Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

The Law

New York General Business Law

Chapter 20. Of the Consolidated Laws

Article 36-a. Home Improvement Contracts, Sections 770-776

General Business Law §771-Contract Provisions

1. Every home improvement contract subject to the provisions of this article, and all

amendments thereto, shall be evidenced by a writing and shall be signed by all the parties to the

contract. The writing shall contain the following:

(a) The name, address, telephone number and license number, if applicable, of the

contractor.

(b) The approximate dates, or estimated dates, when the work will begin and be

substantially completed, including a statement of any contingencies that would materially change

the approximate or estimated completion date. In addition to the estimated or approximate dates,

the contract shall also specify whether or not the contractor and the owner have determined a

definite completion date to be of the essence.

owner, including make, model number or any other identifying information, and the agreed upon

consideration for the work and materials.

(d) A notice to the owner purchasing the home improvement that the contractor or

subcontractor who performs on the contract or the materialman who provides home improvement

goods or services and is not paid may have a claim against the owner which may be enforced

against the property in accordance with the applicable lien laws. Such home improvement contract

shall also contain the following notice to the owner in clear and conspicuous bold face type:

“Any contractor, subcontractor, or materialman who provides home improvement

goods or services pursuant to your home improvement contract and who is not paid may

have a valid legal claim against your property known as a mechanic’s lien. Any mechanic’s

lien filed against your property may be discharged. Payment of the agreed-upon price under

the home improvement contract prior to filing of a mechanic’s lien may invalidate such lien.

The owner may contact an attorney to determine his rights to discharge a mechanic’s lien.”

(e) A notice to the owner purchasing the home improvement that, except as otherwise

provided in paragraph (g) of this subdivision, the home improvement contractor is legally required

to deposit all payments received prior to completion in accordance with subdivision four of

section seventy-one-a of the lien law and that, in lieu of such deposit, the home improvement

contractor may post a bond, contract of indemnity or irrevocable letter of credit with the owner

guaranteeing the return or proper application of such payments to the purposes of the contract.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

(f) If the contract provides for one or more progress payments to be paid to the home

improvement contractor by the owner before substantial completion of the work, a schedule of

such progress payments showing the amount of each payment, as a sum in dollars and cents, and

specifically identifying the state of completion of the work or services to be performed, including

any materials to be supplied before each such progress payment is due. The amount of any such

progress payments shall bear a reasonable relationship to the amount of any work to be performed,

materials to be purchased, or expenses for which the contractor would be obligated at the time of

payment.

(g) If the contract provides that the home improvement contractor will be paid on a

specified hourly or time basis for work that has been performed or charges for materials that have

been supplied prior to the time that payment is due, such payments for such work or materials shall

not be deemed to be progress payments for the purposes of paragraph (f) of this subdivision, and

shall not be required to be deposited in accordance with the provisions of paragraph (e) of this

subdivision.

(h) A notice to the owner that, in addition to any right otherwise to revoke an offer, the

owner may cancel the home improvement contract until midnight of the third business day after

the day on which the owner has signed an agreement or offer to purchase relating to such contact.

Cancellation occurs when written notice of cancellation is given to the home improvement

contractor. Notice of cancellation, if given by mail, shall be deemed given when deposited in a

mailbox properly addressed and postage prepaid. Notice of cancellation shall be sufficient if it

indicates the intention of the owner not to be bound. Notwithstanding the foregoing, this paragraph

shall no apply to a transaction in which the owner has initiated the contact and the home

improvement is needed to meet a bone fide emergency of the owner, and the owner furnishes the

home improvement contractor with a separate dated and signed personal statement in the owner’s

handwriting describing the situation requiring immediate remedy and expressly acknowledging

and waiving the right to cancel the home improvement contract within three business days. For the

purposes of this paragraph the term “owner” shall mean an owner or any representative of an

owner.

