Consumer Protection Blog

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Consumer Protection Blog

Court Rules That A Realtor® May Be Sued Under Fair Debt Collection Practices Act For Collecting Rents

Greaves v. Ann Davis Associates, Inc. , 2015 WL 668227 (NJ District Court)

In a decision released on 17 February 2015 by the United States District Court for the District of New Jersey, the court ruled that Realtors® may be subject to the Fair Debt Collection Practices Act if they are regularly engaged in collecting rents on behalf of a landlord.


ERA Central Realty Group, and its agent Anjani Kumar, listed a rental home in Bordentown, New Jersey. On 5 August 2012, Patricia Greaves and her spouse rented the property for a term of two years.

Ms. Greaves was a US Army officer. In 2013, she received a mobilization order which included an annual salary of $84,000.

In August 2013, Ms. Greaves was ten days late with the rent. She was contacted by both the landlord and the rental agent, who sought the rent and a late fee. The real estate agent also called Ms. Greaves’ military superiors and informed them that Ms. Greaves was late on her rent and communicated to them that they needed to “handle” Ms. Greaves and the issue of her failure to pay rent. The military superiors told Ms. Greaves that given the information supplied by the real estate agent, they questioned her ability to handle her finances and her ability to complete the tasks required by the mobilization order. Soon thereafter, Ms. Greaves’ mobilization order was revoked along with the $84,000 salary.

The Lawsuit

Ms. Greaves sued both the broker and the agent under the Fair Debt Collection Practices Act (FDCPA). 15 U.S.C. Sec. 1692 et seq. To bring a FDPCA claim, a plaintiff must show that: (1) the defendant is a “debt collector,” and (2) the defendant engaged in prohibited practices in an attempt to collect a debt. A “debt collector” is defined under the FDCPA as:

[A]ny person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due [to] another.

15 U.S.C. Sec. 1692(a)(6).

The broker and agent filed a motion to dismiss the complaint alleging that they were not a “debt collector” under the FDCPA. They maintained that the “principal purpose” of their business was not debt collection but was brokering real estate transactions.

While it is clear that the FDCPA does not apply to an isolated instance of collecting a debt for another, it is equally clear that the FDPCA does apply to businesses and individuals who “regularly engage” in debt collection evem when debt collection is not the “principal purpose” of the business. Thus, for example, banks and law firms have been held liable for the FDCPA when it has been shown that they regularly attempt to collect debts of another. See Heintz v. Jenkins, 514 U.S. 291, 115 S.Ct. 1489 (1995) (FDCPA applies to attorneys who regularly engage in consumer-debt-collection activity); Oppong v. First Union Mortg. Corp., 215 F. App’x 114, 119–120 (3d Cir.2007) (FDCPA applies to bank even where debt collection represents an extremely small portion of its business).

The Court’s Decision

The Court held that a Realtor® could be held liable under the FDCPA if the Realtor® regularly engages in debt collection on behalf of a client. Thus, the court denied the Realtors’ motion to dismiss the complaint. The court permitted the plaintiff to conduct discovery to determine if the broker and agent were regularly engaged in debt collection on behalf of their landlord clients.

What This Means For NJ Realtors®

The Greaves case stands for the proposition that if a real estate broker or agent is regularly engaged in collecting rents on behalf of their landlord clients, they may be subject to the requirements of the federal Fair Debt Collection Practices Act.

Prior case law appears to indicate that one who acts as a “property manager” for an owner of real property is not a “debt collector” under the FDCPA - this is so even where the property manager regularly collects rent and back rent. In Greaves, it appears that the real estate agent was not acting as a property manager but was instead attempting to “help” a client collect rent where the agent had no contractual duty to do so. It is the real agent’s alleged zeal in helping the client collect a debt owed to the client that has placed the agent - and the agent’s broker - in hot water.

Is a NJ Realtor® Required to Disclose a Murder or a Suicide at a Listed Property?

The PA Supreme Court rules that there is no duty to disclose a murder or suicide that occurred in a residential property listed for sale.

Every New Jersey Realtor® has a duty to “make [a] reasonable effort to ascertain all material information concerning the physical condition of every property for which he or she accepts an agency.” N.J.A.C. 11:5-6.4(b). A “reasonable effort” has two requirements”: (1) inquiries of the seller or the seller’s agent concerning physical conditions that affect the property, and (2) a visual inspection of the property to determine if there are any readily observable conditions that affect the property. N.J.A.C. 11:5-6.4(b)(1). “[I]nformation is ‘material’ if a reasonable person would attach importance to its existence or non-existence in deciding whether or how to proceed in the transaction, or if the [Realtor®] knows or has reason to know that the recipient of the information regards, or is likely to regard it as important in deciding whether or how to proceed.” N.J.A.C. 11:5-6.4(b)(2). Finally, New Jersey Realtors® have a duty to “disclose all information material to the physical condition of any property which they know or which a reasonable effort to ascertain such information would have revealed”. N.J.A.C. 11:5-6.4(c).

In a nutshell, every Realtor® has a duty to investigate a property for physical conditions that a reasonable person would find important when deciding to purchase the property, and if the Realtor® has reason to know of any special needs or concerns of a client, the Realtor® must investigate for those concerns too. Furthermore, a Realtor® has a duty to divulge those material facts in his or her knowledge to potential buyers.

Is a murder, a suicide or a murder-suicide a “physical condition that affects the property” so that a Realtor® must disclose the event to a potential buyer?

No New Jersey court has ruled on the issue. However, in the Summer of 2014, the Pennsylvania Supreme Court addressed this very issue. Milliken v. Jacono, 103 A.3d 806 (PA 2014).

In Milliken, in February 2006, a prior homeowner shot and killed his wife in the home and then turned the gun on himself and committed suicide. In September 2006, Mr. and Mrs. Jacono purchased the home from the estate of the prior owners for $450,000 - which amount represented a savings of over $100,000 from the fair market value. The Jaconos then invested several thousand dollars to clean and renovate the home. They listed the property for sale in June 2007. At the time of the listing, they informed the broker of the prior murder-suicide. The Jaconos also asked their attorney and the Pennsylvania Real Estate Commission if they were legally obligated to disclose the murder-suicide. Both the attorney and the Real Estate Commission informed the Jaconos that a murder-suicide was not a “material defect” that had to be disclosed. The real estate broker also contacted the Real Estate Commission and was told the same thing. After receiving the opinion of their attorney and the Real Estate Commission, the Jaconos completed and signed a Seller’s Property  Disclosure Statement, which did not disclose the prior murder-suicide.

Also in June 2007, Ms. Milliken, a resident of California who was unfamiliar with the murder-suicide at the property in Pennsylvania, viewed the home and received a copy of the Seller’s Disclosure. She entered into a contract to purchase the home. She asked her real estate agent about why the Seller had paid only $450,000  just a year and a half before her contract for $610,000 to purchase the same home. The agent stated that perhaps the Jaconos had purchased the property from a mortgage foreclosure. Despite being provided with title documents showing that the Jaconos had purchased the home from an estate, Ms. Milliken made no further investigation concerning the prior owners. After the closing of title, and after moving into the home, Ms. Milliken was informed that there had been a murder suicide in her home less than two years prior to her purchase.

