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Penalties for using an illegal construction contract in New York:
- New York General Business Law § 756-a supplies contract terms if not covered in the written agreement – payment dates, invoices, grounds for disapproval and grounds for stopping work.
- New York General Business Law § 757 voids certain contract clauses.
- New York General Obligations Law § 5-322.2 requires specific terms in construction contracts.
- New York General Business Law Article 36-A requires certain disclosures in home improvement contracts, home repair contracts, contracts for construction of custom homes and contracts for improvement or repair of leased residences. For technical violations, the penalty is $100. For substantial violations, the penalty is the greater of $250 or 5% of the contract price up to $2,500.
- Failure to make the disclosures required by New York's Property Law Article 10 § 428 (Sales Protection Act) gives an owner the right to cancel the contract and demand a refund at any time, even years after work is completed (§ 428-b-2).
- Failure to make federal truth in lending disclosures requires restitution of the overcharge.
- Failure to include the disclosures required by 12 Code of Federal Regulations § 226.15 extends the right of rescission to three years (rather than three days).
- Omitting insulation disclosures required by 16 Code of Federal Regulation § 460 can result in an $11,000 fine.
The contracts linked below will help New York contractors avoid these penalties by complying with state and federal law.
The contracts linked below also comply with current New York and federal court decisions.
The contracts linked below comply with the following New York and federal laws:
- New York Civil Practice and Law Rules § 213 (statute of limitations)
- New York General Business Law § 756 to 757 (payment, choice of law)
- New York General Business Law § 770 to 777 (home improvement contracts)
- New York General Obligation Law § 5-322.1 and 5-322.2 (indemnity)
- New York General Obligations Law § 15-301 (modification of contract)
- New York Labor Law § 240, 241 and 241-a (liability for injury)
- New York Lien Law § 34 (no lien contracts)
- New York Lien Law § 71 (payment from trust accounts)
- 12 Code of Federal Regulation § 226.15 (right of rescission)
- 15 United States Code § 1638 (truth in lending)
- 16 Code of Federal Regulation § 460 (insulation disclosure)
Return to Penalties for Illegal Contracts in New York.
The contracts linked below conform with current New York and federal court decisions.
The contracts linked below comply with the following New York and federal court decisions:
- Changes in the work - Albert Elia Building Co. v. New York State Urban Development Corp., 54 A.D.2d 337, 1976
- Charge for extra work - A.H.A. General Construction v New York City Housing Authority, 92 NY2d 20, 1989, Barsotti's, Inc. v. Consolidated Edison Co., 254 A.D.2d 211, 1998
- Claims for delay - Corinno Civetta Constr. Corp. v. New York, 67 N.Y.2d 297, 1986
- Consequential damages - Net2globe Int'l v. Time Warner Telecom of N.Y., 273 F. Supp. 2d 436, 2003
- Cost of delay - Melka Marine Inc.v United States, 187 F.3d 1370
- Defective work - Edgewater Construction Co. v. 81 & 3 of Watertown, Inc., 252 A.D.2d 951, 1998, Edgewater Construction Co. v. 81 & 3 of Watertown, Inc., 252 A.D.2d 951, 1998
- Differing site conditions - Graham Construction & Maintenance Corp. v. Village of Gouverneur, 229 A.D.2d 815, 1996
- Indemnity - Cavanaugh v. 4518 Associates, 9 A.D.3d 14, 2004
- Liquidated damages - X.L.O. Concrete Corp. v. John T. Brady & Co., 104 A.D.2d 181, 1984
- Pay only when paid - West-Fair Electric Contractors v. Aetna Casualty & Surety Co., 87 N.Y.2d 148, 1995
- Warranty - Watt v. Irish, 708 N.Y.S.2d 264, 2000, Sharpe v. Mann, 34 A.D.3d 959, 2006, Gorsky v. Triou's Custom Homes, Inc., 194 Misc. 2d 736, 2002, Hamlet on Olde Oyster Bay Home Owners Association, Inc. v. Holiday Organization, 824 N.Y.S.2d 763, 2006, Caceci v. Di Canio Construction Corp., 72 N.Y.2d 52, 1988, Fumarelli v. Marsam Development, Inc., 92 N.Y.2d 298, 1998, Gomes v. Ern--Roc Homes, Inc., 72 Misc. 2d 410, 1973, Milau Associates, Inc. v. North Ave. Dev. Corp., 42 N.Y.2d 482, 1977, Lupien v. Bartolomeo, 799 N.Y.S.2d 161, 2004
Return to Penalties for Illegal Contracts in New York.
Return to construction contract laws in New York.
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