(i) Before a contractor or subcontractor begins work on a home, such writing shall

disclose to the homeowner the existence of a property and/or casualty insurance policy that covers

the scope of such contractor or subcontractor’s employment would an insurance claim be filed

resulting from losses arising from the work at such property. Such disclosure shall also include

the contact information of the insurance company providing such property and/or casualty

insurance, including a phone number and address.

2. The writing shall be legible, in plain English, and shall be in such form to describe

clearly any other document which is to be incorporated into the contract. Before any work is done,

the owner shall be furnished a copy of the written agreement, signed by the contractor. The writing

may also contain other matters agreed to by the parties to the contract.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

General Business Law §771-a-Responsibilities of home improvement contractors

No home improvement contractor shall engage in any activity, transaction, or course of business

or pay or receive any fee, payment, money, or other thing of value in connection with the financing

of a home improvement contract without fully disclosing such activity, transaction, or course of

business and any fees, payment, or other thing of value paid or to be paid in connection therewith,

and without having obtained the agreement in writing from all parties to the transaction to such

activity and the payment therefor.

General Business Law §771-b

Responsibilities of roofing contractors

1. Every roofing contractor shall enter into a written contract with an owner pursuant

to all of the provisions of section seven hundred seventy-one of this article before engaging in the

business of roofing, gutter, downspout or siding services for such owner. In addition, the contract

entered into under this section shall contain the name of the insurer, type of insurance coverage as

required by subdivision nine of this section, and the insurance policy limits obtained by the roofing

contractor.

2. A roofing contractor shall not advertise or promise to pay or rebate all or any

portion of any insurance deductible as an inducement to the sale of goods or services. As used in

this section, a promise to pay or rebate includes granting any allowance or offering any discount

against the fees to be charged or paying the insured or any person directly or indirectly associated

with the property any form of compensation, gift, prize, bonus, coupon, credit, referral fee, or other

item of monetary value for any reason.

3. An owner who has entered into a written contract with a roofing contractor to

provide goods or services to be paid under a property and casualty insurance policy may cancel

the contract prior to midnight on the third business day after the insured party has received written

notice from the insurer that all or any part of the claim or contract is not a covered loss under the

insurance policy. Cancellation occurs when written notice of cancellation is given to the roofing

contractor. Notice of cancellation, if given by registered or certified mail, shall be deemed given

when deposited in a mailbox properly addressed and postage prepaid. Notice of cancellation shall

be sufficient if it indicates the intention of the owner not to be bound. Notwithstanding the

foregoing, this subdivision shall not apply to a transaction in which the owner has initiated the

contact and the roofing contract is needed to meet a bona fide emergency of the owner, and the

owner furnishes the roofing contractor with a separate dated and signed personal statement in the

owner's handwriting describing the situation requiring immediate remedy and expressly

acknowledging and waiving the right to cancel the roofing contract within three business days. For

the purposes of this subdivision the term “owner” shall mean an owner or any representative of an

owner.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

4. Within ten days after a contract referred to in subdivision three of this section has

been cancelled, the roofing contractor shall tender to the owner any payments, partial payments,

or deposits made and any note or other evidence of indebtedness. If, however, the roofing

contractor has performed any emergency services, acknowledged by the owner in writing to be

necessary to prevent damage to the premises, the roofing contractor shall be entitled to the

reasonable value of such services. Any provision in a contract referred to in this subdivision that

requires the payment of any fee for anything except emergency services shall not be enforceable

against the owner who has cancelled a contract pursuant to this section.

5. A roofing contractor shall not require an owner to provide a deposit for the work

and materials. A roofing contractor shall not mandate that a particular form of payment be made

in order to commence performance of the home improvement. A roofing contractor may invoice

for payment of the materials portion of the project upon delivery of the materials to the owner of

the property. The material cost must be disclosed to the property owner in writing in advance of

payment. A roofing contractor may invoice the remainder of the project upon successful

completion of all contracted work.