Ms. Milliken sued the Jaconos and the real estate brokers for the non-disclosure of the murder-suicide. Both the Jaconos and the real estate broker filed motions to dismiss the claims on the grounds that a murder-suicide was not a “material defect” of the property. The trial court granted the motions and dismissed the claims. Ms. Milliken then appealed the trial court’s decision. The appeal eventually made its way all the way up to the Pennsylvania Supreme Court, which stated they would review the trial court’s decision to determine “whether the occurrence of a murder/suicide inside a house constitutes a material defect of the property” that must be disclosed to potential buyers.

The Pennsylvania Supreme Court ruled that a murder-suicide is not a material defect that had to be disclosed to potential buyers. The Court reasoned:

"Regardless of the potential impact a psychological stigma may have on the value of property, we are not ready to accept that such constitutes a material defect. The implications of holding that non-disclosure of psychological stigma can form the basis of a common law claim for fraud or negligent misrepresentation, or a violation of the [Consumer Protection Law’s] catch-all, even under the objective standard posited by appellant, are palpable, and the varieties of traumatizing events that could occur on a property are endless. Efforts to define those that would warrant mandatory disclosure would be a Sisyphean task. One cannot quantify the psychological impact of different genres of murder, or suicide — does a bloodless death by poisoning or overdose create a less significant "defect" than a bloody one from a stabbing or shooting? How would one treat other violent crimes such as rape, assault, home invasion, or child abuse? What if the killings were elsewhere, but the sadistic serial killer lived there? What if satanic rituals were performed in the house?
It is safe to assume all of the above are events a majority of the population would find disturbing, and a certain percentage of the population may not want to live in a house where any such event has occurred. However, this does not make the events defects in the structure itself. The occurrence of a tragic event inside a house does not affect the quality of the real estate, which is what seller disclosure duties are intended to address. We are not prepared to set a standard under which the visceral impact an event has on the populace serves to gauge whether its occurrence constitutes a material defect in property. Such a standard would be impossible to apply with consistency and would place an unmanageable burden on sellers, resulting in disclosures of tangential issues that threaten to bury the pertinent information that disclosures are intended to convey.”

Milliken v. Jacono, 103 A.3d at 810.

In New Jersey, the duty to disclose is not limited to Real Estate Commission regulations. Rather, New Jersey courts have also imposed upon New Jersey Realtors a common law duty to disclose. In Weintraub v. Krobatsch, 64 N.J. 445 (1974), the New Jersey Supreme Court quoted with approval, a holding by the Tennessee Supreme Court, which stated that: a real estate broker or agent “is not only liable to a buyer for his affirmative misrepresentation and intentional misrepresentations to a buyer, but he is also liable for mere non-disclosure to the buyer of defects known to him and unknown and unobservable by the buyer.” Id. at 454 quoting Simmons v. Evans, 185 Tenn. 282, 206 S.W.2d 295 (1947). The Weintraub case dealt with an insect (roach) infestation, and the Simmons matter dealt with limited water service to the home. Thus, both cases dealt with a “physical condition” of the property. Arguably, the Weintraub case does not broaden the Real Estate Commission disclosure requirement found in N.J.A.C. 11:5-6.4 to conditions that are not “physical”.

The ruling of the Pennsylvania Supreme Court in Milliken v. Jacono, supra, is not binding on New Jersey courts. Until a New Jersey court decides the issue, the safest course of action is to disclose any adverse fact regarding a listed property that is known to the Realtor®.

Does a Realtor® Violate the New Jersey Consumer Fraud Act When He or She Provides a Seller’s Property Condition Disclosure Statement to a Buyer, Which Contains a Misrepresentation Made by a Seller?

Holt v. Laube, 2011 WL 6141466 (App. Div., Dec. 12, 2011) (NO. A-1331-10T2) certif. den. 210 N.J. 108 (2012).

By: Michael Millar, Esq.


The most common claim made against real estate brokers and agents in New Jersey is an alleged violation of the New Jersey Consumer Fraud Act (the “CFA”). [EN1]

The CFA provides for a mandatory award of treble (3X) damages and payment of the plaintiff’s attorney fees and costs when the plaintiff proves both a violation of the Act and damages arising from the violation. [EN2] New Jersey courts have created an exception to the CFA, finding that homeowners are not liable under the CFA when they sell their own home. [EN3] However, the courts have further ruled that real estate brokers and agents are subject to the CFA and that they may be liable for repeating a misrepresentation of fact first communicated to them by the seller. [EN4] Thus, the real estate broker and agent may be liable when the seller is not – and where the seller is the source of the alleged misrepresentation.

The CFA’s promise of enhanced, punitive damages and attorney fees against real estate brokers and agents provides a powerful incentive to sue the broker and agent in any dispute between a buyer and a seller of real estate.

One issue facing New Jersey Realtors® is whether, simply by providing a Seller’s Property Condition Disclosure Statement to a buyer, a Realtor® commits an act of consumer fraud if the seller has made a misrepresentation of fact in the disclosure.

The Three Types of CFA Violations

The CFA provides, in relevant part, that:

"The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any … real estate, … is declared to be an unlawful practice…"


CFA violations fall into three basic categories.

The first category is an affirmative misrepresentation of fact. An affirmative misrepresentation violates the CFA even when made without knowledge that the statement is untrue and when made with no intent to mislead. [EN6]

The second category is a “knowing omission” or concealment of a material fact, accompanied by the intent that others rely upon the omission or concealment. [EN7]

The third category is a violation of a specific regulation promulgated under the CFA. In this last category, the unlawful practice may be proven without the need to show intent. [EN8] The third category of CFA violation, a regulatory violation, is only applicable to regulations enacted by the New Jersey Division of Consumer Affairs (“DCA”) under the CFA. [EN9] The regulations setting forth the duties of New Jersey Realtors® - e.g., N.J.A.C. 11:5-6 - are not enacted by the DCA and are not enacted under the CFA. Rather, the New Jersey Real Estate Commission is responsible, under its own rule making authority, for enacting regulations governing the duties of Realtors®. [EN10] Therefore, violating a regulation enacted by the New Jersey Real Estate Commission is not a violation of law and is not an act of consumer fraud. [EN11]

Having eliminated the third category - regulatory violations - as a means of CFA liability for Realtors®, leaves only the first two categories - affirmative misrepresentations and knowing omissions. Virtually every case brought against a New Jersey real estate broker and/or agent involves either a claim that the broker/agent misrepresented some fact to the plaintiff or that the broker/agent had knowledge of a material fact but failed to disclose it. [EN12]

