After decades of existence, one would think that most home construction contractors in Ohio would be aware of the Home Solicitation Sales Act (the “Act”). But we continue to encounter those who are not — particularly with service contracts of $10,000 or less — which inevitably create roadblocks to collection efforts in the event of non-payment. This article provides a brief overview of the Act and also offers an easy solution to ensure future compliance.
The Act covers, among other things, home construction service contracts that are reached either at an owner’s residence or a location other than the contractor’s office, even if the owner initiates the contact. But the Act does have its limits. It does not apply to contracts:
- Reached entirely by mail or telephone, but only if there was no other contact between the owner and contractor.
- Reached at an office in which the services are displayed on a continuous basis.
- Reached after the owner initiates the contact with a contractor who has an office in Ohio where the services are regularly offered.
- Addressing an emergency, but only if the owner waives, in writing, his or her right to cancel the contract within three business days.
- Reached after the owner initiates the contact and the sale is for additional services or goods.
- Where the contractor provides written notice to the owner of his or her right to rescission under the Consumer Credit Protection Act.
And because the Consumer Sales Practices Act does not apply to home construction service contracts that exceed $25,000, compliance with the Act is a non-issue for such contracts, too.
The Act requires a written contract, signed and dated by the owner, which identifies the contractor’s name and address, has specific language regarding the owner’s right to cancel and has a separate, completed and specific “Notice of Cancellation.”
Failure to comply with the Act may constitute a deceptive act in violation of the Consumer Sales Practices Act. As a result, an owner can sue a contractor to recover actual damages, up to $5,000 in non-economic damages, and attorneys’ fees.
If you are a contractor performing home construction service contracts, we encourage you to have and use a form contract that complies with the Act, even if the contract falls outside the bounds of the Act. To avoid admitting that the Act applies, the contract should state something like: “Should this transaction be governed by the Home Solicitation Sales Act, the following terms and conditions apply.” This language will give any contractor the ability to argue, in the event of a dispute, that the Act is inapplicable, while at the same time complying with the Act’s contracting requirements (assuming the requirements listed above are also followed).