Contract Omissions Can Trigger ROC Action Against the Contractor's License
Every time a contractor performs work for more than $1,000 for an owner — commercial or residential — Arizona law requires a signed contract that contains nine specific pieces of information.
As we originally discussed in our May 2013
Compliance Update, if you
omit from a contract with an owner just one
of the nine "minimum elements of a contract" listed below and set forth in
§ 32-1158, you are in violation of Arizona's contracting statutes. Those minimum elements are not mere technicalities;
the ROC has made it clear that a contractor's license can and will be
disciplined if any of the nine elements are missing from a contract.
Although a failure to comply with the minimum-elements
statute does not automatically trigger a specific sanction, the consequences can
be serious. At an April 1, 2014, meeting of Arizona construction lawyers, an ROC
representative reported that, in a couple of recent cases, contractor's licenses
were temporarily suspended for failure to include required contractual
The Nine Elements
The conclusion is simple.
To avoid running afoul of the ROC, make sure that your contracts
include the following:
1. The contractor's name, business address, and
2. The owner's name and mailing address, along
with the address or legal description of the jobsite.
3. The date the contract was entered into by the
4. The estimated date of completion.
5. A description of the work to be performed.
6. The total amount to be paid to the
contractor, including all applicable taxes.
7. The amount of any advance deposit.
8. The amount and timing of progress payments.
9. Notice that the property owner has the right
to file a written complaint with the Registrar of Contractors for an alleged violation of
A.R.S. § 32-1154(A), along with contact information for the ROC. (Watch out:
This notice and contact information needs to be displayed in specific ways.)
Given the ROC's seriousness about enforcing the
contract requirements of A.R.S. § 32-1158, you should review your contracts
to check for the presence of all nine elements. If need be, consult with a
construction attorney to ensure compliance.