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DEPARTMENT OF CONSUMER AND
WORKER PROTECTION (DCWP)
LICENSING CENTER
42 Broadway, Lobby
New York, NY 10004
NYC SMALL BUSINESS
SUPPORT CENTER
90-27 Sutphin Blvd, 4th Floor
Jamaica, NY 11435
HOME IMPROVEMENT EXAMINATION GUIDE
The New York City Department of Consumer and Worker Protection (DCWP) licenses
all home improvement businesses and individuals who perform qualifying home
improvement work. To receive a contractor’s license, you must pass an examination
given by DCWP that tests your understanding of the law. This guide will help you
prepare for the examination, but does not reflect all relevant laws and rules that you
need to know. Licensees must comply with all relevant laws and rules, including the
Consumer Protection Law. To access laws and rules, visit nyc.gov/BusinessToolbox.
The test covers:
I. The Basics of the City’s Home Improvement Business Law
II. Contracts and Cancellations
III. Advertising and Selling Practices
IV. General Industry and Business Knowledge
Acronyms
DOB Department of Buildings
DCWP Department of Consumer and Worker Protection
DOT Department of Transportation
I. The Basics of the City’s Home Improvement Business Law
What is “home improvement”?
Home improvement means the construction, repair, replacement, remodeling, alteration,
conversion, rehabilitation, renovation, modernization, improvement, or addition to any
land or building or any part of the land or building used or designed to be used as a
residence or dwelling place, including basements, driveways, fences, garages,
landscaping, patios, porches, sidewalks, swimming pools, and terraces. Home
improvement includes, among other things, installation of:
• Central heating/air conditioning
• Central vacuum cleaning system
• Storm windows
• Awnings
• Communication systems
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What is not “home improvement”?
Examples of what is not considered home improvement include:
• Construction of a new home or building
• The sale of goods or materials where the seller neither arranges nor participates
in the installation or application of the goods or materials
• Work performed on a residence owned or controlled by the state or municipality
• Painting or decoration of a building, residence, home, or apartment when no
other home improvement services are provided
Who is a “contractor”?
A contractor is anyone who owns, operates, maintains, conducts, controls, or transacts
a home improvement business, undertakes or agrees to perform any home
improvement, or solicits a home improvement contract, whether or not the contractor is
a prime contractor or subcontractor. A contractor may be an individual, a firm, a
company, a partnership, or a corporation.
What is a “home improvement contract”?
A “home improvement contract” is an agreement, whether or not in writing, between a
contractor and an owner or tenant for performance of a home improvement and
includes all labor, services, and materials to be furnished and performed.
Who must have a DCWP license?
Any person who solicits, canvasses, sells, performs, or obtains a home improvement
contract as a contractor must have a DCWP license.
Local Law 31 of 2020 repealed the licensing requirement for Home Improvement
Salespersons, individuals who solicit or negotiate contracts on behalf of contractors.
As of August 9, 2020, DCWP no longer licenses Home Improvement Salespersons.
Who does not require a DCWP license?
The following do not require a DCWP license:
• An individual employee who works for the contractor, including a salesperson
• A person performing a home improvement job, which is less than $200
• Plumbers and electricians acting within the scope of their licensed craft
• Architects and engineers acting exclusively within the scope of an architect or
engineer
Where must I post my Home Improvement Contractor license?
You must post your license in your office where all consumers can see it or show it to
consumers upon request.
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What must I do in case of a change of business trade name, change of business
address, or change of owners (management)?
At least 10 days before a change to your business trade name or address, you must
notify DCWP.
You must notify DCWP in advance to get approval for a change of ownership
(management).
How does a person obtain a license or renew a license?
You must submit an application to DCWP for a new or renewed license. A separate
Home Improvement Contractor license is required for each place of business.
