Avoiding the hammer of Wisconsin’s
Home Improvement Code

By Matthew R. Rosek

The Wisconsin Home Improvement Code regulates the construction industry and was created to protect home owners against unfair trade practices by contractors providing home-improvement services.

In reality, it can become a hammer that home owners use to strike down contracts and avoid paying final invoices by alleging technical violations of the code.

It would be impossible to quickly summarize all of the code’s provisions, but a few deserve particular attention.

The code applies to both written and verbal contracts for the repair or improvement of personal property. It doesn’t apply to new home construction or commercial/industrial improvements or renovations.

Projects performed after a closing may fall within the definition of an improvement under the code.

If you convert commercial buildings to residential or to mixed residential/commercial projects, it likely falls within the code. Some examples of home improvements — as defined by the code — are basement repairs, HVAC or water-softener installation, flooring installation and some landscaping projects.

The code requires that written contracts be signed by all parties in situations where the home owner is required to make a payment before the work commences or whenever the contract was initiated by door-to-door, mail or telephone solicitation. The contract must contain specific information about the contractor, the work to be performed, all anticipated charges, starting and ending dates, financing, warranties and a description of all documents incorporated into the contract.

A contractor is required to provide the home owner with a copy of a contract before the work begins or before the contractor receives payment. The use of any prepaid funds for another project is strictly prohibited and may be considered theft by contractor.

Finally, do not misrepresent the complexity, cost or nature of the project. The code states that a misrepresentation can be made by omission, meaning that a contractor can mislead home owners by not informing them of important facts that should have been disclosed.

The penalties that a contractor can incur for noncompliance can be substantial and will come as a shock to most contractors. If a home owner is able to establish that a contractor violated a provision of the code, and that the home owner was damaged by the violation, they can sue the contractor and recover twice the amount of the loss, litigation costs and actual attorney fees.

In many instances the attorney fees can surpass the amount of the damages sought and can result in the contractor being hit twice. The Wisconsin Department of Agriculture, Trade and Consumer Protection can seek a court order enjoining violations of the code and order a contractor to pay restitution to the home owner.

The department (or any district attorney) can start a court action to
recover a civil forfeiture from the contractor for a violation of the code, and the court may impose a civil forfeiture of up to $10,000 per violation. Finally, a district attorney could start a criminal prosecution against a contractor, and that can result in fines up to $5,000, a sentence of up to a year in jail or both.

Relief for contractors can come through the efforts of the DATCP 110 work group. Members of the Metropolitan Builders Association, the Wisconsin Builders Association and the National Association of the Remodeling Industry created the group to address various concerns raised by the code.

The group principally addresses the availability of double damages for a violation of any part of the code (despite whether the violation was intentional or actually caused harm), the applicability of the code to both design/build and remodeling contractors, and the degree to which the code fails to reflect current industry practices.

The bottom line for contractors is to read the code, follow the applicable provisions, draft contracts and always keep the lines of communication open between you and your customers. Many disputes can be avoided through consistent customer updates and proper change orders.