The CFA Safe Harbor

Because, among other reasons, a Realtor® may be found liable under the CFA for repeating a statement made by his or her client - and the client has no CFA liability for making the statement - the New Jersey Association of Realtors® successfully lobbied the New Jersey legislature to pass an amendment to the CFA - a Realtor® “Safe Harbor” - which shields the Realtor® from treble damages and attorney fees for conveying information supplied by a Seller to the Buyer if the Realtor® follows certain steps. [EN13] The CFA Safe Harbor led to the creation of the Seller’s Property Condition Disclosure Statement (the “Seller’s Disclosure”). From the perspective of real estate brokers and agents, the primary purpose of the Seller’s Disclosure is to shield them from CFA punitive damages if they are sued. To qualify for the CFA Safe Harbor, the Realtor® must meet the following four conditions:

  1. Does not know of the defective condition. (A Realtor® always has a duty to disclose all material facts known to the Realtor® [EN14]);

  2. Obtains a Seller’s Disclosure completed solely by the seller;

  3. After obtaining the Seller’s Disclosure, performs a visual inspection of the property and the home to see if anything differs from what is represented by the seller in the Seller’s Disclosure;

  4. Provides the Seller’s Disclosure to the buyer prior to the conclusion of attorney review.


What Happens to the Realtor® When the Seller’s Disclosure Contains a Misrepresentation of Fact Made by the Seller?

The Seller’s Disclosure contains over 100 questions. The Seller’s Disclosure is both a blessing and a curse. It is a blessing because it may shield a New Jersey Realtor® from punitive damages and attorney fees under the CFA. It may be a curse because it may expose the Realtor® to CFA liability for misrepresentations made by a seller concerning a myriad of issues that the Realtor® would otherwise make no representation whatsoever.

Some plaintiff’s attorneys have argued that the mere conveyance of a Seller’s Disclosure is an act of consumer fraud made by the Realtor® if the Seller’s Disclosure contains a misrepresentation made by the seller. The law is unsettled on this point. There is no published decision by any court in New Jersey - as of January 2015 - that provides guidance. There is, however, an unpublished decision, made by the New Jersey Appellate Division that discusses the issue. [EN16]

New Jersey, like the federal government, has three levels of courts - the Law Division (trial court), the Appellate Division (mid-level appellate court) and the Supreme Court (highest court). The decision of a higher court on an issue is controlling on a lower court. A trial court must follow a decision made by the Appellate Division. However, there is a difference between a published and an unpublished decision. A published decision must be followed. An unpublished decision is merely “persuasive authority” - i.e., it is instructive, but it does not have to be followed.

The Holt v. Laube Case

In October 2002, plaintiffs, Mr. & Mrs. Holt, expressed an interest in purchasing a home owned by Mr. & Mrs. Laube. Coldwell Banker represented the seller. Re/Max represented the buyer. A Contract of Sale was completed and Coldwell Banker provided a Seller’s Disclosure to plaintiffs. In December 2002, while the contract with the Holts was pending, Mr. & Mrs. Laube conveyed the property to a relocation company – Primacy. Primacy completed a second Seller’s Disclosure and provided it to the Holts along with the original Seller’s Disclosure prepared by the Laubes. The Primacy Seller’s Disclosure stated Primacy was a relocation company, had not lived in the property and that it made no representations or warranties concerning the property. After the purchase, a retaining wall on the property collapsed. The Holts sued alleging the Laubes had made misrepresentations in their Seller’s Disclosure concerning the construction of the retaining wall and that both Coldwell Banker and Primacy had committed consumer fraud by providing them with a copy of the Laubes’ Seller’s Disclosure. As to Primacy, the trial court dismissed the CFA claim finding the statements made in the Seller’s Disclosure were not made by Primacy. The Appellate Division upheld that ruling. [EN17] The Appellate Division stated:

"Plaintiffs nevertheless allege that Primacy is liable under the CFA for affirmative misrepresentations allegedly made by the Laubes in their SDS, which Primacy had provided to plaintiffs. However, those statements were made by the Laubes, not Primacy. Here, Primacy did not make any representations as to whether the Laubes had obtained all permits required for the construction of the retaining walls. Although Primacy furnished plaintiffs with a copy of the Laubes’ SDS, Primacy never indicated that the Laubes’ statements were accurate or acceptable. … We therefore conclude that the trial court correctly determined that Primacy was entitled to summary judgment."


In Holt, after affirming the summary judgment order dismissing the CFA claim against Primacy, the Appellate Division next turned to the consumer fraud claim asserted against the real estate broker – Coldwell Banker. The plaintiffs argued both that the real estate broker had an obligation to investigate inconsistent statements made in the Seller’s Disclosure and that the real estate broker had made a misrepresentation to the plaintiffs by conveying the Seller’s Disclosure to them. The Appellate Division rejected both arguments stating:

"We next consider plaintiffs’ contention that the trial court erred by dismissing their CFA claims against Coldwell. Plaintiffs assert that the Laubes made inconsistent statements on their SDS and Coldwell had a duty to investigate those inconsistencies. Plaintiffs claim that these inconsistent statements constitute affirmative material misrepresentations by Coldwell that violate the CFA. We are not persuaded by these arguments.


… Furthermore, there is no basis for a claim against Coldwell based on a failure to disclose material facts regarding any deficiency in the retaining walls. As the trial court noted, there was no evidence that Coldwell was aware of any problem with the retaining walls and acted to conceal it. We are therefore convinced that the trial court correctly determined that Coldwell was entitled to summary judgment.”


In Holt, the Appellate Division ruled that a Realtor® does not make a “representation” by conveying a Seller’s Disclosure to a buyer. Rather, a plaintiff must show either that the Realtor® made a representation, found to be false, independent of the Seller’s Disclosure or that the Realtor® had actual knowledge of a defective condition that was not disclosed.

Other Reasons a Seller’s Disclosure Should Not Create Realtor® Liability.

In Holt, the Appellate Division ruled that a Realtor® does not make a representation in a Seller’s Disclosure - and that without a representation there can be no misrepresentation. However, that is not the only argument that could or should be advanced for why a Realtor® should not be found to have violated the CFA by providing a Seller’s Disclosure to a buyer.

(1) The Seller’s Disclosure Expressly Provides that the Realtor® Does Not Make a Factual Representation in the Form.

The text of the Seller’s Disclosure expressly provides that all answers are provided solely by the seller. A buyer cannot read the Seller’s Disclosure and then claim they reasonably believed the representations made in the disclosure were made by the Realtor®.

The Sellers Disclosure states on the first page:

The purpose of this Disclosure Statement is to disclose, to the best of Seller’s knowledge, the condition of the property…. Seller alone is the source of all information contained in this form…

While it is true that a Realtor® signs a Seller’s Disclosure, the Realtor does so in order to further inform the Buyer that the information in the Disclosure is provided solely by the Seller.


The undersigned Seller’s real estate … salesperson acknowledges receipt of the Property Disclosure Statement form and that the information contained in the form was provided by the Seller.

Thus, a plain reading of the Seller’s Disclosure indicates that all of the representations concerning the condition of the property are made by the Seller alone.

