Roofing Contractors Beware…
Mandatory Residential Roofing Contractor
Contract Cancellation Period now in Effect in Georgia
By: Marvin P. Pastel, II
Roofing contractors in Georgia are, at times, extremely busy. Every year, thunderstorms, tornados, hail, and other severe weather cause significant damage to the roofs of homes throughout the state. Roofing contractors often respond quickly to assess roof damage, perform emergency services before the full extent of damage may be known in order to prevent further damage, and, ultimately, repair or replace damaged roofs. The industry practice has trended toward contractors agreeing with property owners to be paid out of expected proceeds of property and casualty insurance policies. In order to curb what the Georgia legislature considers unfair trade practices by roofing contractors who agree to be paid from insurance proceeds, Georgia Code Section 10-1-393.12 establishes new contracting requirements for residential roofing contractors.
As of July 1, 2011, all “residential roofing contractors” – persons or entities in the business of contracting or offering to contract with an owner or possessor of real estate to repair or replace “roof systems” for one-to-four family residential structures, including detached garages – will have to comply with the new law. A “roof system” is broadly defined by the statute to mean “a roof covering, roof sheathing, roof weatherproofing, roof framing, roof ventilation system, and insulation.” Because the law is broad in scope, many contractors who do not consider themselves “roofing contractors” will be affected. All contractors should take measures to determine whether they must comply.
All residential roofing contractors who enter into written agreements with their customers to be paid out of the proceeds of property and casualty insurance policies must provide a five-day cancellation period. If a customer receives during the five-day cancellation period written notice from its insurer that all or any part of the claim or contract is not covered by insurance, the customer may cancel the contract. Before entering into these newly-regulated roofing contracts, residential roofing contractors must furnish their customers with the following specific statement advising of the customer’s right of cancellation in boldface type and in a minimum of ten-point font:
“You may cancel this contract at any time before midnight on the fifth business day after you have received written notification from your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy. This right to cancel is in addition to any other rights of cancellation which may be found in state or federal law or regulation. See attached notice of cancellation form for an explanation of this right.”
Furthermore, residential roofing contractors must provide customers with a pre-completed, “notice-of-cancellation” form. The notice of cancellation form must also be written in boldface type in a minimum of ten-point font and must be attached to the contract in duplicate and be easily detachable. Although any form of notice that indicates the intention of the customer not to be bound by the contract is required to be accepted by the residential roofing contractor, the form notice of cancellation must provide as follows:
“NOTICE OF CANCELLATION
If you are notified by your insurer that all or any part of the claim or contract is not a covered loss under the insurance policy, you may cancel the contract by mailing or delivering a signed and dated copy of this cancellation notice or any other written notice to (name of contractor) at (address of contractor’s place of business) at any time prior to midnight on the fifth business day after you have received such notice from your insurer.
I HEREBY CANCEL THIS TRANSACTION
Pursuant to the new law, residential roofing contractors may not require any payment from the customer for work that may be covered by insurance proceeds until the five-day cancellation period has expired. Residential roofing contractors may collect, prior to the expiration of the cancellation period, payment for emergency services performed to secure the property and prevent further damage. Payment for emergency services, however, may only be collected if the customer acknowledges in writing that the emergency services suggested by the residential roofing contractor are necessary to prevent further damage to the premises.
Significantly, the new law also strictly prohibits residential roofing contractors from representing or negotiating on behalf of a customer on any insurance claim in connection with the repair or replacement of roof systems.