Home Improvement Contract, Stop-Work Order, and Lapsed Insurance on a Petworth Addition
A DC-licensed home improvement contractor signs a $186,000 contract to finish a basement and build a 12-foot rear addition on a Petworth rowhouse. The "contract" is a two-page proposal listing scope, price, a 60% deposit, and a hand-drawn schedule. It contains no license number, no cancellation notice, and no reference to permits. The homeowner pays $111,600. The crew begins framing before a permit is issued. A neighbor reports the dumpster, and a Department of Buildings inspector posts a stop-work order. The contractor then discovers that its general liability policy lapsed two months ago and that its license renewal is pending because of an unpaid $1,500 fine. The homeowner demands a full refund and threatens to complain to the Department of Licensing and Consumer Protection. The contractor has about $38,000 of material and labor in the job.
1. Is the contract enforceable, and what should the contractor have included under DC home improvement law?
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The contract is at serious risk and should not be treated as a reliable collection document. DC home improvement contracts must be in writing and include the contractor's name, business address, and license number; a description of the work and materials; the price and payment schedule; the start and completion dates; and a notice of the consumer's right to cancel within the statutory cancellation period, commonly three business days. The homeowner must receive a copy. Missing the cancellation notice can extend the rescission period and give the homeowner a right to cancel that the contractor thought had expired. A 60% deposit taken before any work is also vulnerable to a consumer-protection challenge as an unreasonable advance. Failure to include required terms and contracting without a license can violate the DC Consumer Protection Procedures Act, which carries damages, attorney's fees, and potential treble damages. The practical conclusion: the signed proposal is not a strong basis for demanding the balance. The contractor should assume the enforceability of the price term is contestable and negotiate from documented cost, not from the paper.
2. What must happen immediately after the stop-work order, and what is the exposure from the lapsed insurance and pending license?
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First, stop all work and secure the site. Do not frame, do not install, and do not remove material in a way that looks like an attempt to hide the work. Post the stop-work order, photograph the site, and contact the Department of Buildings to find out what is required to resolve it: usually a permit application, sealed plans if structural work is involved, payment of civil infraction fines, and a reinspection before work resumes. The lapsed policy is the more serious problem. Operating without general liability coverage exposes the company and its principals personally for any injury or third-party damage during the gap, and the homeowner's insurer may pursue subrogation. Do not ask the carrier to backdate a certificate; that is insurance fraud. The pending license renewal is separate: DLCP can refuse renewal or suspend the license while the fine is unpaid, and continuing to contract while unlicensed compounds the violation. Get a new policy or reinstatement effective now, pay the fine, and put the certificate and license status in writing to the homeowner. Then assess the structural work already done to see whether it must be opened for inspection.
3. The homeowner wants a refund. What are the contractor's realistic options, and can it file a mechanic's lien?
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The contractor should separate earned from unearned money. Document labor and materials actually incorporated into the property, then offer a written settlement returning the unearned portion of the deposit in exchange for a mutual release and a lien waiver. Refusing to return any money while the job is stopped and the license is in question is the fastest route to a CPPA complaint and a damages multiplier. A mechanic's lien may be available, but it is not a cure-all: DC has statutory notice and filing deadlines that run from the last work or the statutory triggering event, and the contractor must preserve them before negotiating too long. A lien filed by a contractor with a licensing and consumer-law problem invites a counterclaim, and a lien against an owner-occupied home can turn a $38,000 dispute into a much larger case. The better sequence is: cure the license and insurance, obtain the permit, quantify the work, negotiate, and only file a lien if the deadline is near and the settlement fails. Consult DC counsel on the exact recording and suit periods before the date passes.