(2) The CFA Safe Harbor Does Not Create a New Type of CFA Violation

Plaintiffs may argue that the CFA Safe Harbor speaks of a Realtor’s® liability for communicating false information provided by a seller to a buyer. However, the CFA Safe Harbor does not create a new class of consumer fraud violations. The CFA Safe Harbor does not define what acts or omissions constitute a violation of the CFA.

CFA violations are defined at N.J.S.A. 56:8-2 (misrepresentations and knowing omissions) and N.J.S.A. 56:8-4 (certain regulatory violations). There are no CFA violations defined in N.J.S.A. 56:8-19.1 (the CFA Safe Harbor),

In context, N.J.S.A. 56:8-19.1 supplements N.J.S.A. 56:8-19, which defines damages. N.J.S.A. 56:8-19.1 - the CFA Safe Harbor - defines an exception to the damages required by the CFA.

The CFA Safe Harbor sets forth what steps a Realtor® must take to be shielded from punitive damages and attorney fees - if the Realtor® has committed a violation of N.J.S.A. 56:8-2 (affirmative misrepresentations and knowing omissions). The CFA Safe Harbor does not state that by complying with the requirements of the CFA Safe Harbor - _ i.e._ , by providing a Seller’s Disclosure - a Realtor® has committed an act of consumer fraud. Rather, the CFA Safe Harbor merely defines what steps must be taken to be shielded from the punitive damages mandated by the CFA.

(3) A Finding That the CFA Safe Harbor Creates Liability Requires an Illogical Interpretation of the Statute.

In enacting the CFA Safe Harbor, the New Jersey Legislature created certain requirements – e.g., the seller alone must complete the Seller’s Disclosure and that the Realtor then must provide the Seller’s Disclosure to the buyer - that a Realtor® must follow to avoid punitive damages. A plaintiff who argues that a Realtor has committed an act of consumer fraud by providing the Seller’s Disclosure to the Buyer, is arguing that the New Jersey Legislature intended and required that Realtors® commit acts of consumer fraud against New Jersey consumers so that the Realtor® can then be shielded from punitive damages for their acts of consumer fraud. That makes no sense. The purpose of the CFA is to reduce instances of consumer fraud and to punish those who commit acts of consumer fraud. It is illogical to interpret the CFA Safe Harbor so that it is intended to require that more acts of consumer fraud be committed and that those who commit acts of consumer fraud should then be shielded from the punitive damages required by the CFA.

A court must interpret a statute in such a way that it does not lead to illogical or absurd results. [EN20] It makes no sense to interpret the statute - the CFA Safe Harbor - to mean that the New Jersey Legislature intended that a Realtor® must first commit an act of consumer fraud before a Realtor® can be shielded from punitive damages. It is an illogical and absurd reading of the statute. A more logical reading of the statute would be that providing a Seller’s Disclosure - which is required by the CFA Safe Harbor - is not an act of consumer fraud.

A Seller’s Disclosure Should be Used in Every Transaction.

Regardless of how the issue plays out in the courts, New Jersey real estate brokers and agents are advised to use a Seller’s Disclosure in every transaction. The Seller’s Disclosure is required to obtain the CFA Safe Harbor - to be shielded from treble damages and attorney fees. Without the CFA Safe Harbor, for a successful CFA claim, $35,000 in damages could be worth over $200,000 when that amount is trebled and attorney fees are added in.


So, does a New Jersey Realtor® commit a violation of the Consumer Fraud Act when he or she provides a Seller’s Property Condition Disclosure Statement, which contains a misrepresentation made by the seller, to a buyer?

The answer, at this point, is unclear. No reported court decision has directly decided the issue.

However, the unreported decision of the New Jersey Appellate Division in Holt provides some guidance. The Appellate Division, in Holt, indicated that a Realtor® does not make a representation in a Seller’s Disclosure - only the seller does. If the courts eventually follow the Holt decision, a Realtor would not have liability for providing the Seller’s Disclosure to a buyer.


[EN1] N.J.S.A. 56:8-2.

[EN2] N.J.S.A. 56:8-19.

[EN3] DiBernardo v. Mosley, 206 N.J.Super. 371 (App. Div. 1986).

[EN4] Arroyo v. Arnold Baker & Assoc., 206 N.J.Super. 294, 296-97 (Law Div. 1985).

[EN5] N.J.S.A.* 56:8-2.

[EN6] Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997).

[EN7] Chattin v. Cape May Greene, Inc., 124 N.J. 520, 522 (1991) (Stein, J., concurring)).

[EN8] Cox v. Sears Roebuck & Co., 138 N.J. 2, 18-19 (1994).

[EN9] N.J.S.A. 56:8-4.

[EN10] N.J.S.A. 45:15–16.49.

[EN11] Stoecker v. Echevarria, 408 N.J.Super. 597, 624 (App. Div.) (violating Realtor® duties found in N.J.A.C. 11:5-6 is not a violation of law and is not a violation of the Consumer Fraud Act) certif. den. 200 N.J. 549 (2009). [EN12] See, for example, Vagias v. Woodmont Properties, LLC, 384 N.J.Super. 129 (App. Div. 2006) (affirmative misrepresentation - agent liable under CFA for telling buyer that home was located in Towaca section of Towaca Township when it was not, even though agent did not know that her statement was incorrect); Ji v. Palmer, 333 N.J.Super. 451 (App. Div. 2000) (knowing omission - plaintiff claimed that broker knew that home marketed as a multi-family home was zoned only for single family use).

[EN13] N.J.S.A. 56:8-19.1.

[EN14] N.J.A.C. 11:5-6.4(b)

[EN15] N.J.S.A. 56:8-19.1.

[EN16] Holt v. Laube, 2011 WL 6141466 (App. Div., Dec 12, 2011) (NO. A-1331-10T2) certif. den. 210 N.J. 108 (2012).

[EN17] Holt, supra at 7.

[EN18] Holt, supra at 7-8.

[EN19] Holt, supra at 8.

[EN20] See American Fire and Cas. Co. v. New Jersey Div. of Taxation, 189 N.J. 65, 81 (2006) (Courts must “construe statutes in a manner that avoids unreasonable results unintended by the Legislature.”); State v. Lewis, 185 N.J. 363, 369 (2005) (“[A] court should strive to avoid statutory interpretations that lead to absurd and unreasonable results.”) (citation and quotation omitted).

A Quick Introduction to the New Jersey Consumer Fraud Act.

(This is a slide show - click on the right arrow to advance to the next slide)

New Jersey Consumer Protection Information

Peltier v Barbera


2013 WL 6410989 (N.J.Super.A.D.)

In an unpublished decision, the New Jersey Appellate Division finds that, in a dispute over a home improvement contract, damages may be established by the scope of work provided by the homeowner’s insurance carrier.


