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Legal Alert: Ohio General Assembly Enacts New Law Exempting Home Builders from Consumer Protection Laws

The Ohio General Assembly recently passed a new law that will exempt new home builders from liability under the Ohio Consumer Sales Practices Act and its “treble damages” provisions.  The new law, known as the Home Construction Service Suppliers Act (“the Act”), became effective August 31, 2012, and applies to all “home construction service contracts” entered into after that date.  Previous court decisions have held that a new home builder is a “supplier” under the Consumer Sales Practices Act.

To qualify as a “home construction service contract,” the contract must be between an owner and a supplier of home construction services for an amount exceeding $25,000.  Such “home construction services” include the construction of a one, two, or three-family residence, as well as construction of a single unit within a four or more family residence, or for the common areas of a condominium property.

To come within coverage of the Act, the owner and the home builder must enter into a written agreement, which must provide the following:

  1. The name, physical business address, business telephone number and taxpayer identification number of the builder;
  2. The name, address, and telephone number of the owner;
  3. The address or location of the property where services will be rendered;
  4. A general description of the goods and services to be furnished;
  5. The anticipated date or time period for the commencement and completion of service;
  6. The total estimated cost of construction along with any additional costs such as installation or delivery;
  7. A certificate of insurance demonstrating that the builder has general liability coverage in an amount of at least $250,000; and
  8. The dated signatures of the owner and the builder.

In addition, if the builder reasonably foresees that extra costs exceeding $5,000 may be incurred during the course of performance of the home construction contract, then the written agreement must provide the owner with the option to receive a written or oral estimate of those foreseeable costs.

While compliance with the Act will exempt the home builder from the treble damages provisions of the Consumer Sales Practices Act, the new Act provides that many of the same acts or practices deemed to be unfair or unconscionable under the Consumer Sales Practices Act are still unlawful, and provides its own remedies to the owner for a violation.  A list of those acts or practices is provided in the new Act.  In addition, the Ohio Attorney General retains many of the same enforcement powers and remedies that are available under the Consumer Sales Practices Act.

For assistance with the Home Construction Service Suppliers Act or with any other matters related to residential construction or development, please contact Joe Trauth or Steve Coffaro, or another member of our Real Estate group at (513) 579-6400. 

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