Home Construction Defects: Which Act Applies?

When dealing with home construction or renovation defects, it is important to understand the applicable consumer protection statutes at play. Often, plaintiffs will bring causes of action under the Ohio Consumer Sales Practices Act (CSPA), R.C. 1345.01 et seq., the Ohio Home Construction Service Supplier’s Act (HCSSA), R.C. 4722.01 et seq., or both. But as a matter of law, the two statutes are mutually exclusive—only one can be applicable to the transaction at issue. The distinction is important as the two statutes have different prohibited acts and allow for different damages.

Why Only One Statute Can Apply

The CSPA provides for a specific exception within the definition of a “consumer transaction” which excludes “transactions involving a home construction service contract as defined in section 4722.01 of the Revised Code.” R.C. 1345.01(A). As a result, if the transaction falls under the HCSSA, then it cannot likewise be considered a “consumer transaction” under the CSPA.

When The HCSSA Applies to The Transaction

When analyzing whether the HCSSA applies to the transaction, the contract price, the parties, and the type of home at issue are all important factors to take into consideration.

If the contract price is less than twenty-five thousand dollars, then the transaction will not fall under the HCSSA. This is because the HCSSA defines a “home construction service contract” as “a contract between an owner and a supplier to perform home construction services, including services rendered based on a cost-plus contract, for an amount exceeding twenty-five thousand dollars.” R.C. 4722.01(C) (emphasis added).

The HCSSA also requires the parties to the transaction to be between an “owner” and “supplier.” The HCSSA’s definition of “owner” is much more expansive than the common understanding. For example, the definition includes “a tenant who occupies the dwelling unit on which the home construction service is performed. . . .” A “supplier” on the other hand is simply someone “who contracts with an owner to provide home construction services for compensation and who maintains in force a general liability insurance policy in an amount of not less than two hundred fifty thousand dollars.”

The type of structure that is the subject of the transaction will also be determinative whether the HCSSA applies. For example, the HCSSA only applies to residential buildings—it does not apply to structures with four or more dwelling units (except common areas of condominiums or individual dwelling units within the structure). And importantly, Ohio courts have held that the HCSSA only applies to the construction of new homes and not already-existing ones. See Beder, et al. v. Cerha Kitchen and Bath Design Studio, LLC, et al.,2022-Ohio-4463 (11th Dist.); see also A1 Heating & Cooling, Inc. v. Thomas, 2024-Ohio-109, ¶ 57 (5th Dist).

When The CSPA Applies to The Transaction

While the CSPA does not apply to pure real estate transactions (i.e., services that are required to transfer property), Ohio courts have held that the CSPA applies to consumer transactions involving services for the construction and remodeling of residential homes in certain instances. Because the CSPA is much broader than the HCSSA, this means that even if the transaction for home construction services does not fall within the HCSSA for one of the reasons discussed above, then it could still fall under the CSPA.

Differing Prohibited Acts and Damages Between the CSPA and HCSSA

Knowing which statute applies in a given situation is important as each statute has different prohibited acts and allows for different damages.

The CSPA imposes liability where there is a “unfair or deceptive” act under R.C. 1345.02, or an “unconscionable” act under R.C. 1345.03; whereas the HCSSA imposes liability for certain enumerated acts and practices regardless of whether they are necessarily considered unfair, deceptive, or unconscionable. See R.C. 4722.03.

While both allow compensatory damages or rescission of the contract in certain circumstances, the two statutes vary in permitting other forms of damages. For example, the CSPA allows for the plaintiff to be awarded treble damages in certain circumstances, while the HCSSA does not. In fact, the HCSSA caps non-economic damages at $5,000.  

If you are unsure whether the CSPA or HCSSA applies to your situation, or what recourse or remedies are potentially available, the attorneys at Gallagher Sharp are ready to assist you.