The Peltier case helps plaintiffs establish the amount of damages in claims made against home improvement contractors. Often, a homeowner has to hire - and pay for - a second home improvement contractor to both estimate the amount of repairs needed and to spend a day in court to testify as the necessity for and the scope of repairs. The Peltier case establishes that when the home improvement contract is to complete work specified in the scope of work provided by a homeowner’s insurance claim, the plaintiff need not find a second contractor but can instead rely on the scope of work to establish damages This situation is not uncommon in the wake of Hurricane Sandy.


The plaintiff’s home was damaged in a storm. She met with the defendant, a home improvement contractor, to make repairs. The defendant suggested that the homeowner file a claim with her homeowner’s insurance company. The two signed a home improvement contract that provided that the contractor would make the repairs approved by the plaintiff’s homeowner’s insurance company and that contract would be void if the claim was denied. Thereafter the homeowner’s insurance approved approximately $13,560 in repairs and the parties signed a second document referencing the claim.

The contractor made some, but not all of the repairs, before walking off the job. The homeowner filed a complaint in the Special Civil Part of the Superior Court. At trial, the homeowner identified items on the scope of work provided by the insurance company, which items the contractor had not completed, had been paid for and which totaled approximately $5,425. The plaintiff relied upon the insurance company’s scope of work to calculate the damages.

The trial court judge dismissed the action, finding that the homeowner had failed to establish an ascertainable loss because she had not brought in another home improvement contractor to establish the cost to complete the work. On appeal, the Appellate Division reversed the trial court finding that the agreed upon scope of work could be used to establish damages. The Appellate Division remanded the case to the trial court with the instruction that judgment should be entered in favor of the homeowner in the amount of the claimed loss.


SONYA PELTIER, Plaintiff-Appellant,
JUSTIN BARBERA, Defendant-Respondent. No. A-0740-12T4. Superior Court of New Jersey, Appellate Division. Argued December 3, 2013. Decided December 10, 2013. Mark J. Molz argued the cause for appellant. Respondent has not filed a brief. Before Judges Fisher and Espinosa.


PER CURIAM. Plaintiff, a homeowner, filed a complaint in the Special Civil Part in which she alleged that defendant, a contractor, had breached his contract with her by failing to complete work for which he was paid by her homeowner’s insurance carrier. Following a bench trial, the trial court found she had proven the defendant was liable for breach of contract but dismissed her complaint because, the court found, plaintiff had failed to prove she had suffered any damages as a result of the breach. Plaintiff appeals from that judgment.[1] We reverse.

The scope of our appellate review of judgment entered in a non-jury case is limited. We exercise our original fact-finding jurisdiction sparingly and will not disturb the findings on which the trial court’s judgment is based “unless they are so wholly insupportable as to result in a denial of justice.” Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974) (internal quotation marks omitted); accord In re Trust Created by Agreement Dated Dec. 20, 1961, ex rel. Johnson, 194 N.J. 276, 284 (2008). “Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence.” Rova Farms, supra, 65 N.J. at 484. Therefore, our first inquiry is to determine whether “there is substantial evidence in support of the trial judge’s findings and conclusions.” Ibid. In this case, we find that the record fails to support the trial court’s conclusion that plaintiff failed to prove she suffered any damages as a result of defendant’s breach.

Because the trial court’s finding of liability is unchallenged on appeal, we need not engage in an extensive review of the facts.

After plaintiff’s home sustained damage from a storm, defendant, a home improvement contractor, suggested she file a claim with her homeowner’s insurance carrier. The parties entered into an “Insurance Restoration Contracting Services” agreement, dated June 19, 2011, in which defendant agreed to complete all repairs to plaintiff’s property identified in the insurance carrier’s worksheet. The agreement stated, “IF THE OWNER’S INSURANCE CLAIM IS DENIED, THIS CONTRACT IS VOID.”

The carrier engaged United Storm Adjusters to assess the damage and estimate the cost of repairs for the scope of damages covered by the claim. The adjuster inspected the damage on August 12, 2011 and prepared an estimate, which identified the necessary repairs and concluded that plaintiff was entitled to receive $13,558.17 to satisfy her claim, identified by the Claim Number XXXXXXXXXXXX.

Thereafter, the parties entered into another written contract, dated September 16, 2011, that made explicit reference to Claim Number XXXXXXXXXXXXX. The agreement stated in pertinent part:

• Justin R. Barbera LLC, is agreed [sic] to make all repairs to the above client in the manner stated in the insurance claim. • Work on the home has started before the date on this contract and will continue until complete. • Materials-Labor-Profit-Disposal-Permits are being paid thru this claim and no cost is incurred to the home owner. • This contracts [sic] purpose is to clarify any existing questions or alleviate any doubt on the extent of Justin R. Barbera LLC obligation to this claim. Contract is a binding agreement between homeowner and contractor for services outlined in insurance claim and all payments from the insurance company are to be paid to Justin R. Barbera LLC for services rendered. [Emphasis added.]

Defendant received payments from the carrier as follows: $5450 on August 17, 2011, for remediation; $11,785.70 on September 9, 2011, as “final payment”; and, an additional, reduced payment of $1940 on an invoice dated September 22, 2011. Plaintiff testified that defendant did not complete the work for which he was paid by the carrier, specifically identifying the following work along with the amount paid by the insurance company for the completion of the work:

   Roof & Exterior

    ShingleLift                            $762.00
    General Demolition                    $1814.00

    R&R Gutter Downspout                  $201.00

    Bedroom 1

           Paint Walls & Ceilings         $342.00
           Floor Protection                $77.66
           MaskWalls                       $57.82
           Content Manipulation           $166.70
           R&R Batt Insulation 6" R19     $320.40
           Batt Insulation 10" R30        $139.36

      Bedroom 2

           R&R Acoustic Plaster           $909.87
           Paint Walls & Ceiling          $335.82
           Floor Protection                $75.32
           MaskWalls                       $57.12
           Content Manipulation           $166.70
                        Total            $5425.37

Plaintiff relied upon these calculations, included within the insurance adjuster’s estimate, to prove the damages caused by defendant’s failure to perform the specified work. The trial court concluded that this evidence was insufficient to determine the loss suffered, stating:

The Court would need to have an estimate from a professional, another contractor, who had gone out to the property, inspected it, said… this work needs to be done and this is how much it cost. And that contractor would have had to have been called into court to testify at trial. I simply do not find that plaintiff has proven by a preponderance of the evidence ascertainable damages.

We disagree.