You can apply for a new license:
• In person by appointment only at the DCWP Licensing Center (42 Broadway,
New York, NY 10004) or NYC Small Business Support Center (90-27 Sutphin
Blvd., 4th Floor, Jamaica, NY 11435) OR
• Online at nyc.gov/BusinessToolbox
About three months before your license expires, DCWP will mail you a license renewal
package. You can renew by mail, in person at the DCWP Licensing Center or NYC
Small Business Support Center, or online at nyc.gov/BusinessToolbox.
What are a prime contractor’s duties and responsibilities?
1. The prime contractor must secure all necessary permits, licenses, Certificates of
Occupancy, or exemptions necessary to complete the contract in accordance
with state and local building laws.
2. Each home improvement contractor must maintain copies of contracts, books of
account, and other records reflecting all transactions related to the home
improvement business for six (6) years or the length of time of any contractual
guarantee, whichever is longer.
3. The home improvement contractor must use all funds received to pay expenses
directly related to the home improvement. The contractor may not use funds
received to pay expenses unrelated to the home improvement, unless the home
improvement is completed and all expenses for direct labor, material, and
subcontractors related to the home improvement have been paid.
4. No work should be performed and no money should be paid until after the 3-day
cancellation period.
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A contractor cannot:
1. Abandon or fail to perform agreed-upon work.
2. Make any substantial misrepresentation in the solicitation of a home
improvement contract.
3. Commit fraud in the execution of a contract, mortgage, promissory note, or other
document related to the home improvement transaction.
4. Publish any advertisement that contains false, deceptive, or misleading
representations.
5. Violate the building, sanitary, fire, and health laws.
6. Fail to notify DCWP of any change of ownership (management), business name,
or business location.
7. Conduct the home improvement business in any name other than the name of
the business or Doing Business As (DBA) name listed on the license.
8. Act as an agent for, or advertise, promote, or arrange a home loan or a home
improvement loan for the consumer.
Must a contractor furnish a consumer with a written estimate?
Yes, if the consumer requests one. You can charge a reasonable fee for the estimate,
but you must disclose the fee to the consumer before you provide the estimate and you
must include and itemize the fee in the total estimated contract price.
What are the penalties for false or fraudulent representation?
A contractor who lies is subject to civil fines of up to $500 for each separate
misrepresentation.
In addition, a contract entered into after misrepresentations are made may be declared
null and void, and a contractor may be ordered to pay restitution to the consumer.
What are the penalties for operating a home improvement business without a
license?
Any person who owns or operates a home improvement business without a license or
after a license is suspended or revoked may be guilty of a misdemeanor and may be
prosecuted criminally and subject to up to six (6) months imprisonment and/or $1,000 in
fines. Each violation is a separate offense.
In addition, a person may be prosecuted civilly and faces fines of up to $100 per day for
engaging in unlicensed activity or aiding and abetting the operation of an unlicensed
person or business.
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Finally, DCWP can padlock (close down) and confiscate (take) the tools and trucks
used in connection with unlicensed home improvement work.
II. Contracts and Cancellations
In what form must a home improvement contract be?
Every home improvement contract must be in writing and signed by everyone involved.
You must give the consumer a completed, legible copy of the contract at the time of
signing and before any work is done. The contract must be in plain English, unless
another language was used in any oral (spoken) sales presentation, in which case the
contract needs to be in that language and in English.
If a consumer wants more work done beyond what’s in the original contract, what
should a contractor do?
The contractor should provide a written amendment to the contract, known as a change
order, which the consumer and the contractor must both sign.
What information must a home improvement contract contain?
1. Date of the transaction; the contractor’s name, office address, telephone number,
and DCWP license number.
2. Approximate dates when work will begin and be substantially completed,
including a statement of anything that would alter the approximate completion
date and whether the completion date is a firm, contracted-for date.
3. Description of the work to be done, materials to be provided, and the cost for
labor and materials.
4. Notice to the owner that if the owner does not pay the contractor or
subcontractor, the contractor or subcontractor may have a claim against the
owner.
5. Notice to the owner that the contractor is legally required to deposit all payments
received prior to completion or the contractor must post a bond or contract of
indemnity with the owner guaranteeing the return or proper payment under the
contract.
