Mandatory Clauses In Virginia Residential Contracting Agreements
Certain activities related to the construction, repair or renovation of real property require a contractor’s license. Virginia Code § 54.1-1100 defines a “Contractor” as follows:
“Contractor” means any person, that for a fixed price, commission, fee, or percentage undertakes to bid upon, or accepts, or offers to accept, orders or contracts for performing, managing, or superintending in whole or in part, the construction, removal, repair or improvement of any building or structure permanently annexed to real property owned, controlled, or leased by him or another person or any other improvements to such real property. For purposes of this chapter, “improvement” shall include (i) remediation, cleanup, or containment of premises to remove contaminants or (ii) site work necessary to make certain real property usable for human occupancy according to the guidelines established pursuant to § 32.1-11.7.
Therefore, if you are engaged in any of the activities outlined in the definition above, you will need to obtain the proper license from the Virginia Department of Professional and Occupational Regulation. For both the contractor and the person hiring the contractor, (“owner” for purposes of this article), there are legal requirements that control the relationship and obligations of the contractor and the Owner.
This is a brief overview of the types of contractors, the mandatory minimum terms that a contractor’s contract must contain, and what happens when there is a dispute in court.
Three Classes of Contractors Licenses
There are three classes of contractor licenses in Virginia, Class A, Class B and Class C. They are defined in Va Code § 54.1-1100 and divided according to the value and scope of the contracts that the particular contractor is allowed to handle.
•· Class A license allows a contractor to perform construction for single contracts for $120,000 or more or if the total value of all such construction in any 12-month period is $750,000 or more.
•· Class B contractors may handle single contracts between $10,000 and $120,000 or total construction of less than $150,000 in any 12-month period.
•· Class C contractors may handle contracts between $1,000 and $10,000 or a total of $150,000 over a 12-month period.
Mandatory Clauses In Residential Contracting Agreements.
A construction contract describes in a very detailed manner, clearly identified TIMELINES, description of the product to be delivered, payment schedules, methods of verification of progress and payments based on such independent verification. There are time and materials contracts, and fixed or flat fee contracts. The type of job, scope and the complexity will determine what form will be used. However, regardless of form, there are mandatory clauses that must be included in a Virginia contract for construction work.
In accordance with 18 VAC 50-22-260, all contractors engaged in “residential contracting” must have a written contract containing certain mandatory minimum terms. “Residential Contracting” is defined as the
construction, removal, repair, or improvements to single-family or multiple-family residential buildings, including accessory-use structures as defined in § 54.1-1100 of the Code of Virginia.
There are ten clauses that are absolutely mandatory and must appear in all Virginia construction contracts. Those are detailed under 18 VAC 50-22-260(B)(9):
•1. When work is to begin and the estimated completion date;
•2. A statement of the total cost of the contract and the amounts and schedule for progress payments including a specific statement on the amount of the down payment;
•3. A listing of specified materials and work to be performed, which is specifically requested by the consumer;
•4. A “plain-language” exculpatory clause concerning events beyond the control of the contractor and a statement explaining that delays caused by such events do not constitute abandonment and are not included in calculating timeframes for payment or performance;
•5. A statement of assurance that the contractor will comply with all local requirements for building permits, inspections, and zoning;
•6. Disclosure of the cancellation rights of the parties;
•7. For contracts resulting from a door-to-door solicitation, a signed acknowledgment by the consumer that he has been provided with and read the Department of Professional and Occupational Regulation statement of protection available to him through the Board for Contractors;
•8. Contractor’s name, address, license number, class of license, and classifications or specialty services;
•9. A statement providing that any modification to the contract, which changes the cost, materials, work to be performed, or estimated completion date, must be in writing and signed by all parties; and
•10. Effective with all new contracts entered into after July 1, 2015, a statement notifying consumers of the existence of the Virginia Contractor Transaction Recovery Fund that includes information on how to contact the board for claim information.
Absence of such mandatory minimum terms may subject the contractor to disciplinary action by the DPOR. If you have any questions regarding this subject matter, please feel free to contact our firm at 703-686-5406.