On January 1, 2014, a new Wisconsin law, often referred to as the “Storm Chaser Law” (Wis. Stat. Sec. 100.65) went into effect. The new law is intended to protect consumers and their insurers from contractor fraud, particularly the type of fraud that sometimes occurs when unscrupulous contractors, often from out-of-state, descend on a community recently devastated by a storm or other natural disaster.
The Storm Chaser Law creates new rights for consumers, as well as new duties for contractors, which means that all Wisconsin consumers should learn about the law before hiring a contractor, and all contractors who work in Wisconsin should review their construction agreements and procedures to make sure that they are in full compliance with the new law.
To help both contractors and consumers get up to speed quickly on the details of the new law, here are some answers to frequently asked questions about Wisconsin’s new Storm Chaser Law:
Does Wisconsin’s Storm Chaser Law apply to construction work done on a residential property, a commercial property or both?
Wisconsin’s Storm Chaser Law applies only to construction work done on a single-family or two-family residential dwelling, and only if the owner or possessor of that dwelling (referred to as a “consumer” under the law) is the party contracting for the work.
Are all types of construction work covered by Wisconsin’s Storm Chaser Law?
No. Wisconsin’s Storm Chaser Law only applies to repairs or replacements of roof systems and exterior repairs, replacements, construction or reconstruction work. Contracts relating exclusively to interior work are not subject to the new law. Note, however, that, although the new law is often referred to as the “Storm Chaser Law,” the law applies to roof and exterior work regardless of whether that work is, or is not, required due to a storm or other natural disaster. In other words, if you are a contractor replacing a roof on a single family dwelling, you need to comply with this law, even if you are just replacing an old roof, rather than replacing a roof that was damaged in a storm.
What rights does Wisconsin’s Storm Chaser Law give to a consumer?
Wisconsin’s Storm Chaser Law gives a consumer a right to cancel a construction contract covered by the law within 3 business days of the consumer’s receipt of written notice that an insurance claim relating to the contracted work has been denied, in whole or in part. If a consumer exercises this cancellation right, the contractor must refund ALL payments and deposits made by the consumer (except for payments made for certain emergency services) within 10 days of the contractor’s receipt of the consumer’s cancellation notice. With only limited exceptions, a full refund must be made even if the contractor has already begun work on the project. In other words, if a contractor begins work that is subject to the Storm Chaser Law (other than certain emergency services) before the consumer’s insurance company has approved a claim relating to that work, the contractor is taking a significant risk that it will never be paid for that work.
What does Wisconsin’s Storm Chaser Law prohibit a contractor from doing?
Wisconsin’s Storm Chaser Law prohibits a contractor from: (1) promising to pay or rebate all, or any portion, of a consumer’s property insurance deductible as an incentive for the consumer to enter into an agreement with the contractor; (2) representing, or offering to represent, a consumer in connection with an insurance claim; or (3) negotiating, or offering to negotiate, an insurance claim on behalf of a consumer.
What does Wisconsin’s Storm Chaser Law require a contractor to do?
Before entering into a written contract with a consumer to perform any work covered by the new law, a contractor must furnish the consumer with 2 documents:
(1) A document signed by both the contractor and the consumer in which they each state whether, to the best of their knowledge, the work contemplated by the contract is, or is not, related to a claim under a property insurance policy. This document must also include language notifying the consumer of the cancellation rights he or she has under Wisconsin’s Storm Chaser Law, including the deadline for exercising those rights.
(2) A form, in duplicate, attached to the contract (but also easily detachable), that the consumer can use to exercise his or her cancellation right. This form must include an explanation of the cancellation right, including both the deadline for exercising that right and an explanation of the consumer’s right to a refund, in the event of a cancellation.
A more complete description of all of the requirements applicable to these two documents, including such details as minimum font size and what language must appear in bold type, can be found in the statute.
Does the law apply to oral, as well as written, agreements to do construction work?
Yes and no. The provisions of the law prohibiting a contractor from promising to pay or rebate an insurance deductible and the provisions of the law prohibiting a contractor from negotiating or representing a consumer in connection with an insurance claim apply to both oral and written contracts. The new law’s cancellation and refund right, and the provisions of the law requiring a contractor to deliver the two documents described above, only apply to written contracts. Note, however, that Section ATCP 110.05 of the Wisconsin Administrative Code requires home improvement contracts to be in writing if they require any payment prior to completion of the work, or if the contract is initiated by the contractor’s solicitation of the consumer in any of the ways described in Section 110.05(1)(b), including, but not limited to, face-to-face solicitation of a consumer by an out-of-state “Storm Chaser” contractor.
This article was written by Janice L. Gauthier, Esq. Ms. Gauthier has an A.B., cum laude, from Harvard University and a J.D, cum laude,. from Harvard Law School. She is a real estate lawyer and the owner of The Gauthier Law Group, LLC, a boutique real estate law firm in Milwaukee, Wisconsin, that represents real estate owners, developers, sellers, buyers, borrowers, lenders, tenants and landlords in the Greater Milwaukee, Chicago and Madison Areas, as well as in other parts of Wisconsin and Illinois. You can contact Ms. Gauthier at 414-270-3855, ext. 101 or by email. To learn more about Ms. Gauthier’s background and experience, visit her Google or LinkedIn profiles.
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