In September of this year, the Federal Reserve made an uncharacteristic decision only seven weeks before the United States presidential election – cutting interest rates by half a percentage point. While it’s true that interest rate policies are rarely static during election years, implementing a rate-cutting phase with less than 10 weeks to Election Day has only happened twice in this country’s history – first in 1976, then again in 1984.[1] But while this presidential election is attributable (at least in part) to this recent rate cut, forecasts released by the Federal Reserve show that officials expect its key lending rates to continue to drop through the conclusion of 2025.[2] And just as we saw at the outset of the coronavirus pandemic, reduced borrowing costs are likely to spur a new wave of home renovations as borrowers seek to take advantage of cheaper home improvement loans or prepare their properties for sale.[3]

Whether you are a homeowner looking to spruce up your property, or a contractor in the business of making a homeowner’s vision a reality, it is important to understand the rights that Indiana has afforded to consumers with respect to real property improvement contracts. If you are a property owner or one who engages in or solicits home improvements (regardless of whether you deal directly with consumers), being aware of and understanding the obligations imposed upon real property improvement contracts is pivotal. Especially in today’s litigious day and age, knowledge of your rights as a property owner or a contractor when relationships between parties begin to dissolve can be the difference between protracted litigation and an amicable separation.

First codified in 2012, the purpose of the Home Improvement Contract Act (“HICA”) “is to protect consumers by placing specific minimum requirements on the contents of home improvement contracts.”[4] Because consumers rely upon contractors, and because the general assembly found “well-known abuses” in the home improvement industry, contractors are held to a strict standard under HICA.[5]

Those strict standards apply to all property improvement contracts where the amount of the contract is greater than $150. Aside from the requirement that all property improvement contracts for more than $150 be in writing, HICA imposes a litany of other provisions that are required in those written contracts. And while failure to strictly adhere to HICA’s statutory requirements does not necessarily render a home improvement contract void, Indiana courts have the discretion on whether to enforce the real property improvement contract or limit the application of the contracts or clauses in violation of HICA.[6] And while a voided contract is not traditionally a desirable outcome for contractors, the bigger concern should be whether the violations of HICA open the door to damages under Indiana’s Deceptive Consumer Sales Act (“DCSA”).

HICA establishes that any violation is actionable by either the attorney general or a consumer under the DCSA.[7] Under the DCSA, a consumer relying upon an “uncured” or “incurable” deceptive act may be entitled to up to three times the actual damages incurred by the consumer plus the attorneys’ fees that the consumer incurred. Accordingly, if a court concludes that a contractor’s HICA violations are either uncured or incurable under the DCSA, the exposure that contractor faces increases exponentially.

Whether you are a consumer or a contractor, it is important to ensure that any real property improvement contract that you enter into is HICA compliant. In the event of a dispute revolving around a real property improvement contract, it is important to consult with a legal professional knowledgeable on HICA and the DCSA to ensure that your rights, either as a consumer or a contractor, are protected.

This is not legal advice and is for educational use only. Please consult with legal counsel should you have any questions regarding the information discussed above. Use and reliance on this article does not create an attorney-client relationship.

**Preliminary research provided by PSRB Summer Associate Sarah Brown

[1] What has the Fed Done in Election Years? Rate Changes Happen More Often Than Not, REUTERS (https://www.reuters.com/markets/rates-bonds/what-has-fed-done-election-years-rate-changes-happen-more-often-than-not-2024-09-18/).

[2] US Goes Big With First Interest Rate Cut in Four Years, BBC News (https://www.bbc.com/news/articles/cz04md0zdrno)

[3] Planning a Renovation? The Fed Rate Cut Means You’ll Want to Start Now, Mansion Global (https://www.mansionglobal.com/articles/planning-a-renovation-the-fed-rate-cut-means-youll-want-to-start-now-3b02b0fa)

[4] Imperial Ins. Restoration v. Costello, 965 N.E.2d 723, 727 (Ind. Ct. App. 2012).

[5] Id.

[6] Paul v. Stone Artisans, Ltd., 20 N.E.3d 883, 887-88 (Ind. Ct. App. 2014).

[7] Ind. Code § 24-5-11-14.

Categorized: Articles

Tagged In: DCSA, Federal Reserve, HICA, Home Improvement Contract Act, Indiana's Deceptive Consumer Sales Act