Roofing contractors in more than a dozen states are adjusting their business practices to comply with recently enacted laws intended to protect consumers from unscrupulous “storm-chasers.” Alabama, Arizona, Colorado, Georgia, Indiana, Illinois, Iowa, Kentucky, Oklahoma, Louisiana, Minnesota, Missouri, Nebraska, South Dakota, and Tennessee have all enacted such laws within the past year and a half.
The new laws vary somewhat in detail, but most include one or more of the following provisions:
- A requirement that roofers provide written estimates of work to be performed and obtain a signed contract before starting (in several states, including Louisiana and Illinois, the laws cover all remodeling and home-improvement contracting, not just roofing).
- A specified “grace period” — typically 72 hours from when the contract is signed — during which consumers can cancel a roofing contract without penalty.
- An additional grace period — again, most often 72 hours — that begins if and when the homeowner’s insurance carrier denies a claim that was to have covered the work in question.
- A requirement that contractors refund any deposit or other payment made by the homeowner if a project is cancelled under either of the 72-hour provisions above.
- A prohibition against waiving or rebating the deductible portion of the homeowner’s insurance.
Who benefits? Some contractors support the new laws without reservation. “Conscientious roofers think it’s a good thing,” says Frederick, Colo., roofer Scott Kawulok. “The Colorado Roofer’s Association has been behind it from the beginning.”
But others aren’t so sure. Shreveport, La., restoration contractor George “Geep” Moore says he understands the reasoning behind his state’s law, which took effect in August 2012: “After a storm, you’ll have contractors showing up who will tell the homeowner, ‘Yes, that damage will be covered by insurance, and we’ll waive the deductible if you sign right now.’ Then after they’re gone and the claim is denied, the homeowner is out the cost of the new roof.” But he’s exasperated by the law’s complexity and worries that insurance companies, not homeowners, may stand to reap most of its benefits. “We’re trying to protect ourselves by rewording our contracts,” he says, “but there’s still a lot of uncertainty about it.”
Denver attorney Daniel Glasser — who recently wrote a two-part feature about Colorado’s new roofing law for Cleaning & Restoration magazine (restorationindustry.org) — believes that contractors are right to be concerned. For example, he notes that the mandated 72-hour contract-cancellation period could open the door to widespread “poaching” by unscrupulous contractors looking to undercut others on price. (It’s technically illegal for a contractor to knowingly interfere with an existing agreement, but such rules are unlikely to matter to fly-by-night operators.)
The law also complicates cash flow by requiring contractors to “hold in trust any payment from the property owner until the roofing contractor has delivered roofing materials ... or has performed a majority of the roofing work on the residential property.” To be sure that they’re in compliance, Glasser says, contractors should consider keeping initial payments from residential projects in a separate account, and transfer them to an operating account only when a project is substantially complete. — Jon Vara