Massachusetts home improvement contract requirements

Who chapter 142A covers

The law covers residential contracting: reconstruction, alteration, renovation, repair, modernization, conversion, improvement, removal or demolition of, or an addition to, a pre-existing owner-occupied building with one to four dwelling units, plus structures next to it. The owner is the homeowner of such a building, or a tenant in it, who hires you. New construction isn't covered, and neither is a building the owner doesn't live in. Both contractors and subcontractors must be registered before they offer or agree to do the work (section 9).

What section 2 requires

Every agreement for residential contracting over $1,000 must be in writing and include:

1. The complete agreement, with a clear description of any other documents incorporated into it.
2. The parties' full names, social security numbers and addresses (no post office boxes), your registration number, the salesperson's name if any, and the date the parties signed.
3. The dates the work is scheduled to begin and to be substantially completed.
4. A detailed description of the work and the materials to be used.
5. The total amount to be paid.
6. A time schedule of payments, with each amount in dollars, including finance charges.
7. The signatures of all parties.
8. Clear and conspicuous notices: that contractors and subcontractors must be registered and where to direct registration questions; your registration number; the owner's three-day cancellation rights; all warranties and the owner's rights under chapter 142A; and any lien or security interest on the home.
9. Any other lawful terms you agree on, as long as none waives the owner's rights under the chapter.

Section 2 adds rules around the list. The owner gets a copy signed by both of you at signing, and no work may start before that. The contract must tell the owner which permits are needed, that getting them is your obligation, and that owners who pull their own permits are excluded from the Guaranty Fund. No acceleration clause can make the balance due because you feel insecure, though you can ask that the remaining funds go into a joint escrow account. An arbitration clause is allowed only if it's disclosed clearly in language the director designates and each party separately signs and dates it.

The deposit cap

A deposit paid before work starts can't exceed the greater of one-third of the total contract price or the actual cost of special-order or custom-made materials or equipment that must be ordered ahead to keep the project on schedule. On a $30,000 kitchen, that's $10,000, or more if the custom cabinets you must order now cost more. And no final payment may be demanded until the contract is completed to the satisfaction of the parties. Demanding or receiving payment in violation of these rules is a prohibited act under section 17.

The three-day right to cancel

When an agreement over $25 is signed somewhere other than your business address, usually the owner's kitchen, Mass. Gen. Laws ch. 93 § 48 lets the buyer cancel until midnight of the third business day after signing, by mail, telegram or delivery to your office. The front page must carry this in 10-point bold next to the buyer's signature, and a completed notice of cancellation in duplicate must be attached:

Leaving out a required or agreed term, or not delivering a copy signed by you, keeps the cancellation window open until you fix it. You refund within ten business days of a valid cancellation. The FTC's forms may be used in place of the state's. Financed jobs can bring in other cancellation rights under ch. 255D § 14 or ch. 140D § 10, which section 2 also asks you to disclose.

Registration, the Guaranty Fund and penalties

• Register, and advertise the number. Operating without a certificate of registration, and advertising home improvements without your registration number, are both prohibited acts under section 17.
• Every violation is a 93A violation. Breaking any provision of chapter 142A is an unfair or deceptive act under chapter 93A, the state's consumer protection law.
• Criminal penalties. Working unregistered, or after a suspension or revocation, can bring a fine up to $5,000, up to two years' imprisonment, or both. Other knowing and willful violations: up to $2,000, up to a year, or both (section 19).
• Other prohibited acts include abandoning a job without justification, deviating from plans without the owner's consent, failing to pay suppliers after being paid for their materials, and violating building laws.
• The contract still stands. A contract isn't invalid solely because it doesn't comply with section 2, but the violations and their consequences remain.

Signing it electronically

Massachusetts' Uniform Electronic Transactions Act gives electronic signatures and records legal effect (see e-signature law in Massachusetts). Two of chapter 142A's rules translate neatly: the "no blank spaces" warning becomes a contract where every field is filled or required before anyone can sign, and the copy signed by both arrives the moment the envelope completes. For notices the law requires in writing, get the owner's consent to electronic records first (15 U.S.C. § 7001(c)).

Setting it up in SignMaster

1. 1

   Put the warning above the signature

   In your contract template, place the "Do not sign this contract if there are any blank spaces" line directly above the owner's signature field, with your registration number and the required notices on the page.

2. 2

   Leave nothing blank

   Fill the job details before sending, and make every field the owner completes required, so the signed contract has no empty spaces.

3. 3

   Schedule the money

   Use currency fields for the deposit and each scheduled payment, and keep the deposit within the one-third or special-order limit.

4. 4

   Sign before the first swing

   Sign at the table with Sign in person. Both of you get the signed copy by email at once, so work can start on schedule.