Home Constructions Contracts
Effective August 31, 2012 there has been a change concerning consumer remedies arising under most home construction service contracts. The Ohio Consumer Sales Practice Act under § 1345.01 of the Ohio Revised Code no longer covers all home construction contracts. Home construction contracts that exceed $25,000 and are performed by a construction service supplier carrying at least $250,000 in liability insurance will now be covered under § 4722.01 of the Ohio Revised Code.
The new law is very similar to the CSPA, however, the CSPA was designed for the protection of consumers against unfair practices by suppliers and does not fit well when applied to home construction. O.R.C. Section 4722 requires that prior to performing any home construction service costing twenty-five thousand dollars or more, the supplier and owner must enter into a written home construction services contract which includes all agreements and conditions related to the home construction service and a statement concerning possible excess cost. If the total amount of reasonably unforeseen, but necessary, excess costs of a home construction service at any time exceeds five thousand dollars over the course of the entire home construction contract, prior to performing the work related to the excess costs, the home construction service supplier must provide an owner with a notice that contains a written or oral estimate, depending on which type the owner has designated in the contract.
Legal Requirements of a Home Construction Contract
The Home Construction Contracts that involve construction services exceeding $25,000.00 must include all agreements and conditions related to the home construction service, including all of the following:
(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;
(9) The dated signatures of the owner and the supplier.
The contract must also contain a statement concerning possible excess cost. The statement should read:
“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.
….. written estimate ….. oral estimate.”
Penalties for Violations of Ohio Revised Code Section 4722
If the attorney general shows that the supplier has violated or is violating this chapter, the court may issue a temporary restraining order, preliminary injunction, or permanent injunction to restrain and prevent the act or practice.
On motion of the attorney general, or on its own motion, the court may impose a civil penalty of not more than five thousand dollars for each day of violation of a temporary restraining order, preliminary injunction, or permanent injunction issued under this section, if the supplier received notice of the action.
In addition to the other remedies provided in this section, the attorney general may request and the court may impose a civil penalty of not more than twenty-five thousand dollars against the supplier for each violation of an act or practice described in this chapter.