6. Schedule of payments and the work/services to be performed if the contract calls
for incremental payments.
7. Any advertised representation, including charges, guarantees, or warranties,
must be clearly stated.
8. The contract must inform the consumer that the contractor will furnish a
Certificate of Workers’ Compensation Insurance before beginning work.
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9. The contract must inform the consumer that the contractor will procure all permits
required by local law.
10. The contract must include the following statement directly above the signature
lines:
“YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO
MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS
TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR
AN EXPLANATION OF THIS RIGHT.”
This statement must be in boldface, and the font size must be at least 10 point.
Must a contractor provide the consumer with a separate Notice of Cancellation?
Yes. At the time the consumer signs the contract, the contractor must attach to the
signed contract two copies of a separate, completed form titled “Notice of
Cancellation.” The words in the form must be in boldface, and the font size must be at
least 10 point. It must be in English and in any other language used to negotiate the
contract and include the following:
1. Name/address of contractor
2. Date of transaction
3. Date until which the consumer may give notice of cancellation AND
4. The following statement must be included:
NOTICE OF CANCELLATION
(ENTER DATE OF TRANSACTION)
YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR
OBLIGATION, WITHIN THREE (3) BUSINESS DAYS FROM THE ABOVE DATE.
IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU
UNDER THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRUMENT
EXECUTED BY YOU WILL BE RETURNED WITHIN 10 BUSINESS DAYS
FOLLOWING RECEIPT BY THE SELLER OF YOUR CANCELLATION NOTICE, AND
ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE
CANCELED.
IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR
RESIDENCE, IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED,
ANY GOODS DELIVERED TO YOU UNDER THIS CONTRACT OR SALE; OR YOU
MAY IF YOU WISH, COMPLY WITH THE INSTRUCTIONS OF THE SELLER
REGARDING THE RETURN SHIPMENT OF THE GOODS AT THE SELLER’S
EXPENSE AND RISK.
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IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER
DOES NOT PICK THEM UP WITHIN 20 DAYS OF THE DATE OF YOUR NOTICE OF
CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY
FURTHER OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THE
SELLER, OR IF YOU AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL
TO DO SO, THEN YOU REMAIN LIABLE FOR PERFORMANCE OF ALL
OBLIGATIONS UNDER THE CONTRACT.
TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED
COPY OF THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE TO
[NAME OF SELLER] AT [ADDRESS OF SELLER’S PLACE OF BUSINESS] NO LATER
THAN MIDNIGHT OF [DATE] _______.
I HEREBY CANCEL THIS TRANSACTION.
____________________________________________
(Consumer’s/Buyer’s Signature, Print Name, and Date)
Must a contractor inform the consumer orally (spoken word) of the consumer’s
right to cancel?
Yes. A contractor must tell the consumer at the time of contract signing about the right
to cancel a home improvement contract within three (3) business days from the contract
date.
What if a contractor fails to comply with the provisions requiring oral (spoken)
and written notice of the consumer’s right to cancel?
Until the contractor complies with the requirements for oral and written notice of the
consumer’s right to cancel, the consumer may cancel the contract.
What should a contractor do if a consumer wants to cancel the contract?
The contractor should honor any valid notice of cancellation and must within 10
business days:
1. Refund all payments made under the contract.
2. Cancel and return monies paid in connection with the contract.
3. Terminate any security interest. AND
4. Notify the consumer as to whether the contractor intends to repossess or
abandon any shipped/delivered materials.
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III. Advertising and Selling Practices
The following rules are the basics to advertising home improvement work:
1. All advertising and sales literature must contain the DCWP Home Improvement
Contractor license number.
2. Advertised prices and descriptions must not be deceptive or misleading.
3. Headings must not contain exaggeration or deception.
4. A “savings” claim cannot imply the amount specified is the selling price.
5. Descriptions and illustrations of advertised items or offers must accurately
portray the product as to size, quality, quantity, and design.
