Thomas Hunt and Nathan Studeny | Kohrman Jackson & Krantz
Ohio made a significant change to its law governing home construction services, introducing an amendment that impacts both contractors and homeowners. House Bill 50 (H.B. 50), signed by Governor Mike DeWine in June 2024, added several key terms to the Home Construction Service Suppliers Act (HCSSA) to expand its coverage. These changes, which became effective on September 20, 2024, both eviscerate consumers’ ability to seek treble (triple) damages against contractors performing repairs, improvements, remodeling, or renovations on projects valued at over $25,000 and require contractors performing such services to take additional steps to ensure their contracts are compliant with the HCSSA.
Key Changes in House Bill 50
Previously, the HCSSA applied only to contracts for new construction or ancillary services tied to new builds where the contract exceeded $25,000. The Consumer Sales Protection Act (CSPA), which provided consumers a potential remedy of treble damages, applied to instances where the contracts were for home remodeling, repairs, improvements, or renovations that were not connected to new construction. However, under the amended law, contracts for the repair, renovation, remodeling, or improvement of existing structures—with a value greater than $25,000—will now be covered by the HCSSA.
Ohio Revised Code 4722.01 now defines “home construction service” as not only the creation of new residential buildings but also the improvement or renovation of existing ones. This clarification was introduced to supersede recent Ohio appellate court decisions holding that the CSPA exclusively applied to home remodeling projects, while the HCSSA applied to new home construction. By explicitly including remodeling and other improvements, the new law is a blow to consumers by removing such contracts from the broader CSPA, which subjected contractors to potential treble damages for certain misconduct.
While the added clarity benefits contractors by shielding them from treble damages provided for in the CSPA, it also brings new burdens and responsibilities in an industry generally run by small business owners. Now, all contractors performing repairs, improvements, remodeling, or renovations on projects valued at over $25,000 must ensure their contracts meet specific, strict requirements under the HCSSA, including, among other things:
- Detailed Description: The contract must clearly describe the services, materials to be used, timelines, warranties, and a detailed estimate of the total cost.
- Insurance: The contractor must disclose their insurance information and coverage for no less than $250,000.
- Excess Costs: The homeowner must be notified of their right to receive an estimate for any additional costs, using language substantially similar to that provided in the HCSSA. Failure to do so could lead to claims from either the homeowner or the Ohio Attorney General.
Pending Litigation Involving Home Remodeling
One question that remains unclear is how Ohio courts will apply this change to pending litigation or disputes arising from contracts entered prior to September 20, 2024. For instance, will courts apply the HCSSA or CSPA to remodeling contracts over $25,000 that were entered into before September 20, 2024? Ohio’s Constitution provides that the general assembly cannot pass retroactive laws. The Supreme Court of Ohio has interpreted this to mean that “law may be applied retroactively if there is an express legislative intent that it do so and it affects a remedial, not substantive right”.
A plain reading of the amendment does not provide a clear answer, requiring Ohio courts to decipher whether the amended HCSSA affects remedial or substantive rights for it to apply retroactively to contracts entered prior to the amendment. Given the changes that affects consumers’ ability to recoup treble damages under the CSPA and the HCSAA’s additional contract requirements, Ohio courts may find that it affects substantive rights and only apply prospectively to contracts entered following the amendment.
What Does this mean for Contractors?
Remodeling contractors, especially small business owners, must take note of the new requirements imposed by the HCSSA and should consult with legal counsel if they have questions about how it might impact their business.