Release of Liability Form: What Is It?
In its most basic form, a homeowner release of liability form is a written agreement between a homeowner to be, at the conclusion of a home improvement project, released from further liability to the contractor for any injuries the contractor might have sustained in connection with the work done on the property. It’s similar to the classic "contractor assumes the liability" clause sometimes found in a written agreement between a homeowner and a contractor.
Let’s say that John Smith wants to install an inground swimming pool in his backyard. After having received a recommendation from a neighbor, he hires a contractor, Joe Jones Landscaping, to perform the work. As Joe Jones’ employees are digging a trench for the pool, one of them sprains his back, and of course, the next day he’ll begin getting expensive medical treatment for the injury, and he’ll also be out of work for a week or two while his back heals. Joe Jones belongs to the Home Improvement Division of the state of New Jersey Department of Consumer Affairs, which means that he has workers compensation insurance coverage and that his employees are covered by that policy if they are injured on the job . A release of liability form will cut off the employee’s right to claim additional money under either the employer’s workers’ compensation policy or under Joe Jones’ general liability policy.
If the homeowner has signed off on a properly drafted and lawyer-approved liability waiver, he will have relieved Joe Jones and his workers’ compensation carrier from any role in the payment of the employee’s workers’ compensation benefits. And if he has also signed off on the general liability waiver, his homeowner’s policy, which actually covers the claim, will have to pay to the employee all of the benefits under the policy, up to the limits of the coverage. These benefits include medical expenses, wage loss, or permanent disability compensation. The general liability policy for Joe Jones would then cover the homeowner’s out of pocket costs, as well as any costs incurred over the limits of his homeowner’s policy.
Why Would a Homeowner Want One?
Homeowners are generally surprised to find that release of liability forms, also known in our warning sign and disclaimer template as a "Liability Release, Waiver, and Indemnification," are a document designed highly in the interest of the homeowner rather than of the contractor working on the property. In fact, there are several potential benefits of having a contractor sign such a form.
First, it is a simple, strong warning log which can prove particularly effective if someone is injured on the homeowner’s property. After all, the strongest warning signs will offer potentially up to 10 points of typical warning information, and a whole page of typing in the case of our full-Length disclaimer template!
In addition, such a form can strongly inform any injured guests on the property that the homeowner bears no liability, but that the responsible contractor may indeed be held liable if the proper steps were not taken. This can prevent claims against the homeowner in some cases, particularly if the form is worded in a manner where the homeowner also seeks indemnity from the contractor for any such injuries.
The homeowner can also spell out precisely which behaviors are permitted or prohibited on the property; for instance, perhaps there is no climbing a fragile fence which may quickly give way during the course of a worker’s duties. Or perhaps there is a neighbor’s cat present whom the homeowner wishes to be left unharmed. This can help clearly remind even the most forgetful of contractors to take the proper precautions.
Components of the Form under the Law
The essential home improvement contractor homeowner release of liability form should include these elements: Universal indentures: Names of parties involved including the owner/contractor and hiring agent. It should also contain information about the property. Specifics about the work – a start and finish date and the amount being paid for the work should be included in this section. Release of liability: This is where the release forms the basis for the contractor to be relieved of all future obligations. Through the Indiana Home Improvement Contractors Act, the Indiana statute requires the written home improvement contract exempt from a remedy or warranty such as the duty to protect the work or materials until completion. Essentially, signing the release means the contractors are no longer responsible for any materials, labor or anything else that is related to the home improvement project. The paperwork signed by the homeowner should include a waiver in their favor and an agreement of subsidiary waiver by the contractor. Any payment releases getting executed should not be given without these signatures – or you’ll be losing protections. A partial waiver may be involved if there is more work to be done; however, the contractor should not be asked to sign this until work is fully completed.
How Does One Create the Form?
Assuming that the homeowner release form is otherwise valid and executed, a construction contractor will only need to follow these steps in drafting the homeowner release form:
- Make sure that the release form identifies the proper parties to which it is to be addressed.