6. Any description of materials must be accurate.
7. When price or credit terms are used, they must accurately describe what is
offered.
8. If installation is extra, the ad must clearly say so.
9. You cannot make statements such as “Factory to you” and “Buy from
manufacturer” unless you actually make or produce the items.
10. You cannot make “lifetime” guarantees or warranties. You can only make
guarantees or warranties, which extend to the normal life of the item/service.
In the case of defective materials and workmanship, you cannot make the
guarantee beyond the period within which the defect is likely to show up.
IV. General Industry and Business Knowledge
Who must obtain permits?
It is the duty and obligation of the prime contractor to secure all necessary permits,
licenses, and Certificates of Occupancy or special exceptions in accordance with
applicable state or local building laws. A contractor may not shift responsibility to the
consumer.
Where does a contractor go to secure a permit for an addition or alteration to a
house?
A contractor secures all necessary permits from the New York City Department of
Buildings (DOB). A contractor must make sure that any addition or alterations meet
building code standards and do not violate local zoning laws. Finally, although a
contractor may pick up permits at DOB, a registered architect or licensed engineer must
file alterations to building plans with DOB.
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What is the difference between a subcontractor and an employee?
A subcontractor is an individual in business for himself or a firm in business for itself
contracting to do part of a home improvement contract with a prime contractor. An
employee works for wages and is under the employer’s (prime or subcontractor) direct
supervision and control.
What is net profit of a job?
Net profit is the final profit of any job after expenses.
Must a subcontractor be licensed by DCWP?
Yes. A subcontractor, as opposed to an employee of a general contractor, must have a
DCWP license to perform home improvement work in New York City.
DOB licenses electricians and plumbers.
What are some of your obligations with regard to employees?
You must cover employees with Workers’ Compensation and disability insurance.
You must report employee wages to the Internal Revenue Service (IRS), and you must
withhold taxes.
In addition, you must comply with the federal immigration laws, which require employers
to ensure that employees have legal authority to work in the United States.
Can a contractor elect to secure a bond or participate in DCWP’s Home
Improvement Trust Fund?
Yes. A contractor can either secure a bond or contribute to DCWP’s Home
Improvement Trust Fund every two years.
What is needed to paint the exterior of a house with more than one story?
You may require a suspended scaffold and a rigging permit from DOB to paint the
exterior of a home that is one story or more, unless you can use a ladder to do the job.
You must contact DOB for more information before beginning this work.
Whose responsibility is it to obtain an amended Certificate of Occupancy?
If an amended Certificate of Occupancy is needed, it is the contractor’s responsibility to
obtain it for the consumer. A registered architect or professional engineer must file the
actual amended Certificate of Occupancy at DOB.
Is it necessary for a home improvement contractor to hire a licensed electrician to
do certain types of work?
You must use a licensed electrician to install anything having to do with light, heat, and
power, regardless of voltage.
How must a contractor handle sales tax?
Contractors must collect sales tax for repairs from the consumer.
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What type of work qualifies as a capital improvement?
Adding a bathroom to a home is an example of a capital improvement.
Repairs such as repairing a window frame or painting the living room do not qualify as
capital improvements.
When adding an extension to a home, what is the first thing a contractor should
do before beginning work?
The first thing a contractor should do before beginning work on a home is to consult with
a licensed architect or engineer—not DOB—to determine if the owner can put in the
extension and still comply with the applicable zoning law.
Where does a contractor go to secure a permit for a dumpster that is placed on
the street?
A contractor should contact the Department of Transportation (DOT) for a dumpster
permit.
Does a home improvement contractor need a permit to perform sidewalk work?
Yes. Sidewalk work requires a permit from DOT. Call 311 or visit www.nyc.gov/dot.
What should a contractor do to haul or transport waste resulting from home
improvement work?
If you plan to haul or transport waste resulting from your business operations, you must
obtain a Class One Self Hauler Registration from the New York City Business Integrity
Commission. For an application and more information, call 311 or visit www.nyc.gov/bic.