Here, it is undisputed that defendant breached the contract, and the evidence supports the conclusion that plaintiff suffered damages that were “a reasonably certain consequence of the breach.” See Totaro, Duffy, Cannova and Co., L.L.C. v. Lane, Middleton & Co., L.L.C., 191 N.J. 1, 14 (2007) (quoting Donovan v. Bachstadt, 91 N.J. 434, 445 (1982)). Accordingly, “mere uncertainty as to the quantum of damages is an insufficient basis on which to deny the non-breaching party relief.” Ibid. See Kozlowski v. Kozlowski, 80 N.J. 378, 388 (1979) (“Where a wrong has been committed, and it is certain that damages have resulted, mere uncertainty as to the amount will not preclude recovery—courts will fashion a remedy even though the proof on damages is inexact.”). It is “sufficient that the plaintiff prove damages with such certainty as the nature of the case may permit, laying a foundation which will enable the trier of the facts to make a fair and reasonable estimate.” Totaro, supra, 191 N.J. at 14. Because compensatory damages are designed to put the injured party in the position he or she would have been in if there had not been a breach, “[s]pecific rules or formulas are subordinate to this broad purpose’ and should not be invoked if they defeat a common sense solution.’” St. Louis, LLC v. Final Touch Glass & Mirror, Inc., 386 N.J. Super. 177, 188 (App. Div. 2006) (quoting 525 Main Street Corp. v. Eagle Roofing Co., 34 N.J. 251, 254 (1961)). See 24 Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 66:17 (4th ed. 2002).

Defendant agreed to perform the services identified in the insurance claim for the amounts specified in the insurance estimate. Plaintiff, whose testimony the court found to be credible, testified that defendant failed to perform specific services for which he was paid by the carrier. It is doubtful that there could be evidence more persuasive as to the cost of the incomplete repairs than the amount that defendant agreed to and actually received for performing the services.

The judgment is reversed and remanded for entry of judgment in plaintiff’s favor in the amount of $5425.37 plus costs.

[1] In the judgment, the court also dismissed defendant’s breach of contract claim against plaintiff. Defendant has not appealed from the dismissal of his claim or the court’s finding of liability against him.

Perez v Professionally Green, LLC

The New Jersey Supreme Court deals a serious blow to Consumer Fraud Act claims made by homeowners against home improvement contractors.


On September 12, 2013, a unanimous New Jersey Supreme Court ruled that a homeowner is not entitled to an award of attorney fees when a contractor commits a violation of the New Jersey Consumer Fraud Act if the homeowner has no out-of-pocket expenses related to the violation. 

Perez v Professionally Green, LLC, 215 N.J. 388 (2013).

The case can be retrieved from Google scholar at:


The Perez case involved a claim against a home improvement contractor who did not include in the contract, a start date or an end date for the work as required by New Jersey law. The homeowner did not prove any damages related to the Consumer Fraud Act violation. The trial court refused to award attorney fees against the contractor. The homeowner appealed and the Appellate Division reversed - ruling that a homeowner is entitled to attorney fees if the plaintiff proves a violation of the Act. The contractor appealed to the New Jersey Supreme Court. The Supreme Court ruled that the homeowner is not entitled to attorney fees if they have no damages arising from the violation.

From a business perspective, the Perez decision is logical. From a consumer protection perspective, the ruling means that contractors can violate certain parts of the Consumer Fraud Act without fear of any consequences.

The decision is “logical” because, in any lawsuit, a plaintiff must prove all of the elements of the cause of action. For example, to prove a breach of contract, a plaintiff must prove: (1) the existence of a contract; (2) that the defendant violated one or more terms of the contract; and (3) that the plaintiff has damages related to the defendant’s breach of contract. To prove the tort of negligence, a plaintiff must prove: (1) a duty to do or refrain from doing some act; (2) that the defendant violated the duty; and (3) damages related to the defendant’s breach of duty. If a plaintiff cannot prove all three elements, then the plaintiff loses. 

Under the Consumer Fraud Act (N.J.S.A. 56:8-1 - 20), a plaintiff must prove: (1) a violation of the Consumer Fraud Act and (2) an ascertainable loss related to the violation. An ascertainable loss is an out of pocket expense - something that the homeowner had to, or will have to, pay to fix the violation.

As originally enacted, the Consumer Fraud Act could only be enforced by an action initiated by the State of New Jersey. There was no private right to sue wrongdoers. Homeowners could not sue contractors, rather only the State of New Jersey could. The Consumer Fraud Act was later amended to provide for a private cause of action. The private right of action included the right to receive treble (3X) damages and an award of attorney fees. (N.J.S.A. 56:8-19) The law provided for an award of attorney fees because, among other reasons, the amount of money in dispute was often small. Fee shifting enable homeowners to hire an attorney to represent them in cases that otherwise would not warrant the expense of hiring private counsel. And, it was a way for the State to encourage private attorneys to enforce the Consumer Fraud Act for the State.

Over the years, there was a split in the Courts as to whether a homeowner could be awarded attorney fees if the homeowner could not prove damages related to the violation of the Consumer Fraud Act. One line of decisions reasoned that if all of the elements of the cause action - i.e., both a violation of the CFA and damages related to the violation - could not be proved, then the plaintiff received nothing. Another line of cases reasoned that if a homeowner did not have damages, but proves that a contractor violated the CFA, then the contractor had to pay the homeowner’s attorney fees. (Weinberg v. Sprint Corp., 173 N.J. 233 (2002); Pron v. Carlton Pools, Inc., 373 N.J. Super. 103 (App. Div. 2004)) In Perez, the New Jersey Supreme Court has sided with the first line of cases - ruling that damages are an essential element of the cause of action and if the plaintiff cannot prove all of the elements of the cause of action, then the plaintiff cannot be awarded attorney fees.

While the Perez decision is logical - applying the same standard to consumer protection cases as is applied to contract and tort claims - it creates a situation in which contractor may now violate the Consumer Fraud Act with no consequences. An act of consumer fraud is generally defined to include three types of violations - a misrepresentation of fact, an intentional concealment of a material fact or a violation of certain administrative code provisions promulgated pursuant to the Consumer Fraud Act. The most common violation is a violation of the administrative code requirements applicable to home improvement contractors. The Home Improvement Contractor (HIC) regulations require that a contractor provide the homeowner with the following:

A written contract signed by the homeowner;
Provide for a three day right of rescission;
Provide his contractor registration number;
Provide a start date for the work;
Provide an end date for the work;
Provide contact information for the New Jersey Division of Consumer Affairs;
Provide information relating to the contractor’s general liability insurance;
Specify what goods are to be provided and/or what services are to be performed;
Specify what warranties are to be provided.

A violation of HIC regulatory requirements rarely results in a monetary loss to the homeowner. For example, not knowing the contractor’s registration number is unlikely to cause damages to the homeowner. There is no incentive for a home improvement contractor to comply with the HIC regulations. The HIC regulations do not impose a penalty, the homeowner will not likely have any damages due to a HIC regulatory violation and, after Perez, there is no threat of fee shifting.

In response to the Perez decision, the New Jersey legislature will need to address what should happen when a home improvement contractor ignores Home Improvement Contractor (HIC) regulations. The Legislature may need to either legislatively overturn Perez so that attorney fees are awarded for any violation of the CFA irrespective of damages or amend the CFA to provide for penalties for violations of the HIC regulations.

Until the legislature fixes the problem, a homeowner should look for an experienced consumer protection attorney to focus on the homeowner’s damages claim so that the homeowner can get both treble damages and attorney fees. 