- Identify the work to which the release is being given. In particular, the form should be specific whether the release covers work performed on both the homeowner’s primary residence and any other properties owned by the homeowner. The form should also be specific whether the release covers both the interior and exterior of the properties for which work was performed.
- Identify the location of the properties to which the release applies.
- Identify the work and the date or dates that the work was performed on the properties.
- Be clear that the release is for all claims and related liabilities which the homeowner has or may have against the contractor or its subcontractors, whether known or unknown. As with any release, however, it should be specifically carved out again potential fraud or environmental claims which are unrelated to work performed on the properties.
The homeowner release form may be a complicated document intended for use in a limited scope of circumstance. A court may be inclined to strike or at least construe against a party any ambiguous provisions in the homeowner release form. It is certainly recommended that the homeowner release form be drafted with the assistance of an experienced legal professional. Other industry professionals recommend that associations or other industry groups draft a "standard" homeowner release form that can be utilized by the industry, its suppliers and vendors.
Most Common Mistakes
The caveat to the release is that you can’t sign a valid release of liability for intentional conduct or gross negligence. And so that’s the balance that you have to walk, both as a contractor and as a homeowner. It’s not uncommon for there to be boilerplate language that’s not relevant to the situation, or for the contractor to inadvertently include a release for gross negligence or intentional conduct. If that happens, that’s just a bad form.
For homeowners, the most common pitfall is just not paying attention. There’s almost never an immediate harm to a homeowner just signing the form and moving on because they’ve agreed to release the contractor . There’s never any immediate harm so they don’t think about it again. It’s only when the tough times come that they realize what they’ve done.
From the contractor’s perspective, you have to be careful that your release doesn’t include a release for intentional conduct or a release for gross negligence. In our office we have a lawyer look at every release that we send because there are little things that can make a difference. You’ve got to be careful. It’s worth the time and it’s worth the investment to spend 5 minutes having a lawyer look at it.
Issues before the Court
Aside from the aforementioned practical issues, there are also the legal considerations. In particular, both homeowners and contractors should be aware of three general issues: contract law, potential consumer protection statutes, and state-specific laws.
Contract Law
The most straightforward consideration is contract law. Since a homeowner is voluntarily signing a release of liability form, a court will likely consider it to be binding unless one of the exceptions are met. So long as a homeowner gives knowing, voluntary consent to the release and it is not against public policy, the release may be binding under contract law.
Consumer Protection Laws
Many states have consumer protection laws that prohibit the use of contracts that contain language inconsistent with the local fair trade or consumer acts. Though a homeowner could still try to challenge a release form drafted in violation of these statutes, courts generally strike down these arguments: (1) a lien waiver is not against public policy; (2) a home improvement contract is subject to the same long-standing contract rules that govern all contracts; and (3) every jurisdiction recognizes the distinction between procedures for voiding and declaring unenforceable.
State-Specific Laws
Finally, there are some state-specific statutes and court decisions that impact how a homeowner release of liability form can be read and applied. In many cases, these restrictions require contractors to include certain language on their forms for them to be enforceable. However, in most cases, given that many homeowners agree to the terms on a voluntary basis, courts uphold release of liability forms as long as they are not contrary to public policy and did not rely on fraud, duress, or misrepresentation.
Frequently Asked Questions about Release of Liability Forms
Q: In what situations is a homeowner release of liability form recommended to be used?
A: In general terms, a homeowner release of liability form is used when a homeowner wants to allow a contractor to handle the specific details of a construction project without the owner being liable for any injuries that occur. Sometimes this is used instead of a hold harmless agreement.
Q: Does a homeowner release of liability form have limitations?
A: Yes. Creating a liability release with a licensed attorney should help avoid any problems with these agreements. In addition , keep in mind that these agreements are only as good as the person signing them. When doing a job on a residential home, make sure to properly vet the homeowner and spend the necessary time on due diligence to make sure they are the type of person who will stand by their word.
Q: Isn’t a homeowner release of liability form like a waiver of subrogation?
A: These releases are somewhat different. A homeowner release of liability form protects both the homeowner and the contractor or tradesman from any liability. A waiver of subrogation, however, is used to prevent an insurance company from seeking damages back after paying a claim.