6. A roofing contractor shall not abandon, or fail to perform, without justification, any

roofing contract, nor shall the roofing contractor deviate from or disregard plans or specifications

in any material respect without the consent of the owner. A roofing contractor shall abide by the

applicable building code for the jurisdiction where the residential property is located.

7. A roofing contractor shall not fail to pay for materials or services rendered in

connection with a roofing contract where the contractor has received sufficient funds as payment

for the particular contract for which the services or material were rendered or purchased.

8. A roofing contractor shall not perform the reporting, adjusting, or negotiating a

claim on behalf of the owner and shall not receive compensation for the referral to any entity that

reports, adjusts or negotiates a claim on behalf of an owner. Nothing herein prevents a roofing

contractor from communicating with an insurance company representative and sharing his or her

technical knowledge when the insurer initiates the communication.

9. (a) A roofing contractor shall provide to the owner adequate proof of insurance of

the types and amounts set forth in this subdivision:

(1) A certificate of workers' compensation covering all employees of the roofing

contractor. If the roofing contractor does not have any employees, then the contractor must

provide a certificate of attestation exemption (CE-200) form from the workers'

compensation board; and

(2) Certificates of general liability and property damage insurance in the amount

of one hundred thousand dollars per person, three hundred thousand dollars per occurrence,

bodily injury; and fifty thousand dollars for each occurrence and aggregate, property

damage.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

(b) The insurance requirements set forth in this subdivision shall apply to roofing

contracts performed in all political subdivisions that do not contain any insurance requirements for

such contracts.

General Business Law §772

Penalty for fraud

1. Any owner who is induced to contract for a home improvement, in reliance on false

or fraudulent written representations or false written statements, may sue and recover from such

contractor a penalty of five hundred dollars plus reasonable attorney’s fees, in addition to any

damages sustained by the owner by reason of such statement or representations. In addition, if the

court finds that the suit by the owner was without arguable legal merit, it may award reasonable

attorney’s fees to the contractor.

2. Northing in this article shall impair, limit, or reduce the statutory, common law or

contractual duties or liability of any contractor.

General Business Law §773

Violations

1. Technical Violations. Every home improvement contractor who violates any of

the provisions of this article shall be subject to a civil penalty not to exceed one hundred dollars.

2. Substantial Violations. Every home improvement contractor who fails to deposit

funds in an escrow account or provide a bond or contract of indemnity or irrevocable letter of

credit in compliance with the requirements of section seventy-one-a of the lien law, or who fails

to provide a written contract substantially in compliance with the requirements of this article, shall

be subject to a civil penalty not to exceed the greater of two hundred fifty dollars for each violation

or five percent of the aggregate contract price specified in the home improvement contract;

provided, however, that in no event shall the total penalty exceed twenty-five hundred dollars for

each contract.

3. Mitigating factors; defenses. In an instance where the contractor has been shown

to have committed multiple violations of this article or the provisions of section seventy-one-a of

the lien law, the court shall consider the following factors in assessing a civil penalty pursuant to

subdivision two of this section: the volume of business which the home improvement contractor

performs on an annual basis, the number of contracts in violation, the actual financial loss or

exposure to financial loss suffered by any owner a result of the violations, and whether the home

improvement contractor acted in good faith or willfully with respect to such violations. No home

improvement contractor shall be subject to the increased penalties provided by subdivision two of

this section if such contractor shows by a preponderance of the evidence that the violation was not

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

intentional and resulted form a bona fide error made notwithstanding the maintenance of

procedures reasonably adopted to avoid such a violation.

General Business Law §774

Action by the Attorney General

1. Upon any violation of the provisions of this article, an application may be made by

the attorney general in the name of the people of the state of New York to a court or justice having

jurisdiction to issue an injunction, and upon notice to the defendant of not less than five days, to

enjoin and restrain the continuance of the violation. If it shall appear to the satisfaction of the court

or justice that the defendant has violated this section, an injunction may be issued by the court or

justice, enjoining and restraining any further violation, without requiring proof that any person

has, in fact, been injured or damaged thereby. In any such proceeding, the court may make

allowances to the attorney general as provided in paragraph six of subdivision (a) of section eight

thousand three hundred three of the civil practice law and rules, and direct restitution.

