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Construction Law

Contract Omissions Can Trigger ROC Action Against the Contractor's License

Every time a contractor performs work for more than $1,000 for an owner — commercial or residential — Arizona law requires a signed contract that contains nine specific pieces of information.

 

As we originally discussed in our May 2013 ROC Compliance Update, if you omit from a contract with an owner just one of the nine "minimum elements of a contract" listed below and set forth in A.R.S. § 32-1158, you are in violation of Arizona's contracting statutes. Those minimum elements are not mere technicalities; the ROC has made it clear that a contractor's license can and will be disciplined if any of the nine elements are missing from a contract.

Although a failure to comply with the minimum-elements statute does not automatically trigger a specific sanction, the consequences can be serious. At an April 1, 2014, meeting of Arizona construction lawyers, an ROC representative reported that, in a couple of recent cases, contractor's licenses were temporarily suspended for failure to include required contractual provisions.

  Construction Advisor

This article appeared in the April 2014 issue of "The Construction Advisor" published by Lang & Klain, P.C.


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The Nine Elements

The conclusion is simple. To avoid running afoul of the ROC, make sure that your contracts include the following:

1. The contractor's name, business address, and license number.

2. The owner's name and mailing address, along with the address or legal description of the jobsite.

3. The date the contract was entered into by the parties.

4. The estimated date of completion.

5. A description of the work to be performed.

6. The total amount to be paid to the contractor, including all applicable taxes.

7. The amount of any advance deposit.

8. The amount and timing of progress payments.

9. Notice that the property owner has the right to file a written complaint with the Registrar of Contractors for an alleged violation of A.R.S. § 32-1154(A), along with contact information for the ROC. (Watch out: This notice and contact information needs to be displayed in specific ways.)

Given the ROC's seriousness about enforcing the contract requirements of A.R.S. § 32-1158, you should review your contracts to check for the presence of all nine elements. If need be, consult with a construction attorney to ensure compliance.