The Perils of Ignoring the CFA in the Residential Construction Context

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The New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq. (“CFA”) has become a potent weapon for residential homeowners hoping to avoid payment to contractors in the residential home construction context, even where the contractor has done everything in its power to meet its obligations to the homeowner under their contract. In the last few years, countless cases have come down which have demonstrated the clear dangers to construction firms for failing to comply with the veritable thicket of regulations that apply in the residential context (N.J.A.C. § 13:45A-16.1 and § 13:45A-16.2 (implementing regulations)), as well as their obligations under the Contractor’s Registration Act, N.J.S.A. § 56:8-136 et. seq. Operating without registering can, and has, resulted in criminal liability (State v. Rowland, 396 N.J. Super. 126, 132 (App. Div. 2007)), and can (as has been discussed in my blog in the past) form the basis for substantial civil liability against not just the construction company, but its principal officers as well.

A new case by the Appellate Division demonstrates that even where the contractor is owed money and has done nothing to harm the homeowner, that contractor will have difficulty recovering any affirmative relief, and stands a good chance of getting hit with an award of attorneys’ fees in favor of the homeowner.

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