Posted on March 22, 2016
Ohio consumers and homebuilders alike should be aware of an important Ohio law which took effect on August 31, 2012 – The Home Construction Service Suppliers Act (“HCSSA”), which is found at Ohio Revised Code Chapter 4722. The HCSSA applies specifically to “home construction service contracts” and exempts these contracts from of the purview of Ohio’s Consumer Sales Practices Act (“CSPA”), a law designed to protect consumers from predatory or unscrupulous merchants and service providers. When the HCSSA was passed, the CSPA was specifically amended to exclude “home construction service contracts” from the definition of “consumer transaction.” The Ohio legislature’s creation of the HCSSA as a separate statute reflects the fact that the CSPA never fit well in the home construction context and was not intended to apply in that context.
A “home construction service contract” is defined by the HCSSA as “a contract between an owner and a supplier to perform home construction services, including services rendered based on a cost-plus contract, for an amount exceeding twenty-five thousand dollars.” A “supplier” is defined as “a person who provides home construction services for compensation and who maintains in force a general liability policy in an amount of not less than two hundred fifty thousand dollars.” Thus, to be covered by the new statute, the home construction contract must exceed $25,000.00 and the contractor must carry $250,000.00 in insurance coverage.
The most significant benefit of the HCSSA for contractors is that the threat of “treble damages” previously available under the CSPA is removed. However, most of the same kinds of dishonest conduct prohibited by the CSPA are still prohibited by the HCSSA. The HCSSA also includes several new requirements for home construction suppliers. Most notably, under the HCSSA a home construction supplier is required to enter into a written contract with the homeowner, which must include all terms relating to the home construction and must contain several specific pieces of information, including:
(1) The supplier’s name, physical business address, business telephone number, and taxpayer identification number;
(2) The owner’s name, address, and telephone number;
(3) The address or location of the property where the home construction service is to be performed;
(4) A general description of the home construction service, including the goods and services to be furnished as part of the service;
(5) The anticipated date or time period the home construction service is to begin and the anticipated date or time period it is to be completed;
(6) The total estimated cost of the home construction service;
(7) Any cost of installation, delivery, or other cost that the total estimated cost does not cover;
(8) A copy of the supplier’s certificate of insurance showing general liability coverage in an amount of not less than two hundred fifty thousand dollars; and
(9) The dated signatures of the owner and the supplier.
Additionally, the written agreement must include a specific provision entitling the owner to either a written or oral estimate when the total amount of reasonably unforeseen, but necessary, additional costs over the contract price exceed $5,000.00. The HCSSA further obligates the home construction supplier to perform its services in a “workmanlike manner.” While the specific statutory articulation of this duty is new, the principle is not. The Supreme Court of Ohio has previously held that a builder’s duty to construct a home in a workmanlike manner is a duty imposed by law, and the homeowner cannot waive that right. Another significant provision of the HCSSA prohibits home construction suppliers from taking as a down payment more than ten percent of the contract price before the work begins, with limited exceptions.
The HCSSA provides several other requirements and prohibitions that all homeowners and residential contractors should familiarize themselves with. For questions regarding the Ohio Home Construction Service Suppliers Act or any other aspect of Ohio construction law, please contact Todd Harpst or the other attorneys at at Harpst Ross, Ltd. – Business Lawyers for the Construction Industry®, at (330) 983-9971 or firstname.lastname@example.org.
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