Finally, it should be noted that the Perez decision does not affect those claims in which the acts of a home improvement contractor result in actual damages to the homeowner. It applies only to those violations in which the homeowner has no out of pocket expenses due to the violation.

For more information on New Jersey consumer protection laws, contact Michael Millar, Esq.

E: michael@michaelmillar.com

T: 732-914-9114

F: 973-457-0269


Not Happy With Your Contractor? You Have Options.


You signed a home repair contract.

You paid the contractor.

He seemed reliable when you first met him.

Now you’re not so sure.

The work is not done.

What has been done is not acceptable. 

The home repair project is taking much longer than you were originally promised.

The contract doesn’t tell you when the work will be completed.

The contractor appears more interested in his next home repair project rather than in completing the work at your home.

He’s talking about the project costing more - however, you never agreed to any changes and don’t understand why it will cost more.

What can you do? Review Your Contract - You May Have The Right To Fire Your Contractor.

Contract Law - Problems For Homeowners: The balance of power favored the contractor.

In order to perform work at a home, a contractor has to enter into a contract with the homeowner - a contract that is referred to as either a home improvement contact or a home repair contract. A contract is an exchange of promises. The contractor promises to make certain repairs / improvements. The homeowner agrees to pay the contractor a certain amount of money in exchange for those repairs / improvements. When one side or the other does not keep his or her promise, there is a “breach of contract”. In law, breach of contract remedies are designed to put the non-breaching party in the same position as if the contract had been fully performed. A contractor might sue for the unpaid balance or for lost profits. A homeowner might sue for the cost to complete the project or to repair defective work. Contract law does not provide for punitive damages and it does not provide for an award of attorney fees or court costs from the losing party. Thus, each party bears the cost of paying his or her own lawyer and court costs, which fees and costs effectively reduce the amount a party may net at the end of the trial.

In theory, both parties had the same risks in a breach of contract lawsuit.

In practice, that was not always the case.

There were at least two problems with traditional contract law.

First, because contract law does not allow for the payment of a homeowner’s legal costs, where a contractor is found to have breached the contract, the cost to sue the contractor was either too much for the average homeowner to afford or it simply did not make financial sense given the time and cost it would take to litigate (e.g., it may not make sense to spend $15,000 in legal fees to be awarded $18,000 at trial several years later). This problem would be exacerbated when there was an income disparity between the contractor and the homeowner. A large corporate builder could hire a high-powered law firm to “out-spend” the plaintiff and to drag-out the litigation.

Second, under contract law, a contractor had no personal liability when the contractor worked through an LLC or a corporation. Instead, the homeowner could only sue the company that the contractor worked for. To get to the owners and officers of a company, a homeowner was required to “pierce the corporate veil” - something that is disfavored at law and that is difficult to achieve. Further, a company may have no resources or money of its own - it may be an empty shell. If the company has no assets, then there is no way to collect a judgment against it. Suing a company might result in the homeowner throwing good money after bad.

Due to the cost of litigation and the chance that the contractor’s company might be an empty shell, contractors had greater leverage than homeowners in disputes over home repair / home improvement contracts. 

Consumer Protection Law - Problems for Contractors: The balance of power favors homeowners.

New Jersey has enacted several consumer protection laws meant to shift the power in the relationship from the contractor to the homeowner. Statutes, such as the Consumer Fraud Act, the Contractor Registration Act and the Door-to-Door Home Repair Sales Act, impose strict requirements upon contractors. If a home improvement contractor fails to follow those strict requirements, the home repair contract may be deemed illegal. An illegal contract is not enforceable - the contractor is not entitled to legal or equitable remedies (except in certain limited circumstances). That means that the homeowner can sue the contractor for violations of consumer protection laws - but the contractor cannot maintain an action against the homeowner for breach of contract.

Today, a lawsuit involving a home repair / home improvement contract may not include any claim for breach of contract. Instead, a lawsuit over a home repair / home improvement contract may rely solely on violations of consumer protection statutes and regulations.

Contractors May Be Required To Pay The Homeowner’s Attorney Fees And Punitive Damages.

We noted above that one of the issues with traditional contract law was that a losing contractor did not have to pay the homeowner’s attorney fees and could not be made to pay punitive damages. Therefore, lawsuits over home improvements were often cost-prohibitive for homeowners. That has changed. Under New Jersey’s consumer protection laws, a contractor who has violated the law is now required to pay the homeowner’s reasonable attorney fees. Further, if the homeowner has damages related to the violations of consumer protection laws, then the contractor must pay punitive damages - the contractor is required pay three times the damages suffered by the homeowner. For example, if a homeowner has $20,000 in repairs caused by an act of consumer fraud by the contractor, then the contractor will be required to pay the homeowner $60,000.

Contractors Have Personal Liability Even When They Work For An LLC Or A Corporation.

Another problem identified above is that contractors often work for a company and therefore have no personal liability - and the contractor’s company may have no assets from which a homeowner may collect a judgment. Under consumer protection laws, the homeowner may sue both the company and the individuals from the company with whom they dealt. There is no need to “pierce the corporate veil”. The home repair contractor now has personal liability regardless of how he has formed or operated his business. Thus, even if the company is an empty shell, the homeowner can look to the contractor’s personal assets - his bank accounts and his home - to collect a judgment.

However, Homeowners Cannot Use Consumer Protection Laws As Both A Sword And A Shield.

Consumer protection laws are not a “gotcha” tool permitting a homeowner to take advantage of a contractor by receiving the benefit of all the work and then pointing to a minor, technical violation in the contract to avoid payment. Consumer protection laws are a shield, they are not a sword. This means that the law will protect a consumer, but it will not aid a consumer in taking advantage of a situation in which there are only “technical” violations and the consumer has received the benefit of work which otherwise has no issues.

Further, defective and/or incomplete work is not, in and of itself, a violation of a consumer protection law. The defective or incomplete work must be related to a violation of law - such as performing work without permits or by substituting materials or changing plans without the homeowner’s consent.

What Does This Mean For You? 

This means that you, the homeowner, now have leverage when dealing with a home repair contractor. The balance of power has shifted in your favor. The prospect of personal liability, treble damages and an award of attorney fees means that taking a claim through trial is a big, big risk for a home repair contractor.

This does not mean that you should run out and fire your contractor. You could be in trouble if you do so without legal justification.

Instead, this means that you should have your contract reviewed by an experienced consumer protection attorney: (1) to determine if you have the legal right to cancel the transaction due to violations of New Jersey consumer protection laws, and (2) to determine if you have compensable damages.

That is how you fire your contractor.

Home Improvements and the Consumer Fraud Act

Many home improvement contracts are illegal and unenforceable. Know your rights.

Under the New Jersey Consumer Fraud Act (the “CFA”), a home improvement contractor commits an act of consumer fraud in any one of three ways: (1) affirmative misrepresentations, (2) knowing omissions, and (3) certain regulatory violations. Since Hurricane Sandy, we have seen contractors who have committed one - and often - all three types of consumer fraud.

