Construction disputes and the 
Home Solicitation Act 

The Home Solicitation Act

Ohio's Home Solicitation Act ("HSA"), Ohio Revised Code § 1345.21 et seq. governs home solicitation sales. The HSA provides that:

"Home solicitation sale" means a sale of consumer goods or services in which the seller or a person acting for him engages in a personal solicitation of the sale at a residence of the buyer, including solicitations in response to or following an invitation by the buyer, and the buyer's agreement or offer to purchase is there given to the seller or a person acting for him, or in which the buyer's agreement or offer to purchase is made at a place other than the seller's place of business.

§1345.21(A). The HSA provides buyers of "consumer goods or services" with certain rights, and places certain requirements on seller. Consumer goods or services is defined in the HSA as:

goods or services purchased, leased, or rented primarily for personal, family, or household purposes, including courses or instruction or training regardless of the purpose for which they are taken.

§1345.21(E).

Home construction or remodeling covered by HSA

The HSA applies to home construction or remodeling, unless the buyer contacts the contractor, and the contractor has a business location open to the general public where the contractor customarily provides the goods and services provided to the buyer. (R. Bauer & Sons Roofing and Siding, inc. v. Kinderman, 83 ohio App. 3d 53 Montgomery Cty. 1992)). In the event that a contractor works out of his home, the contractor more than likely will not be within this exception.

The HSA has been interpreted by the courts of Ohio to apply to new home construction and to home improvements. Courts have extended the HSA to cover:

• new home construction (Keiber v. Spicer, 83 Ohio App. 3d 391 (Greene Cty. 1993; Fesman v. Berger, LEXIS 5327 (Hamilton Cty. 1995));
• construction of a new attached garage (Stalnaker v. Kriebel, LEXIS 136 (Mahoning Cty. 1996));
• installation of a new HVAC system in a home (Beck v. Trane, (Hamilton Cty. 1990))
• kitchen remodeling (Collins v. Kingsmen, LEXIS 123 (Cuyahoga Cty. 1995); and
• roofing, and window and door replacement (R. Bauer & Sons Roofing and Siding, inc. v. Kinderman, 83 ohio App. 3d 53 montgomery Cty. 1992)).

Because of the applicability of the HSA to home construction and improvement, contractors need to follow the HSA to avoid the remedies provided to consumers under the Act.

Buyer's rights

Among the rights provided to buyers is the right to cancel a sale "until midnight of the third business day after the buyer signs an agreement or offer to purchase." As stated in the HSA:

In addition to any right otherwise to revoke an offer, the buyer has the right to cancel a home solicitation sale until midnight of the third business day after the day on which the buyer signs an agreement or offer to purchase. Cancellation is evidenced by the buyer giving written notice of cancellation to the seller at the address stated in the agreement or offer to purchase. . . . Notice of cancellation need not take a particular form and is sufficient if it indicates, by any form of written expression, the intention of the buyer not to be bound by the home solicitation sale.

§1345.22.

Seller's obligations

Among the obligations on contractors are the requirement of a written contract, in the same language as used in any oral presentation. The contract must give notice of the seller's right to cancel, and that notice must also be given orally, and the contract must provide a cancellation form. Also, a contractor may not insist on a cognovit promissory note to finance construction.

Notice of the three day right to cancel

Notice of the buyer's right to cancel must be in the contract, using this specific language:

You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation for an explanation of this right.

§1345.23(B)(1). The contractor must also notify the buyer of the right to cancel. In the event that the sale is cancelled, any money received must be returned, and any note or other evidence of indebtedness must be returned. §1345.23(D)(4). A form of cancellation for the buyer's use must also be provided. The form must be as follows:

NOTICE OF CANCELLATION

(enter date of transaction) (Date)

You may cancel this transaction, without any penalty or obligation, within three business days from the above date.

If you cancel, any property traded in, any payments made by you under the contract or sale, and any negotiable instrument executed by you will be returned within ten business days following receipt by the seller of your cancellation notice, and any security interest arising out of the transaction will be cancelled. If you cancel, you must make available to the seller at your residence, in substantially as good condition as when received, any goods delivered to you under this contract or sale; or you may if you wish, comply with the instructions of the seller regarding the return shipment of the goods at the seller's expense and risk.

If you do make the goods available to the seller and the seller does not pick them up within twenty days of the date of your notice of cancellation, you may retain or dispose of the goods without any further obligation. If you fail to make the goods available to the seller, or if you agree to return the goods to the seller and fail to do so, then you remain liable for performance of all obligations under the contract.

To cancel this transaction, mail or deliver a signed and dated copy of this cancellation notice or any other written notice, or send a telegram, to (Name of seller), at (address of seller's place of business)

not later than midnight of (Date)

I hereby cancel this transaction.

(Date)(Buyer's signature)

Remedies for violation of the HSA

If a contractor violates the HSA by not providing the buyer with notice of the right to cancel, the buyer may cancel the contract at any time. This can lead to inequitable results if the contact is cancelled after the contractor commences its work. Conceivably, a contractor may be required to return any money paid by the buyer prior to cancellation. Clemens v. Janus Builders Home Improvement Contractor, 100 Ohio App. 3d 423 (Montgomery Cty. 1995).

The only requirement for the buyer after cancellation is to make the goods available to the seller and that:

The goods made available shall not have been diminished in quantity nor subjected to unreasonable wear or use. The buyer is not obligated to make the goods available at any place other than his residence. If the buyer does make the goods available to the seller and the seller fails to pick them up within twenty days of the buyer's notice of cancellation the goods become the property of the buyer without obligation to pay for them. The buyer has the duty to take reasonable care of the goods in his possession before cancellation and twenty days thereafter, during which time the goods are otherwise at the seller's risk.

§1345.27. However, if the goods and services performed by the contractor have been incorporated into the house, and cannot be removed without waste, the buyer may retain the goods and services, thereby receiving a windfall. Clemens, supra. Although there is case law under the Consumer Sales Practices Act providing that the buyer would be obligated to pay the contractor the reasonable value conferred on the buyer by the contractor, courts have not applied that principle to the HSA. Clemens, supra; R. Bauer & Sons, supra.

Pursuant to HSA §1345.28, if a contractor violates the HSA in any way, the contractor is deemed to have violated the Consumer Sales Protection Act ("CSPA"), Ohio Revised Code § 1345.01 et seq. The CSPA allows buyers to either rescind the contact or sue for three times the damages sustained as a result of the violation. §1345.09(B). Successful parties may also be awarded the attorneys fees expended in bringing the action. §1345.09(F).

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