Arizona Construction Contract Requirements: Did You Know You HAVE to Have to Advise of the Right to Complain to the ROC?

As a contractor in Arizona, do you know that you are required BY LAW to put into your contract that the party who hires you has the right to complain about your work to the Arizona Registrar of Contractors?  This change was put into effect as of December 31, 2007, by a modification to Arizona Revised Statutes Section 32-1158, the statute that sets forth the minimum Arizona construction contract requirements.  That law was enacted in the waning days of the super-boom that hit Arizona beginning around 2004.  Of course, by the time the law went into effect the boom was over and the bust was beginning.   Once the bust hit, contractors weren’t getting jobs, so the contract language requirements were pretty much irrelevant.  But forward to 2014 and contracting business is on the rise again, and in the interim the Arizona Registrar of Contractors has made sweeping changes to how it does the business of regulating contractors.  Not meeting the minimum contracting requirements set by the statute is a violation of law, and could result under the new rules in a fine and/or suspension of your license!

So what exactly do you need to tell the owner about the ROC?  The statute says your contract must tell the property owner that:

a.   They have the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A;

b.   To provide the owner in the contract with registrar’s telephone number and website address; and

c.    State that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A.

Moreover, these things must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor’s designated representative.

It should be noted that a general contractor who constructs a new residential home was already required to provide a separate notice of the right to complain to the Registrar, under the Arizona Purchaser Dwelling Action statutes.  If the general contractor has provided this separate notice, then it is exempt from having to also put the language in its contract with the buyer.    If you are contracting directly with owners and you haven’t recently reviewed your contract form, you should probably check it out to ensure your contract complies with current Arizona law.

What else do you need to enter into a construction contract in Arizona?  Well, first and foremost, you need a WRITTEN contract.  Though the Arizona Registrar of Contractors will enforce verbal contracts, generally such enforcement will only work AGAINST the contractor, and in any event, the failure to have a written contract will expose you to possible fines or suspension of your license.

What should your written contract contain?  At a minimum, in addition to the notice described above, your contract should have the following items to comply with Arizona law:

1. The name of the contractor and the contractor’s business address and license number.

2. The name and mailing address of the owner and the job site address or legal description.

3. The date the parties entered into the contract.

4. The estimated date of completion of all work to be performed under the contract.

5. A description of the work to be performed under the contract.

6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

If you aren’t using a written contract form, you should consider changing that business practice immediately.  If you have a form but haven’t reviewed it, you should review it and make changes to ensure that it meets these minimum requirements.   If you know your contract form doesn’t contain the minimum requirements, and you would like assistance in creating a contract form that complies with the law and perhaps addresses some other common concerns or issues that occur in your jobs, the construction law attorneys at Thomas Law PLLC can help.

If you would like to contact us to discuss this further, we can be reached at 480-222-2225 or by email by completing our contact form.

This article is for general information only and not to be construed as legal advice or the basis for information of an attorney-client relationship between the reader and the author.