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New Jersey Homeowners' Rights When Sued by a Home Improvement Contractor
As a New Jersey homeowner, one of the last things you want to deal with is a lawsuit filed by a home improvement contractor. Whether the dispute centers on issues of payment, quality of work, the terms of your contract, or something else, it’s important to understand that, as a homeowner, you may have strong legal defenses and counterclaims available to you under NJ law.
In particular, New Jersey’s Consumer Fraud Act, the Home Improvement Practices Regulations, and the Contractor’s Registration Act provide important protections for homeowners when dealing with contractors. These statutes not only safeguard your rights but also provide you with valuable counterclaims against the contractor.
Importantly, one of the main purposes these statutes were enacted is to make hiring a competent attorney to represent you a viable option for even the most frugal homeowner. With the power of these statutes, an attorney can not only act as your shield against the contractor’s claims, but can also act as your sword to put you on the offensive in the case. This is because even if the contractor has not caused you any damages, you may still be able to force the contractor to pay your attorney’s fees for defending you.
This is an extremely powerful concept and should not be overlooked. However, if you do not hire an attorney, you cannot use this weapon to your advantage, because you cannot force the contractor to pay your attorney’s fees if you represent yourself, and do not have an attorney. When contractors realize they will likely be on the hook to pay for your legal fees, they more often than not decide to settle the case.
1. Understanding Your Legal Protections
New Jersey law requires home improvement contractors to follow strict guidelines in their dealings with homeowners. These regulations are designed to ensure that contractors maintain high standards of professionalism, transparency, and accountability. Here’s a look at how these laws can benefit you if you’re being sued by a contractor:
The Consumer Fraud Act
The New Jersey Consumer Fraud Act (N.J.S.A. 56:8-1 et seq.) is a powerful consumer protection law designed to protect individuals from deceptive business practices. Home improvement is just one industry that is covered under the Act. Pursuant to the Consumer Fraud Act, contractors must avoid using fraudulent or misleading tactics to induce a homeowner to enter into a contract or perform work.
If the contractor’s actions involve false advertising, misrepresentations, or failure to disclose material facts about the project, the homeowner may have a defense to the contractor’s lawsuit, and in some cases, a counterclaim for damages. The Consumer Fraud Act also allows for the recovery of attorneys’ fees, meaning that if you are successful in defending the lawsuit, the contractor may be required to pay for your legal costs.
The Home Improvement Practices Regulations (“HIP Regulations”)
In addition to the Consumer Fraud Act, New Jersey enacted rules specific to the home improvement industry, called the Home Improvement Practices Regulations (N.J.A.C. 13:45A-16.1 et seq.), which govern the conduct of home improvement contractors. These regulations outline what is required of contractors in terms of contract terms, scope of work, payment arrangements, and licensing requirements. Violations of these regulations by a contractor, such as failing to provide a written contract or engaging in shoddy work, may not only strengthen your defense but may also give rise to counterclaims against the contractor.
The Contractor’s Registration Act
New Jersey’s Contractor’s Registration Act (N.J.S.A. 56:8-137 et seq.) requires that all home improvement contractors be registered with the state. A contractor who is not properly registered may not legally perform work on your home. If your contractor is not registered, this could provide a valid defense against the lawsuit, and you may have the right to seek damages or other remedies under the Act.
2. Recovering Attorneys' Fees
One of the most powerful aspects of these statutes is the potential for homeowners to recover their attorneys’ fees. Under both the Consumer Fraud Act and the HIP Regulations, if you are successful in your defense, you may be entitled to have the contractor pay your legal fees. This is a significant benefit, as defending a lawsuit can be expensive. These laws are structured to discourage contractors from engaging in unfair business practices, and the possibility of having to pay for a homeowner’s legal costs acts as a deterrent. These statutes have the dual effect of reducing the risk of hiring counsel for the homeowner, and increasing the risk for the contractor.
3. Potential Counterclaims You Might Not Be Aware Of
In addition to defending yourself against a contractor’s lawsuit, you may have counterclaims you were not previously aware of. Counterclaims are legal claims you can bring against the contractor as part of the lawsuit. Rather than just defending the contractor’s claims against you, you may be able to go on the offensive and force the contractor to defend your claims against them.
Common counterclaims homeowners might assert under New Jersey law:
- Breach of Contract: If the contractor did not complete the work as agreed, used subpar materials, or failed to meet deadlines, you may have a valid claim for breach of contract.
- Violation of the Consumer Fraud Act: If the contractor engaged in fraudulent or deceptive practices—including but not limited to misrepresenting the quality or cost of materials or services—you can assert a counterclaim under the Consumer Fraud Act. It is also important to know that the Consumer Fraud Act also has a “catchall” phrase which basically says that any “unconscionable commercial practice” is a violation of the Act.
- Failure to Comply with Regulations: If the contractor failed to follow the Home Improvement Practices Regulations, such as not providing you with a proper written contract, you may have a counterclaim based on those violations. Any violation of the HIP Regulations is also a violation of the Consumer Fraud Act.
- Damages for Poor Workmanship: If the contractor’s work was substandard or caused damage to your property, you might be able to file a counterclaim for damages to repair or complete the job correctly.
4. What Should You Do If Sued by a Contractor?
If you find yourself being sued by a contractor, it’s critical to consult with an attorney experienced in construction law as soon as possible. An attorney will be able to:
- Review your contract and the contractor’s conduct to determine if you have any valid defenses under the Consumer Fraud Act, Home Improvement Practices Regulations, or Contractor’s Registration Act.
- Evaluate whether you have any counterclaims that can be asserted against the contractor to reduce or eliminate the amount you owe.
- Help you navigate the legal process, ensuring that you don’t miss any deadlines or procedural steps that could harm your case.
- Put the contractor on the defensive, simply by informing the contractor’s counsel that attorney’s fees are accruing and the likelihood that the contractor will be on the hook.
It’s important to act quickly, as there may be statutes of limitation that limit how long you can wait before asserting certain defenses or counterclaims. Additionally, the earlier you hire an attorney, the more pressure there will be on the contractor to settle the case, because they will be put on notice that attorney’s fees are accruing and they may be on the hook to pay for yours.
5. Conclusion
Being sued by a home improvement contractor can feel overwhelming, but NJ law provides significant protections for homeowners which, if properly wielded, can be used as a shield as well as a sword. By understanding your rights under the Consumer Fraud Act, the Home Improvement Practices Regulations, and the Contractor’s Registration Act, you can potentially reduce or eliminate your liability and even recover your attorneys’ fees. In some cases, you may have counterclaims that you were unaware of, which could strengthen your position in the lawsuit.
If you’ve been sued by a home improvement contractor in New Jersey, don’t hesitate to seek legal counsel to ensure your rights are fully protected. With the right legal strategy, you may be able to turn the tables and hold the contractor accountable for their actions.
At RHG Law, we offer free consultations to New Jersey homeowners who have been sued by a home improvement contractor. At that consultation, we will review your agreements, assess and discuss your defenses, and inform you of any potential counterclaims you may have. We will also set up a strategy to put the contractor on the defensive and get rid of the headache and anxiety that lawsuits bring.