In connection with an application made under this section, the attorney general is authorized to

take proof and to make a determination of the relevant facts and to issue subpoenas in accordance

with the civil practice laws and rules.

2. The provisions of this article may be enforced concurrently by the director of a

municipal consumer affairs office, or by the town attorney, city corporation counsel, or other

lawful designee of a municipality or local government, and all moneys collected thereunder shall

be retained by such municipality or local government.

General Business Law §775

Applicability

This article shall not exempt any contractor subject to its provisions from complying with any local

law with respect to the regulation of hoe improvement contractors, provided, however, that after

the effective date of this article, no political subdivision may enact a local aw inconsistent with the

provisions of section seven hundred seventy-one of this article.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

The Law

New York Personal Property Law §426

Chapter 41. Of the Consolidated Laws

Article 10-a. Door-To-Door Sales Protection Act

Personal Property Law §426

Definitions

In this article:

1. “Door-to-door sale” shall mean a sale, lease or rental of consumer goods or services

in which the seller or his representative personally solicits the sale, including those in response to

or following an invitation by the buyer, and the buyer’s agreement or offer to purchase is made at

a place other than the place of business of the seller. [This subdivision of the law goes on to list a

number of exceptions]

2. “Consumer goods or services” shall mean goods or services purchased, lease, or

rented primarily for personal, family or household purposes, including courses of instruction or

training regardless of the purpose for which they are taken.

Personal Property Law §427

Buyer’s or other obligor’s right to cancel

1. In addition to any right otherwise to revoke an offer, the buyer or other person

obligated for any part of the purchase price may cancel a door-to-door sale until midnight of the

third business day, or until midnight of the seventh business day in the case of a door-to-door sale

of a personal emergency response service, after the day on which the buyer has signed an

agreement or offer to purchase relating to such sale.

2. Cancellation occurs when written notice of cancellation is given to the seller.

3. Notice of cancellation, if given by mail, shall be deemed given when deposited in

a mailbox properly addressed and postage prepaid.

4. Notice of cancellation need not take the form prescribed and shall be sufficient if it

indicates the intention f the buyer not to be bound.

Personal Property Law §428

Form of notice; statement of buyer’s rights

1. In a door-to-door sale, the seller shall furnish to the buyer

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

(a) a fully completed receipt or copy of any contract pertaining to such sale at the time

of its execution, which is in the same language, e.g. Spanish, as that principally used in the oral

sales presentation and which shows the date of the transaction and contains the name and address

of the seller, and in immediate proximity to the space reserved in the contract for the signature of

the buyer or on the front page of the receipt if a contract is not used and in not less than ten-point

bold face type, a statement in substantially the following form:

“YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR

TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS

TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR

AN EXPLANATION OF THIS RIGHT.”

(b) at the time the buyer signs the door-to-door sales contract or otherwise agrees to

buy consumer goods or services from the seller, a completed form in duplicate, captioned

“NOTICE OF CANCELLATION”, which shall be attached to the contract or receipt and easily

detachable, and which shall contain in not less than ten-point bold face type the following

information and statements in the same language, e.g. Spanish, as that used in the contract:

NOTICE OF CANCELLATION

(enter date of transaction)

(Date)

YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION,

WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.

IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU

UNDER THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRUMENT EXECUTED

BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY

THE SELLER OF YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST

ARISING OUT OF THE TRANSACTION WILL BE CANCELLED.

IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR

RESIDENCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY

GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU MAY IF

YOU WISH, COMPLY WITH THE INSTRUCTIONS OF THE SELLER REGARDING THE

RETURN SHIPMENT OF THE GOODS AT THE SELLER'S EXPENSE AND RISK.

IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES

NOT PICK THEM UP WITHIN TWENTY DAYS OF THE DATE OF YOUR NOTICE OF

CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY

FURTHER OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THE

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

SELLER, OR IF YOU AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL TO

DO SO, THEN YOU REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIONS

UNDER THE CONTRACT.

TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY

OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A

TELEGRAM, TO

(Name of Seller), AT Address of Seller

(Place of Business) NOT LATER THAN MIDNIGHT OF

(Date)

I HEREBY CANCEL THIS TRANSACTION.

(Date)

(Buyer's Signature)

and the seller shall complete both copies by entering the name of the seller, the address of the

seller's place of business, the date of the transaction, and the date, not earlier than the third business

day following the date of the transaction, by which the buyer may give notice of cancellation.

2. In a door-to-door sale, the seller shall inform each buyer orally, at the time he signs

the contract or purchases the goods or services, of his right to cancel. Until the seller has complied

with this section, the buyer or any other person obligated for any part of the purchase price may

cancel the door-to-door sale by notifying the seller in any manner and by any means of his intention

to cancel. The period prescribed by subdivision one of section four hundred twenty-seven shall

begin to run from the time the seller complies with this section.

3. A door-to-door sales contract or receipt shall not include any confession of

judgment or any waiver of any of the rights to which the buyer is entitled under this article

including specifically his right to cancel the sale in accordance with the provisions of this article.

4. A door-to-door sales contract or receipt shall disclose conspicuously the seller's

refund policy as to all goods, wares or merchandise subject to the door-to-door sales agreement. If

the seller fails to disclose conspicuously the applicable refund policy, then the seller shall be liable

to the buyer for a cash refund of the total price or a credit of the total price, at the buyer's option,

provided that within twenty days from the date of delivery of the purchased item or items, the

buyer makes a demand therefor and provided that the merchandise is in substantially as good

condition as when received by the buyer. In no event shall this subdivision be deemed to supercede

a refund policy of a seller which allows return of merchandise more than twenty days after the date

of delivery of the purchased item or items. The amount paid by the buyer to the seller shall be

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

refunded or credited, as the case may be, within ten business days from the date of return of the

seller's merchandise in substantially as good condition as when received by the buyer.

5. This section does not relieve any person, firm, corporation or association subject to

the provisions of this section from complying with any other applicable law, ordinance, rule or

regulation relating to refund policies which affords the buyer greater protection than do the

provisions of this section.

The Law

New York Lien Law

Chapter 33. Of the Consolidated Laws

Article 3-a. Definition and Enforcement of Trusts

Lien Law §71-a-Further trust funds received or receivable by owner under executory

contract for the sale and improvement of real property.

1. As used in this section,

(a) A “contract of sale” is an executory contract for the sale of real property and the

improvement thereof by the construction of a building thereon.

(b) “Advances” include funds received by the owner and his rights of action for payment

thereof.

2. (a) Advances made by or on behalf of a vendee of real property to the owner under or

pursuant to a contract of sale shall constitute assets of a trust, as defined in this section, of which

the owner is trustee, notwithstanding that such advances may also be assets of a trust defined

in section seventy of this chapter.

(b) Such advances shall be held and applied by the owner for the payment of the cost of

improvement. The trust claims defined in subdivision three(a) of section seventy-one of this

chapter shall have priority over trust claims which the vendee has under the further trust provided

in this section. Advances shall cease to be subject to the further trust provided in this section after

they have been applied by the owner for payment of the cost of improvement, provided that no

part of the advances shall be applied or be deemed applied for payment of the cost of improvement

until all trust assets, as defined in subdivisions five(a) to five(f), inclusive, of section seventy of

this chapter, which have been received by the owner from all other sources, have been exhausted.

payment of the cost of improvement, shall continue to be held in trust by the owner for the benefit

of the vendee, until the trust is terminated (i) by the owner's performance of the terms of the

contract of sale, or (ii) by a default of the vendee excusing the owner's performance of the terms

of the contract of sale, or (iii) by release or discharge of the owner's liability to refund such

advances to the vendee.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

(d) Until the further trust is terminated as provided in this section, such advances shall not

be applied by the owner for any purpose other than payment of the cost of improvement and

satisfaction of any liability of the owner to refund such advances, or any part thereof, to the vendee.

