Unfortunately, I have come across a large number of home improvement fraud cases recently with striking similarities. Not only do I find it strange that so many of these home improvement fraud cases are out there, but I find the trend to be alarming. Essentially it goes like this: A homeowner hires a home improvement contractor to do some kind of work, be that roofing or siding or interior remodeling. The home improvement contractor comes to the residence, sets out an estimate, and tells the homeowner how much the work will cost, and how much the contractor needs to begin the work. The home improvement contractor signs a written proposal or estimate, and within a few days the homeowner tenders the requested funds to begin the work. From this point, the home improvement contractor becomes completely unresponsive. The home improvement contractor doesn’t respond to phone calls, emails, or even letters. Eventually, the homeowner ends up in my office because no work has been done, some or all of the money has changed hands, and several months have gone by.
The Good News – The Indiana Home Improvement Contracts Act
In 2005, the Indiana General Assembly attempted to remedy an endemic problem–home improvement fraud. Contractors were appearing on the scene of various disasters, and offering to perform home improvement services to repair storm and tornado damage. Often, the contractor would have its own public insurance adjuster with him to adjust the insurance claim at the time of doing the work, and assist the homeowner (often elderly) in filing an insurance claim. Many of these (often oral) contracts for home improvements were based on the perceived value of the potential homeowner’s insurance claim, and the contractor would often receive a check directly from the homeowner’s insurance carrier. Some contractors even represented to the homeowner that they were agents of the homeowner’s insurance carrier and were sent to perform the work. After the claim was filed and the check was sent, the contractor was never heard from again. Sound familiar?
The Indiana General Assembly sought to remedy this problem by passing the Indiana Home Improvement Contracts Act (I.C. 24-5-11-1, et. seq.) The Act provides for treble damages and attorney fees for home improvement fraud. The Act lays out specific, very stringent requirements for home improvement contracts, and makes oral home improvement contracts unenforceable. (For details, see, Home Improvement Contractors: Do Your Contracts Comply With the Indiana Home Improvement Contract Act?) Triple recovery plus attorney fees sounds like a favorable remedy, no?
The Not so Good News – Bankruptcy or Dissolution
The downside to many of these cases is that home improvement contractor-businesses tend to be easy to dissolve or declare insolvent. I have found in pursuing a number of these home improvement fraud cases, that by the time my Client has found me and I have sent a demand, drafted a complaint, and filed the complaint in court, the actual home improvement contractor who signed the agreement is out of business or otherwise nowhere to be found. I have been able to recover some of the lost funds in some of these cases, but it can be fatal for many others. A company such as a limited liability company, for instance, can be dissolved and reformed almost in the same day. The home improvement contractor is operating under a new company name, and most likely engaging in the same practices that developed into the present dispute, but there is very little that can be done about it. If the actual company that contracted with the homeowner is now dissolved, the homeowner has little or no remedy.
There are tools at a lawyer’s disposal that could allow a homeowner to recover, but not in every case. Each case is unique and different, peculiar to its own set of facts. DO NOT attempt to negotiate or pursue a home improvement contractor on your own. The Indiana Home Improvement Contracts Act is very complicated, and many steps and conditions are necessary prior to sending a demand and filing suit. Contact an experienced Indiana real estate attorney to assist you.