Last year I complained about a court decision that crippled Ohio’s home improvement statute. The decision was Beder v. Cerha Kitchen & Bath Design Studio, LLC., decided by Ohio’s Eleventh District Court of Appeals. You can read my critique here.
The Beder court decided that home improvement or repair isn’t “construction” and thus wasn’t covered by Ohio’s Home Construction Service Suppliers Act (HCSSA). I preferred the dissent by Judge Westcott Rice and made a prediction: Ohio’s legislature would revise HCSSA to include home improvement. That’s what just happened. As of September 20, 2024, the law was amended. “Home construction service” now includes both new construction and repair or improvement of an existing residence.
Ohio has now joined the list of 22 states (AR, CA, CT, DC, FL, HI, IL, IN, LA, ME, MD, MA, NV, NJ, NY, OH, OR, PA, TN, VA, WV,WI) that require written home improvement contracts with specific notices and disclosures.
What Does This Mean for Ohio Contractors?
Residential contracts for $25,000 or more must be in writing and must include:
- The contractor's name, physical business address, business telephone number, and taxpayer identification number;
- The owner's name, address, and telephone number;
- The address or location of the job site;
- A general description of the work including labor and materials;
- The start date and job duration;
- The total cost;
- Any category of costs not included in the contract price;
- A certificate of liability insurance with coverage to at least $250,000;
- The dated signatures of owner or tenant and the contractor.
- Initial payment not exceeding 10% of the contract price plus 75% of any special-order materials.
- The following statement (in caps): IF AT ANY TIME A HOME CONSTRUCTION SERVICE REQUIRES EXTRA COSTS ABOVE THE COST SPECIFIED OR ESTIMATED IN THE CONTRACT THAT WERE REASONABLY UNFORESEEN, BUT NECESSARY, AND THE TOTAL OF ALL EXTRA COSTS TO DATE EXCEEDS FIVE THOUSAND DOLLARS OVER THE COURSE OF THE ENTIRE HOME CONSTRUCTION CONTRACT, YOU HAVE A RIGHT TO AN ESTIMATE OF THOSE EXCESS COSTS BEFORE THE HOME CONSTRUCTION SERVICE SUPPLIER BEGINS WORK RELATED TO THOSE COSTS. INITIAL YOUR CHOICE OF THE TYPE OF ESTIMATE YOU REQUIRE: Check one: _____ written estimate _____ oral estimate"
If extra cost on the job will exceed five thousand dollars, the owner is due a written or oral estimate, depending on what’s checked above.
Some residential contracts are excluded:
- Contracts for work on 4 or more living units.
- Manufactured housing.
- Mobile homes.
- Public buildings.
- Cost-plus contracts.
Penalty for a Lame Contract
HCSSA has teeth. A defective contract gives an owner the right to:
Cancel the contract, or
- Sue for economic damages (actual losses) plus an extra $5,000 in non-economic damages (i.e. emotional distress).
- Seek a declaratory judgment or injunction to prevent similar acts by the contractor.
- Collect attorney fees if the defendant knowingly violated HCSSA.
Drafting an enforceable Ohio residential contract has never been easy. Now it’s a mine field. Any owner with a gripe about your work is sure to seek HCSSA penalties if your contract isn’t letter-perfect. Word to the wise. Use only contracts that comply precisely with Ohio’s HCSSA.
What’s the easiest way to do that? Construction Contract Writer drafts perfectly legal Ohio contracts. The trial version is free.
