Home improvement contractors performing remodeling, repair, replacement and/or alteration work on a residential property in the District of Columbia (DC) are required to possess a home improvement contractor’s license. 16 DCMR § 800.1. Pursuant to 16 DCMR § 800.1:

    No person shall require or accept any payment for a home improvement contract to be undertaken in the District in advance of the full completion of all work required to be performed under the contract, unless that person is licensed as a home improvement contractor or as a licensed salesperson employed by a licensed contractor in accordance with the provisions of this chapter.

“Home improvement contractor” is defined as “any person who enters, or offers to enter, into a home improvement contract with a homeowner.” 16 DCMR § 899.1. “Home improvement work” is defined as “the addition to or alteration, conversion, improvement, modernization, remodeling, repair, or replacement of a residential property…” 16 DCMR § 899.1. This regulation does not apply to new construction.

It is well-settled under District of Columbia law that “Receipt of payment by an unlicensed contractor before completion of the work under the contract violates the home improvement regulations and renders the contract void and unenforceable…” See, e.g., Nixon v. Hansford, 584 A.2d 597, 598 (D.C.1991). Known as the “disgorgement rule”, District of Columbia Courts have repeatedly held that all money paid to a contractor who violates 16 DCMR § 800.1 is recoverable by the owner. See e.g. Truitt v. Miller, 407 A.2d 1073 (D.C. 1979)(emphasis added). “If this ironclad rule is not respected, the consequences have been held to be equally draconian. Thus, where an unlicensed contractor… violate[s] the regulations by accepting payment before the completion of a construction project,’ “[a]ny moneys paid may be recovered from the contractor…” Authentic home Improvements v. Mayo, 2006 WL 2687533 (citing Marzullo v. Molineaux, 651 A.2d at 809 & 810 n. 3)(emphasis added). “Our decisions rejecting any deviation from this rule span more than a quarter-century.” Cevern, Inc. v. Ferbish, 666 A.2d 17, 20 (D.C. 1995).

The general rule is that an unlicensed home improvement contractor is liable for the return of all money received from the owner. This remedy is referred to as “disgorgement,” i.e. requiring an unlicensed contractor who profits from illegal or wrongful acts to repay these ill-gotten gains to the owner. DC Courts routinely enforce the “disgorgement rule” against unlicensed home improvement contractors.

Mike Bramnick and Bramnick Creed have substantial experience and knowledge regarding disgorgement claims against unlicensed contractors. If you believe that you have a claim against an unlicensed home improvement contractor, contact Mike Bramnick today for a consultation by calling (301) 547-3647 or by email at mike@bramnickcreed.com.