§444-25.5 Disclosure; contracts. (a) Prior to entering into a contract with a homeowner, or at the time a homeowner signs a contract, involving home construction or improvements, licensed contractors shall:

(1) Explain verbally in detail to the homeowner all lien rights of all parties performing under the contract, including the homeowner, the contractor, any subcontractor, or any materialman supplying commodities or labor on the project;

(2) Explain verbally in detail the homeowner's option to demand bonding on the project, how the bond would protect the homeowner, and the approximate expense of the bond; and

(3) Disclose all information pertaining to the contract and its performance and any other relevant information that the board may require by rule.

(b) All licensed contractors performing home construction or improvements shall provide a written contract to the homeowner. The written contract shall:

(1) Contain the information provided in subsection (a) and any other relevant information that the board may require by rule;

(2) Contain notice of the contractor's right to resolve alleged construction defects prior to commencing any litigation in accordance with section 672E-11;

(3) Be signed by the contractor and the homeowner; and

(4) Be executed prior to the performance of any home construction or improvement.

(c) For the purpose of this section, "homeowner" means the owner or lessee of residential real property, including owners or lessees of condominium or cooperative units, notwithstanding owner-builder status.

(d) Any violation of this section shall be deemed an unfair or deceptive practice and shall be subject to provisions of chapter 480, as well as the provisions of this chapter. [L 1975, c 183, §4; am L 1984, c 95, §8; am L 1989, c 306, §1; am L 1995, c 20, §7; am L 2004, c 119, §3; am L 2013, c 176, §4]

Case Notes

Where plaintiff did not provide to homeowners the lien disclosure notices before or upon signing of the contract or prior to the commencement of the work as required by subsection (a), plaintiff's conduct was an unfair or deceptive practice that rendered its contract void and unenforceable at law or in equity under §480-12; thus, plaintiff was not entitled to a lien upon homeowners' property under §507-42, and trial court did not err in dismissing its lien application. 111 H. 349, 141 P.3d 996 (2006).

As §480-12 voided the contract between homeowner and contractor, §§507-42 and 480-12 precluded the imposition of a §507-42 lien upon the homeowner's property by contractor who failed to comply with the requirements of this section. 96 H. 365 (App.), 31 P.3d 222 (2001).

In light of the purpose of this section and the specific duties it explicitly imposes on "any licensed contractor entering into a contract involving home improvements", the law does not permit a homeowner to waive his or her rights specified therein. 96 H. 365 (App.), 31 P.3d 222 (2001).

Subsection (d) and §480-12 do not preclude some recovery in quantum meruit from a homeowner by a contractor who fails to comply with the requirements of this section; the amount cannot exceed the amount that would have been due the general contractor under the contract had the contract not been void, less the amount previously paid the contractor and the total of the amount paid and owed to all subcontractors and materialmen. 96 H. 365 (App.), 31 P.3d 222 (2001).

Pursuant to §444-2(7), homeowners did not have the benefit of, and, as to homeowners, contractor was not obligated to comply with, the disclosure provisions of this section. 109 H. 96 (App.), 123 P.3d 691 (2005).