Wednesday, January 1, 2014

Wisconsin's New Stormchaser Law

Wisconsin's new Stormchaser Law takes effect today. Wis. Stat. s. 100.65 affects both homeowners and contractors who repair or replace roofing or siding on residential homes. Contractors are prohibited from promising to rebate any part of a homeowners' insurance deductible to induce a sale and are also prohibited from negotiating (or even offering to negotiate) with the insurance company on the homeowner's behalf. If the homeowner will make an insurance claim relating to the contemplated work, the contractor must provide the homeowner with WRITTEN notice of his right to cancel the contract in the event that the insurance company denies the claim. If the insurance company denies the claim, the homeowner has three business days to give the contractor WRITTEN notice of cancellation. If the homeowner cancels the contract, the contractor must refund any payments already made.

Wis. Stat. s. 100.65 is an insurance company protection law; not a consumer protection law. Supporters of this law spun the tale of out-of-state fly by night contractors preying on Wisconsin homeowners, but the truth is that insurance companies pushed this law to reduce the number of hail claims. Here's an insightful discussion from an insurance defense attorney in Texas. If Wis. Stat. s. 100.65 was truly a consumer protection law, it would specifically declare that contractors cannot enforce home improvement contracts that violate its terms. If Wis. Stat. s. 100.65 was truly a consumer protection law, it would have given homeowners a civil cause of action for damages resulting from its violation. Instead, contractors get a $500-$1,000 slap on the wrist for violating this law, and homeowners have to hire someone like me to argue that contracts that violate this law are illegal and unenforceable. Fortunately, a violation of Wis. Stat. s. 100.65 is likely also a violation of the Home Improvement Practices Code. If a homeowner proves that a contractor violated the Home Improvement Practices Code, he can recover twice his damages plus reasonable attorneys' fees pursuant to Wis. Stat. s. 100.20(5).      

Homeowners need to understand that they must provide their contractor with WRITTEN notice of cancellation under Wis. Stat. s. 100.65(5); otherwise, cancellation will be ineffective and the homeowner will be contractually obligated to pay the amount due under the contract. Verbal notice won't cut it.  In fact, faxing or emailing the contractor won't cut it.  Homeowners need to follow the letter or the law and either hand-deliver or snail-mail written notice of cancellation to the contractor. Since Wis. Stat. s. 100.65(3)(b) requires contractors to provide homeowners with a separate document that they can use to cancel the contract simply by signing and dating it, homeowners should be able to provide contractors with the required WRITTEN notice without any difficulty.