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Home Improvement Construction Fraud – HOA Concerns

Home renovation going on

The state of New Jersey takes home improvement construction fraud seriously. Under the provisions of the New Jersey Consumer Fraud Act, any loss that a homeowner incurs because of fraud by a home improvement contractor can be tripled in a lawsuit to recover damages. In addition, the statute allows victimized homeowners to be reimbursed for attorney fees and any costs associated with filing legal action.

When the fraud occurs on property that is part of a homeowners association, though, it’s more than just the homeowner who is at risk. Partially completed improvements or poorly done work on such a home can have an impact on the value of all property in the association and can make it more challenging to market the community. What can a homeowner’s association do to protect itself and its members from unscrupulous contractors?

  • Make it a rule that any contractor working on any structure in the community be approved by the homeowner’s association before beginning any type of work, including demo. Ask contractors for references and be willing to conduct some due diligence on a potential contractor.
  • Provide a list of pre-approved contractors to your members—This can benefit everyone. Most homeowners don’t relish the idea of trying to find a contractor. The homeowner’s association can ensure that all approved contractors are familiar with all covenants and building restrictions, so there’s no worry about non-conforming practices. Homeowners can also relax, knowing that the contractor they’ve chosen will abide by association rules.
  • Require all contractors to provide all relevant licenses before beginning any work
  • Ask for copies of all relevant insurance policies from contractors
  • Advise homeowners not to pay for any work until it is completed—This is the most common type of fraud, where a homeowner makes a down payment and the contractor disappears. If the contractor says he needs money for materials, advise the homeowner to purchase the materials directly and schedule delivery. If the contractor disappears, the homeowner can return the materials or make them available to a new contractor.

Contact the Law Office of Jared M. Lans

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