administrative Code at N.J.A.C. 13:45A-16.1 to 16.2. A contractor’s failure to comply with any of these regulations in the course of home improvement constitutes automatic consumer fraud, whether she intends sharp practice or not. These “per se” violations entitle the aggrieved consumer to his attorney’s fees incurred in proving the violation, regardless of whether the violation has caused him an ascertainable loss. If he can show that the contractor’s violation of the regulation caused a loss, he will be awarded three times his damages by the court.
On their websites, both the Board of Master Plumbers and the Board of Examiners of Electrical Contractors include among their statutes and regulations the home improvement practice regulations – the necessary implication being that these regulations apply to the respective licensed trades.1 After the Contractors’ Registration Act was passed, the home improvement practices regulations were renumbered, and former N.J.A.C. 13:45A-16.1, Definitions, was recodified to N.J.A.C. 13:45A-16.1A. A new section 16.1 was added, to spell out the purpose and scope of the revised regulations:
“13:45A-16.1 Purpose and scope
“(a) The purpose of the rules in this subchapter is to implement the provisions of the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., by providing procedures for the regulation and content of home improvement contracts and establishing standards to facilitate enforcement of the requirements of the Act.
“(b) The rules in this subchapter shall apply to all sellers as defined in N.J.A.C. 13:45A-16.1A and to all home improvement contractors as defined in N.J.A.C. 13:45A-17.2 whether or not they are exempt from the provisions of N.J.A.C. 13:45A-17.”
What subsection (b) of new Section 16.1 means in plain English, is that whether or not a contractor is required to register with the Division of Consumer Affairs, it still has to comply with the home improvement practices regulations any time it engages in the business of making or selling “home improvements” as broadly defined in N.J.A.C. 13:45A-16.1A:
“Home improvement” means the remodeling, altering, painting, repairing, renovating, restoring, moving, demolishing, or modernizing of residential or noncommercial property or the making of additions thereto, and includes, but is not limited to, the construction, installation, replacement, improvement, or repair of driveways, sidewalks, swimming pools, terraces, patios, landscaping, fences, porches, windows, doors, cabinets, kitchens, bathrooms, garages, basements and basement waterproofing, fire protection devices, security protection devices, central heating and air conditioning equipment, water softeners, heaters, and purifiers, solar heating or water systems, insulation installation, siding, wall-to-wall carpeting or attached or inlaid floor coverings, and other changes, repairs, or improvements made in or on, attached to or forming a part of the residential or noncommercial property, but does not include the construction of a new residence. The term extends to the conversion of existing commercial structures into residential or noncommercial property and includes any of the above activities performed under emergency conditions.”
Given the breadth of these regulations, and recapitulation of the point in the latest revision, one might expect the question of who is and who is not subject to the home improvement regulations to be a settled topic, but the case law continues to evolve. For example, a case just decided February 6, 2008, Czar v. Thomas, 398 N.J. Super. 133 (2008), held that a specialty contractor (in that case a cabinetry contractor) dealing directly with owners of a new house under construction by a third party builder, is a home improvement contractor within the meaning of the home improvement practice regulations, and cannot avoid liability under the regulatory exclusion for new home construction.
The new section on the purpose and scope of the home improvement practices regulations needs a plain language re-write, so that it says what it means and any contractor can understand it. Until that day comes, the word needs to go out – the home improvement practices regulations apply to the licensed trades.
Robert J. Incollingo
1As of this writing, the New Jersey Board of Examiners of Electrical Contractors is a bit behind the curve, in that its website carries an outdated version of the regulations as they existed before passage of the Contractors’ Registration Act.