Upon termination of the said trust, the beneficial interest in such advances or any portion thereof

remaining in the hands of the owner shall vest in the owner, provided that all trust claims applicable

to such advances have been paid or discharged.

(e) Any provision whereby the vendee waives the provisions of this section, whether

contained in the contract of sale or otherwise, shall be absolutely void.

(f) Subject to the provisions of this section, the rights and remedies which may be exercised

by a holder of trust claims with respect to assets of a trust defined in section seventy of this chapter

may be exercised, in the same manner and to the same extent, by the vendee with respect to such

advances.

(g) The enforcement of the trust provided in this section shall not be deemed to prohibit

the vendee from seeking to enforce such additional or alternative remedies provided by law as

shall afford the vendee complete relief.

3. (a) The initial advance pursuant to a contract of sale which by its terms provides for or

is incidental to a contract providing for the construction on the subject real property of residential

condominium unit or any structure designed solely for residential occupancy of not more than two

families living separately, on property to be purchased shall, at the vendee's option, be deposited

within five business days thereafter by the recipient in an interest bearing escrow account in a

bank, trust company, savings bank, state or federal savings and loan association, located in this

state. Such deposit, together with the interest accumulated thereon, shall remain the property of

the vendee except as otherwise provided herein. The recipient shall advise the vendee in writing

of the name of the depository where the funds have been placed within ten business days after such

deposit has been made.

(b) In lieu of making the deposit of such moneys in an escrow account as provided in

paragraph (a) of this subdivision, the recipient may post with the vendee a bond or contract of

indemnity, issued by a surety company licensed to execute such an instrument in this state,

guaranteeing the return of the moneys which otherwise would be required to be deposited in such

escrow account, in which case the recipient shall not be required to deposit such money in an

escrow account. Said bond or contract of indemnity shall be delivered to the vendee within ten

business days after receipt of the initial advance.

may post with the vendee a bond or contract of indemnity issued by a surety company licensed to

execute such an instrument in this state guaranteeing the return of such moneys, in which case the

recipient shall not be required to maintain the deposit of such moneys in such account.

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

(d) Such advance shall be retained in the escrow account or such bond or contract of

indemnity continued in effect until the trust is terminated (i) by the recipient's performance of the

terms of the contract of sale, or (ii) by default of the vendee excusing the recipient's performance

of the terms of the contract of sale, or (iii) by release or discharge of the recipient's liability to

refund such advance to the vendee, or (iv) upon transfer of title of the real property to the vendee.

(e) Every contract of sale which by its terms provides for or is incidental to a contract

providing for the construction on the subject real property of a residential condominium unit or a

structure designed solely for the residential occupancy by not more than two families living apart,

shall contain a statement advising the vendee of the provisions of this subdivision. Such statement

shall be printed in bold type which is at least two points larger than any other printing contained

thereon and shall read as follows:

“YOU, AS THE PURCHASER OF THIS RESIDENCE, MAY REQUIRE THE RECIPIENT OR

CONTRACTOR TO DEPOSIT THE INITIAL ADVANCE MADE BY YOU IN AN ESCROW

ACCOUNT. IN LIEU OF SUCH DEPOSIT, THE RECIPIENT OR CONTRACTOR MAY POST

A BOND OR CONTRACT OF INDEMNITY WITH YOU GUARANTEEING THE RETURN

OF SUCH ADVANCE.”

