Starting in 2007, Illinois appellate court districts began issuing diverging decisions about how the HRRA should be applied.
In Smith v Bogard, the fourth district determined that a contractor who fails to provide a written contract and consumer pamphlet as required under the HRRA is "precluded from recovering any amounts he claims due for work performed," whether for breach of contract, unjust enrichment, or quantum meruit.
14) In this line of cases, the courts look to the term "unlawful," which, as is discussed above, appears in section 30 of the HRRA to describe conduct by a contractor that violates the HRRA.
Finally, some courts opined that the proper remedy for a violation of the hrrA is in the CFDBPA, under which consumers can recover only if they prove damages and that the contractor knowingly violated the HRRA.
Moreover, the Smith court's interpretation of the HRRA would effectively reverse long-settled interpretation of the Illinois Mechanic's Lien Act, which does permit liens based on oral contracts.
In response, a subcommittee of the ISBA Real Property Section met with the Illinois Attorney General's office to explain its concerns about the way courts were interpreting the HRRA.
It deleted what was then section 30 of the HRRA and replaced it with the following language: "Any person who suffers actual damage as a result of a violation of this Act may bring an action pursuant to Section 10a of the Consumer Fraud and Deceptive Business Practices Act.
The amendment thus removes the language that labels a violation of the HRRA "unlawful" conduct and establishes that a homeowner's remedy for an HRRA violation is to sue under the CFDBPA.
While proving a contractor's state of mind and damages might be difficult for a plaintiff, this requirement will help to assure that HRRA applies to wrongdoers who are actually trying to defraud a homeowner.
As is illustrated in the McGinnis case cited above, a court may permit a contractor to recover under a theory of quantum meruit even when there is a violation of the HRRA.
In addition, the HRRA is not intended to overturn settled Mechanic's Lien Act law allowing a contractor to assert a mechanic's lien based on an oral contract.
The biggest problem with the HRRA is that few contractors and attorneys know about it.