Know the law on home remodeling projects SanTan Sun News

Know the law on home remodeling projects

Know the law on home remodeling projects
Business
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By Ben Gottlieb
Guest Writer

In today’s COVID-19 world, more people are at home and as a result, more people are creating home projects.

According to a local TV report, “Since Arizona’s stay-at-home order went into effect in March, many people have had time to think of changes they would like to make inside their homes.  As a result, contractors have seen a boost in calls over the last month.”

https://www.fox10phoenix.com/news/for-contractors-covid-19-pandemic-means-more-home-renovation-jobshttps://www.fox10phoenix.com/news/for-contractors-covid-19-pandemic-means-more-home-renovation-jobsAccording to a MarketWatch article published on June 27, “Bank of America polled 1,054 Americans about their attitudes and shopping habits during coronavirus and found that more than 70 percent have decided to tackle home improvement projects, with more planned for 2021.”

With home improvement projects on the rise in Arizona, it is important that homeowners do not unknowingly violate Arizona law in completing their projects.

Arizona has strong laws in place that protect the public from unlicensed contractors performing work.

Arizona imposes significant requirements for licensure – an aspiring contractor must post a bond, obtain experience or train at an accredited institution, and pass a written test.  He or she may also have to submit fingerprints for a background check.

If a person dismisses these licensure requirements and proceeds with performing unlicensed work, the person may suffer severe legal consequences.

And these consequences may extend beyond civil penalties into the criminal realm – and disqualify the person from ever obtaining a license.

Like most areas of the law, however, exceptions exist.

Arizona law permits a property owner to build or improve their property without themselves needing to be licensed, assuming the property is not intended to be placed for sale or for rent. 

Prima facie evidence of intent for sale or for rent is doing either within a year of the project’s completion.

Notwithstanding this exception, in some cases it is best to hire a licensed contractor.

Arizona law also permits contractors without a license to perform certain jobs provided they cost less than $1,000, including labor, materials and other items.

This is generally referred to as Arizona’s “handyman” exemption for a limited range of services.  This exemption does not apply in all cases.  For instance, the work must be of a casual or minor nature to qualify for the exemption. 

It should also be noted that, to avoid a potential legal issue, if and when a homeowner sells his or her home, appropriate disclosures should be made to any prospective buyer regarding the work done on the property.

Arizona law requires a homeowner to disclose to a potential buyer any information or defects regarding the homeowner’s real property that is known to the seller, is “material” and is “latent.”

“Material” means something a reasonable buyer would attach importance to; “latent” is something not readily visible to the naked eye from a reasonable inspection.

Minor repairs that fall under the “handyman” exemption are probably not something that an ordinary seller needs to disclose to a prospective buyer, unless the specific circumstances warrant disclosure – i.e., perhaps it is a minor issue but the issue keeps recurring and the seller had to fix it multiple times.

On the other hand, if the seller fails to disclose that he or she engaged an unlicensed contractor to perform a more substantial project – such as building a casita in the backyard, the seller could have liability exposure for the non-disclosure.

  This is especially the case if the unlicensed contractor performed substandard work or if proper building permits were not obtained.

Non-disclosure is a serious issue and can provide a buyer with a variety of remedies.

  In extreme cases, where fraud occurred, a court may award rescission of the purchase contract – an equitable remedy which contemplates the undoing of the transaction.

In cases where negligent misrepresentation is claimed, the buyer can recover damages that are necessary to compensate the buyer for the monetary loss to him or her of which the misrepresentation is a legal cause, including (a) the difference between the value of what he or she has received in the transaction and its purchase price or other value given for it; and (b) monetary loss suffered otherwise as a consequence of the buyer’s reliance upon the misrepresentation.

In addition to compensatory damages, in civil fraud cases, the jury or court can also award punitive damages, which are additional damages designed to punish the defendant wrongdoer.   

Chandler attorney Benjamin Gottlieb is co-founder in the Phoenix law firm MacQueen & Gottlieb, the state’s #1 ranked real estate law firm for two years running. Information: MandGLawGroup.com or 602-533-2840.

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