Litigation Defenders

Effective Sept. 19, the bill Gov. Mike DeWine recently signed into law, (HB 50) ushers in significant changes to the Ohio Home Construction Suppliers Services Act (HCSSA).

This new legislation expands the definition of “home construction service” to include not only the construction of new residential buildings but also the repair, improvement, remodeling and renovation of existing structures.

Key Changes Under HB 50

The revised definition under R.C. 4722.01(B) now states:

“Home construction service” means the construction of a residential building, including the creation of a new structure and the repair, improvement, remodel, or renovation of an existing structure. “Home construction service” does not include construction performed on a structure that contains four or more dwelling units, except for work on an individual dwelling unit within that structure, or construction performed on the common area of a condominium property.

This change supersedes recent court decisions in Ohio’s 11th and 5th district courts of appeal, which had previously held that the Consumer Sales Practices Act (CSPA) applied to remodeling projects, while the HCSSA was limited to new home construction.

For a contract to fall under the HCSSA, it must exceed $25,000, and the contractor must maintain liability insurance of at least $250,000. If these conditions are not met, the contract will generally be governed by the CSPA.

The key distinction between the HCSSA and the CSPA is that the latter allows for treble damages (three times the actual damages) in certain situations, whereas the HCSSA does not provide for such damages.

Implications for Contractors

This change effectively removes remodeling and renovation work from the scope of the CSPA, provided the contract price is $25,000 or more. While the HCSSA imposes specific requirements on builders and remodelers, it eliminates the risk of treble damages, which is a significant relief for contractors. However, it also means that many existing contracts may no longer be compliant with the HCSSA.

Compliance Requirements

Under the HCSSA, contracts must now include:

• The name, address and phone number of the parties and the contractor’s tax identification number
• The location of the project
• A general description of the construction services, including any appliances or other goods and services to be furnished
• Anticipated commencement and completion dates for the project
• The total estimated cost of construction and any additional costs not included in the estimate
• A provision for excess costs, allowing homeowners to choose between a written or oral estimate for unforeseen costs exceeding $5,000

Additionally, contractors must attach a certificate of insurance to the written agreement, evidencing at least $250,000 of coverage.

Moving Forward

It is crucial for employers and contractors to stay informed and take proactive steps to comply with this new regulation. Consulting with legal counsel is advisable to ensure all contracts and practices align with the updated HCSSA requirements.