4. (a) Under a home improvement contract, payments received from an owner by a home

improvement contractor prior to the substantial completion of work under the contract shall be

deposited within five business days thereafter by the recipient in an escrow account in a bank, trust

company, savings bank, or state or federal savings and loan association, located in this state. No

depository institution acting on the instructions or otherwise dealing with a home improvement

contractor shall be obliged to inquire into the validity or propriety of any deposits to or withdrawals

from any escrow account established by the home improvement contractor in compliance with this

subdivision or to insure that any withdrawals from such account are applied for any specific

purpose or purposes by the home improvement contractor. Such deposit or deposits shall remain

the property of such owner except as otherwise provided herein. Unless the home improvement

contract specifies the name of the depositary where the funds will be placed, no later than ten

business days after the deposit has been made, the recipient shall advise the owner in writing of

the name of the depositary where the funds have been placed. The recipient shall not be required

to keep in separate depositary accounts the funds of the separate owners from whom payments

have been received, provided his books of account shall clearly show the allocation to each owner

of the funds deposited in his general or special depositary account or accounts.

(b) In lieu of making the deposit of such payment or payments in an escrow account as

provided in paragraph (a) of this subdivision, the recipient may post with the owner a bond or

contract of indemnity, issued by a surety company licensed to execute such an instrument in this

state, or an irrevocable letter of credit issued by a bank, trust company, savings bank, or state or

federal savings and loan institution located in this state, guaranteeing the return of the payments,

or the proper application of the payments to the purposes of the contract, which otherwise would

be required to be deposited in such escrow account, in which case the recipient shall not be required

Required Home Improvement Contract Provisions

Prepared by Jennifer A. Hemming, Assistant County Attorney, Erie County Department of Law

Revised July 30, 2024

to deposit such payments in an escrow account. Said bond or contract of indemnity or irrevocable

letter of credit shall be delivered to the owner within ten business days after receipt of the payment.

account, the recipient may post with the owner a bond or contract of indemnity issued by a surety

company licensed to execute such an instrument in this state, or an irrevocable letter of credit

issued by a bank, trust company, savings bank, or state or federal savings and loan institution

located in this state, guaranteeing the return or proper application of such payment to the purposes

of the contract, in which case the recipient shall not be required to maintain the deposit of such

payment in such account.

(d) Such deposit or deposits shall remain the property of the owner or such bond or contract

of indemnity or irrevocable letter of credit continued in effect until (i) the proper payment, transfer

or application of such deposits by the contractor to the purposes of the home improvement contract

under the schedule of payments provided therein; or (ii) the default or breach of the owner excusing

the recipient's performance of the terms of the home improvement contract, but only to the extent

of any reasonable liquidated damage amount as defined in section 2-718 of the uniform

commercial code and set forth in the contract, and only after seven days prior written notice to the

owner; or (iii) substantial performance of the contract.

(e) The recipient shall not withdraw deposits from the escrow account in excess at any time

of the total amount shown in the schedule of payments in the home improvement contract. The

amount of any such progress payments shall bear a reasonable relationship to the amount of work

to be performed, materials purchased, or expenses for which the contractor would be obligated.

(f) If the home improvement contract provides that the home improvement contractor will

be paid on a specified hourly or time basis for work that has been performed or charges for

materials that have been supplied prior to the time that payment is due, this subdivision shall not

apply to such payments for such work or materials.

(g) Failure to place customer deposits in escrow, except as provided herein, shall constitute

a violation of this section.

Notes: The purpose of this summary is to assist home improvement contractors and their

attorneys in drafting agreements which comply with the New York State Home Improvement

Contracts Law, found at General Business Law, Article 36-A, Sections 770 and following.

Other provisions of law and court interpretations of these statutes may be relevant to

particular contract situations. Therefore, it is important for contractors and their attorneys to

examine the entire Home Improvement Contracts Law, as well as Lien Law, Article 3-A and

Personal Property Law, Article 10-A. Use the summary only as a helpful “starting place” and

not as a final interpretation of the law. The aforementioned is provided for informational

purposes only.