Performing construction work for consumers in Ohio requires an understanding of and compliance with a variety of laws that govern consumer transactions, contracts, warranties, liens, disputes, and more. Awareness of the legal requirements and rights for contractors and construction companies in Ohio is crucial for businesses providing construction and remodeling services to consumers to operate legally and avoid penalties.
This blog provides an overview of the key Ohio construction and remodeling laws that both protect consumers as well as provide essential protections and recourse for contractors and construction companies. We will cover the major laws related to consumer transactions, home construction contracts, right to cancel sales, dispute resolution, mechanic’s liens, licensing, permits, and more. Understanding these laws allows Ohio construction contractors to properly bid, contract, and perform work, appropriately manage possible disputes, and leverage legal tools when needed. Whether you are a general contractor or specialty trade contractor (painters, concrete pourers, roofers, carpenters, electricians, plumbers, etc.), running a business with several employees or a sole proprietor, being informed on the legal landscape is essential for success and maintaining positive customer relationships. This overview serves as a starting point to build familiarity with construction laws and regulations in Ohio.
Ohio Consumer Sales Practices Act (R.C. 1345.01 – 1345.99)
The Ohio Consumer Sales Practices Act (OCSPA) is an important law that construction and remodeling businesses in Ohio must be familiar with. The OCSPA applies only to “consumer transactions,” which must be with a consumer for primarily personal, family, or household purposes. The OCSPA does not apply to transactions between businesses. The OCSPA prohibits suppliers from engaging in unfair or deceptive consumer sales practices and establishes penalties for violations.
More specifically, the CSPS prohibits conduct such as:
- Misrepresenting the quality, quantity, or origin of goods or services.
- Failing to provide written estimates to consumers regarding work to be done.
- Failing to deliver goods or services as agreed.
- Advertising goods or services with intent not to sell them as advertised.
- Failing to give the consumer written receipts for deposits.
- Engaging in unconscionable conduct (taking advantage of consumers through excessive pricing or unfair terms).
If a contractor or construction business – defined under the OCSPA as “suppliers” – is found to have violated the OCSPA, potential penalties and damages may include:
- Injunctive relief, prohibiting the unlawful conduct.
- Seeking to rescind the agreement or transaction.
- Civil penalties up to $25,000 per violation.
- Actual damages suffered by consumers.
- Noneconomic damages.
- Treble damages.
- Statutory damage.
- Attorney’s fees and court costs.
If a consumer does file a claim under the OCSPA, the contractor or business is permitted to make a “cure offer,” which, if rejected by the consumer, may limit the consumer’s ability to recover treble damage, court costs, and attorney’s fees that might otherwise be available. The OCSPA also provides a “bona fide error” defense, which may also limit liability under certain circumstances.
Knowing about the Ohio CSPS and following fair business practices is crucial for construction companies and contractors to avoid costly lawsuits and penalties. Ensuring truthful advertising, transparent contracts, and delivering the agreed upon goods and services is the best way to comply.
Home Construction Service Suppliers Act (R.C. 4722.01 – 4722.08)
The Home Construction Service Suppliers Act (HCSSA) is another important law for construction companies and contractors to be aware of in Ohio. The HCSSA applies to “home construction service contracts” and “home construction service suppliers” involved in transactions exceeding $25,000. When applicable, the HCSSA exempts home construction companies and contractors from the OCSPA.
The HCSSA has several key provisions:
- It requires written contracts for home construction or remodeling projects over $25,000. The contract must include details like the work to be done, materials to be used, project timeline, warranties, and total price.
- It mandates certain disclosures in the contract, like insurance information, any adverse legal judgments, and the contractor’s or construction business’s name and physical address.
- It gives consumers a 3-day right to cancel the contract after signing. The contractor or construction business must provide notice of this right.
- It prohibits certain unfair contract terms, like requiring excessive down payments or making the contract non-cancelable for delays.
- It provides implied warranties of proper workmanship and habitability for major structural components.
- It allows consumers to seek legal remedies if the work is defective, incomplete, or doesn’t match the contract specifications. Possible remedies are rescission, restitution, repair, replacement, or damages.
If the supplier fails to adhere to the HCSSA, then not only may the Ohio Attorney General investigate the supplier and bring a civil action, but the consumer may also bring a lawsuit and seek to rescind the transaction or recover damages. Under certain circumstances, a court may award the consumer reasonable attorney’s fees.
The HCSSA gives important protections and rights to consumers entering into major home construction projects. It regulates the transaction and provides legal recourse if contractors fail to complete the work properly. Contractors and construction companies in Ohio need to comply with the contract, disclosure, and warranty provisions of the HCSSA.
Home Solicitation Sales Act (R.C. 1345.21 – 1345.28)
The Home Solicitation Sales Act (HSSA) applies to sales of goods or services made at the consumer’s residence or place of employment or at a location that is not the seller’s normal place of business.
The HSSA gives consumers the right to cancel the contract within three business days after signing it. Sellers are required to provide a notice of this right and a cancellation form when making a sale under the HSSA.
The notice must be in duplicate, captioned “Notice of Cancellation”, and contain:
- The name and address of the seller;
- The date of transaction;
- A statement of the buyer’s cancellation rights and
- Any steps the consumer must take to cancel the contract.
The cancellation form must:
- Be detachable;
- Contains the name and address of the seller and
- Refer to the date of the transaction.