An “affirmative misrepresentation” is a statement made either negligently or intentionally, which is factually untrue. For example, if the contractor promises to install Anderson windows and he instead installs generic windows, the contractor has committed an act of consumer fraud by an affirmative misrepresentation.

A “knowing omission” occurs when a contractor knows a material fact but fails to tell you. For example, if you tell a contractor that the project has to be completed by a date certain, and he knows that he cannot meet that date but fails to tell you that the date cannot  be met, then the contractor has committed an act of consumer fraud by a knowing omission.

The third type of consumer fraud - a regulatory violation - is the most common type committed by home improvement contractors. Having seen over 100 home improvement contracts, the author has found that nearly every home improvement contract violates the CFA in one respect or another. Thus, this type of consumer fraud is often very easy to prove. Even a “technical”, regulatory violation results in the contract being declared invalid and unenforceable (i.e., the contractor cannot collect on any claimed unpaid balance) and the contractor must pay the consumer’s reasonable attorney fees and costs. The CFA requires trebling of damages. However, an isolated violation of a regulation may not result in actual damages - and thus no treble damages. However, a pattern of many regulatory violations may result in the court finding that all damages that arise out of the transaction will be trebled.

There are several New Jersey court decisions that have held that a consumer may sue not only the home improvement company, but may also sue the workers who committed the violations and the owners of the company who selected the use of an illegal contract. Thus, despite a contractor operating through a corporation or an LLC, the contractor may nonetheless be personally liable under the CFA.

Many consumers - and their attorneys - misunderstand the concept of what damages are available in a CFA action. Some mistakenly believe that any act of consumer fraud - technical or otherwise - results in the amount paid to the home improvement contractor, or the amount of the contract, being trebled. That is not the case. It is, as a general rule, only those out of pocket costs to repair or replace defective work that is an “ascertainable loss” subject to trebling.

Here are just some of the requirements of a legal home improvement contract:

(1) The contractor must be registered as a home improvement contractor with the Division of Consumer Affairs (DCA).

(2) The contract must provide the name and address of the contractor.

(3) The contract must provide the contractor’s registration number.

(4) The contract must provide the toll free telephone number for the DCA.

(5) The contract must annex the contractor’s certificate of general liability insurance.

(6) The contract must provide the telephone number for the contractor’s insurance company.

(7) The contract must set forth the full price for the project.

(8) The contract must state the date that work will begin.

(9) the contract must state the date that work will end.

(10) the contract must provide a three day right to cancel.

(11) the contract must identify the brand, type and quantity of material to be provided.

(12) the contract must state what warranties for goods or materials are to be provided.

(13) The contract must be signed by the parties.

(14) Once the contract is signed, any modifications / change orders must be in writing.

(15) All communications - such as letters and invoices - must contain the contractor’s registration number.

(16) The contractor may not begin work until all required permits are obtained (working without permits is prima facie consumer fraud). 

(17) The contractor may not begin work until the contract is fully signed. 

(18) The contract may not require that the homeowner pay in full prior to completing the job. 

(19) The contractor’s work vehicles must display his “13VH” registration number. 

(20) The contractor may not mislead the prospective buyer into believing that the down payment or any other sum constitutes the full amount the buyer will be obligated to pay.

The list above is not exhaustive. There are other requirements found in the Contractor’s Registration Act (NJSA 56:8-136 et seq) and the Home Improvement Practices regulations (NJAC 13:45A16 - 17). Given the myriad requirements, only the most diligent home improvement contractor may comply with the law. The vast majority of home improvement contractors are not diligent and are using illegal contracts that are unenforceable.

If you have issues with a home improvement contractor, you may contact the NJ Division of Consumer Affairs (DCA):


the Ocean County Department of Consumer Affairs:


the Monmouth County Department of Consumer Affairs:


or, a local consumer protection attorney.

The New Jersey Construction Lien Law - A Consumer Protection Statute

Since Hurricane Sandy, many invalid construction liens have been filed against local homes.

When discussing consumer protection laws in New Jersey, the conversation typically revolves around the Consumer Fraud Act (CFA). That is for good reason. The CFA provides that if a plaintiff wins, then the defendant must pay three times the plaintiff’s actual damages (“treble damages”) and must also pay the plaintiff’s attorney fees. While the CFA is by far the most often used consumer protection law, it is not the only one.

When it comes to home improvement contracts, the New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1 et seq.) provides homeowners with important consumer protections. A contractor who improperly files a construction lien against a home must pay the homeowner’s attorney fees and costs to have the lien removed and any other damages incurred by the homeowner due to the improperly filed lien.

A valid construction lien requires a three step process.

1. Notice of Unpaid Balance and Right to File Lien

First, a contractor must file with the county clerk, and serve the homeowner with, a Notice of Unpaid Balance and Right to File Lien (“NUB”) within 90 days of when work was last performed, or materials were last provided, at the site. If the contractor does not file a NUB, then the contractor may not file a lien. If the contractor waits more than 90 days to file the NUB, then the contractor may not file a lien.

2. AAA Arbitration

Second, within 10 days of filing and serving the NUB, the contractor must request arbitration with the American Arbitration Association (“AAA”). The request for arbitration must also be served on the homeowner. The arbitrator will decide if, and in what amount, the contract may assert a lien. If the contractor does not request and go through AAA arbitration, then the contractor may not file a lien.

The arbitration is typically done “on the papers” but either side may request a hearing to present evidence. The decision of the arbitrator is made within 30 days of application. The AAA rules for NJ residential construction lien arbitration are found here: http://goo.gl/ZTlfbQ

3. Construction Lien

Third, only after filing a NUB and obtaining a AAA arbitration decision, the contractor may file a construction lien against residential property. That lien must be filed within 120 days of when when work was last performed, or materials were last provided, at the site.

Once filed, the contractor may move to foreclose on your property and obtain payment for the amount found in the construction lien. The suit to foreclose on the lien must be brought within 1 year of the date of the filing of the lien or within 30 days of a demand made by the homeowner. If the contractor does not bring suit within the 1 year period, or within 30 days of a written demand, the lien expires - it is ineffective and unenforceable.

Many Bad Construction Liens Have Been Filed in Ocean and Monmouth Counties

I have reviewed all of the construction liens filed in Ocean and Monmouth Counties since Hurricane Sandy (from November 2012 through July 2013). The majority of the liens filed by home improvement contractors were filed without first filing a NUB or obtaining a decision by an AAA arbitrator. They are illegal and unenforceable. However, the constitute a cloud on the homeowner’s title which could prevent the homeowner from selling the property or obtaining mortgage financing.

If your home has been improperly liened by a home improvement contractor, you can sue to have the lien removed. 

As indicated above, the home improvement contractor is required to reimburse you for your reasonable attorney fees and costs to have the lien removed.

When interviewing an attorney to represent you in such matters, ensure that the attorney has experience litigating construction lien claims.

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