The HSSA provides important protections for consumers who may feel pressured into making a purchase, including for home construction or remodeling services when contracted or approached at home. Requiring notice of the right to cancel gives consumers a chance to change their minds after the seller has left.
Residential Contractor Right to Cure Act (R.C. 1312.01 – 1312.08)
The Residential Contractor Right to Cure Act (RCRCA) establishes a specific procedure for resolving disputes between residential contractors or construction companies and homeowners over defects in the construction or remodeling of a home.
The purpose of this law is to give contractors or construction companies an opportunity to inspect alleged defects and make repairs before a homeowner can file a lawsuit. This aims to resolve issues efficiently without needing to go to court.
Under the RCRCA, if a homeowner discovers defects in the work, they must notify the contractor in writing, explaining the defects. This written notice triggers the process.
Once the contractor receives the notice, they have 21 days to respond. The construction contractor must do one of the following in their response:
- Offer to inspect the alleged defects and cure them if necessary.
- Dispute the homeowner’s claims about the defects.
- Propose a settlement offer to resolve the dispute.
If the construction contractor does not respond within 21 days, they forfeit the right to cure under the RCRCA.
After the construction contractor responds, the law sets timelines for inspection, beginning repairs, and completing repairs. If the construction contractor fails to meet these deadlines, the homeowner may proceed with filing a lawsuit.
The RCRCA provides an important protection for both parties. Homeowners must follow the notice process before suing, and construction contractors have the opportunity to make things right. Overall, the RCRCA aims to resolve home defect disputes efficiently without litigation.
Ohio Mechanic’s Lien Law
The Ohio Mechanic’s Lien Law allows contractors, subcontractors, material suppliers, and laborers to file a lien on the property where they performed work or furnished materials in order to secure payment for their services.
A mechanic’s lien serves as a security interest in the property, which can be foreclosed if the bill is not paid. The lien attaches to the improved property, as well as a certain amount of surrounding land.
To file a valid mechanic’s lien for residential projects in Ohio, the construction contractor or supplier must file the lien within 60 days from the last day labor was performed, or materials were furnished (the timeline is extended to 75 days for commercial projects). The mechanic’s lien will expire and become void if a lawsuit to enforce the lien is not filed within six years of the date of filing. The lienholder must foreclose on the lien within this period.
The Ohio Mechanic’s Lien Law provides important protection for contractors, subcontractors, and suppliers who are not fully paid for improving real property. Complying with the notice, filing, and foreclosure deadlines is crucial for preserving lien rights.
Building Codes, Licensing, and Permits
In addition to the laws discussed above, contractors and construction companies in Ohio must remain aware of the specific building codes that apply to their work and what licensing, registration, permitting requirements are applicable.
All construction projects in Ohio are subject to the Ohio Building Code (OBC), which is based on the International Building Code model codes but is enforced locally by municipal building departments. The OBC contains the regulatory standards for constructing and altering all buildings within the jurisdiction of the state. It covers all aspects of construction including, structural integrity, fire prevention, sanitation, energy efficiency, and safety.
The Ohio Construction Industry Licensing Board (OCILB) oversees contractor licensing for commercial projects. For residential projects, contractors must register with the Ohio Construction Compliance Board (OCCB) and obtain a Certificate of Registration before contracting. Unlicensed contracting may result in a misdemeanor offense in Ohio.
Additionally, getting the proper permits is crucial for construction projects in Ohio. Most construction, remodeling, or repair work requires permits from local building departments before work can legally begin. Failing to get permits can risk fines, stop work orders, and voiding of insurance.
In conclusion, contractors and construction companies in Ohio are subject to a range of laws and regulations, including the Ohio Consumer Sales Practices Act, the Home Construction Service Suppliers Act, the Home Solicitation Sales Act, the Residential Contractor Right to Cure Act, and the Ohio Mechanic’s Lien Law. Additionally, contractors must adhere to building codes and permitting requirements to avoid penalties. To ensure compliance with these laws, it is important for construction contractors to know their legal obligations and rights related to consumer transactions, contract formation, and dispute resolution. The experience attorneys at Cavitch, Familo & Durkin are able to assist contractors and construction companies attempting to navigate the myriad laws and regulations which have the potential to effecting their business and livelihood.
Resources for More Information
Below are some resources for learning more about Ohio construction laws and regulations:
- Ohio Attorney General’s website – Consumer Protection Laws
- Ohio Department of Commerce website
- Licensing Board – https://com.ohio.gov/divisions-and-programs/industrial-compliance/boards/ohio-construction-industry-licensing-board (licenses and regulates various trades, including electricians, HVAC contractors, plumbers, and hydronics contractors. Search their site for license requirements).
- Board of Building Standards – https://com.ohio.gov/divisions-and-programs/industrial-compliance/boards/board-of-building-standards (licenses contractors and enforces standards for commercial construction. Look here for commercial contractor license applications).
- Ohio’s Laws and Rules – https://codes.ohio.gov (provides the full text of the Ohio Revised Code and Ohio Administrative Code)
- The local building department or county auditor can provide information on permits and inspections for your jurisdiction.
- Consider joining a trade association like the Ohio Contractors Association (https://www.ohiocontractors.org/) for access to education, resources, and advocacy for the construction industry.
If you need assistance navigating the laws and regulations affecting contractors and construction businesses in Ohio, contact Cory Martinson for more information at 216-621-7860.