As Reported by the Senate Insurance, Commerce and Labor Committee

127th General Assembly Regular Session 2007-2008

Sub. S. B. No. 275

Senator Spada 

Cosponsors: Senators Buehrer, Coughlin, Grendell, Jacobson, Mason, Miller, D., Mumper, Padgett, Roberts, Schuler, Seitz, Stivers 

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A BILL

To amend sections 1345.01, 4740.04, and 4740.14 and

1

to enact sections 1312.20, 4722.01 to 4722.14,

2

and 4722.99 of the Revised Code to establish

3

laws governing the practices of home improvement

4

contractors and new residential construction

5

contractors and to provide civil remedies for

6

owners who are damaged by a contractor who

7

violates the law.

8

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1345.01, 4740.04, and 4740.14 be	9
amended and sections 1312.20, 4722.01, 4722.02, 4722.03, 4722.04,	10
4722.05, 4722.06, 4722.07, 4722.08, 4722.09, 4722.10, 4722.11,	11
4722.12, 4722.13, 4722.14, and 4722.99 of the Revised Code be	12
enacted to read as follows:	13

Sec. 1312.20.  (A) An express warranty that a residential	14
contractor offers to an owner complies with this division if that	15
warranty is in writing and includes all of the following:	16

(1) The name and address of the residential contractor and	17
any other person who is obligated to the owner under the warranty;	18

(2) The name and address of the owner to whom the warranty is	19
extended;	20

(3) The period of time for which the warranty remains	21
effective, which shall not be less than ten years for claims	22
related to structural integrity, including, but not limited to,	23
the foundation, roof, and basic core structure of the residence,	24
or less than two years for all other claims;	25

(4) A description of the portions of the warranty that	26
extends to a subsequent owner and the terms under which any	27
extension is effective; however, any warranty must be fully	28
transferable during the first two years of the existence of the	29
structure;	30

(5) The clear and conspicuous identification of any part or	31
portion of the home or premises that is excepted or excluded from	32
warranty coverage;	33

(6) An agreement to complete any construction covered by the	34
warranty in a reasonably efficient time, in a workerlike manner,	35
and in accordance with the state residential building code adopted	36
pursuant to Chapter 3781. of the Revised Code;	37

(7) Notice of the residential contractor's right under	38
section 1312.03 of the Revised Code to offer to resolve any	39
alleged construction defect before the owner may commence a	40
dwelling action or arbitration proceeding against the residential	41
contractor;	42

(8) A condition that any warranty dispute have its first	43
hearing under a neutral, nonbinding dispute resolution procedure	44
provided by any of the following:	45

(a) A local home builders trade association;

46

(b) The local better business bureau;

47

(c) A local court program;

48

(d) Any other mediation or dispute resolution procedure	49
agreed to by the parties.	50

(9) A provision that the owner and contractor will equally	51
share in the cost of any dispute resolution procedure;	52

(10) Notice that the warranty is backed by either a separate	53
policy of insurance or a performance bond in an amount equal to or	54
greater than the contract price. Any warranty that otherwise	55
complies with this section is required to be backed by either a	56
separate policy of insurance or a performance bond in an amount	57
equal to or greater than the contract price.	58

(11) Any other term or condition that does not conflict with	59
the Revised Code.	60

No words in the contract of sale or the deed nor merger of	61
the contract of sale into the deed shall exclude or modify any	62
aspect of an express warranty made pursuant to this division.	63

(B) Except for actions based on a claim arising from a	64
knowing misrepresentation of a material term or condition of the	65
contract, goods, or services, no person may bring an action	66
against a residential contractor under sections 1345.01 to	67
1345.13 of the Revised Code based on the construction of a	68
residential building if the contractor provided an express	69
warranty that complies with division (A) of this section.	70

(C)(1) No owner may bring a civil action for property damage,	71
breach of contract, or other similar claims alleging a	72
construction defect against a residential contractor who provides	73
an express warranty that complies with division (A) of this	74
section unless that owner first submits the complaint to the	75
dispute resolution procedure the residential construction advisory	76
committee establishes pursuant to section 4740.14 of the Revised	77
Code. All applicable statutes of limitation or repose are tolled	78
for the period of time the owner is engaged in the dispute	79
resolution procedure described in this division.	80

(2) Notwithstanding division (C)(1) of this section, an	81
action based on an intentional act or gross negligence in the	82
construction of a residential building or for personal injuries	83
directly and proximately caused by the negligence or breach of	84
contract of a residential contractor are not subject to this	85
section and shall not be submitted to the dispute resolution	86
procedure the residential construction advisory committee	87
established pursuant to section 4740.14 of the Revised Code.	88

(D) No owner may bring a claim based on a breach of warranty	89
against a residential contractor more than ten years after the	90
owner discovers a construction defect if the contractor provides	91
an express warranty that complies with division (A) of this	92
section.	93

(E) In any action for property damages, whether based in tort	94
or contract, brought against a residential contractor who offers	95
an express warranty that complies with division (A) of this	96
section for the construction of a residential building, each of	97
the following apply:	98

(1) An owner may allege that the contractor failed to	99
perform in a workerlike manner or that a contractor failed to	100
substantially comply with an applicable local building code or	101
the state residential building code.	102

(2) The burden of proof is on the owner to show that a	103
residential contractor did not perform in a workerlike manner or	104
failed to comply with a building code.	105

(F) The exclusive remedy for a breach of contract or a breach	106
of warranty by a residential contractor who provides an express	107
warranty that complies with division (A) of this section is	108
payment of the amount of actual or consequential damages caused	109
by the breach.	110

(G) Damages for emotional distress are not available against	111
a residential contractor who provides an express warranty that	112
complies with division (A) of this section unless the emotional	113
distress is associated with an actual physical injury.	114

(H) As used in this section, "workerlike manner" means that a	115
contractor performs the residential construction as a skilled	116
worker would do, using ordinary care and skill working in a	117
reasonably efficient manner, consistent with the residential	118
building standards the residential construction advisory board	119
establishes pursuant to section 4740.14 of the Revised Code.	120

Sec. 1345.01.  As used in sections 1345.01 to 1345.13 of the	121
Revised Code:	122

(A)(1) "Consumer transaction" means a sale, lease,	123
assignment, award by chance, or other transfer of an item of	124
goods, a service, a franchise, or an intangible, to an individual	125
for purposes that are primarily personal, family, or household,	126
or solicitation to supply any of these things. "Consumer	127

(2) "Consumer transaction" does not include any of the	128
following transactions:	129

(a) Transactions between persons, defined in sections 4905.03	130
and 5725.01 of the Revised Code, and their customers, except for	131
transactions in connection with residential mortgages between loan	132
officers, mortgage brokers, or nonbank mortgage lenders and their	133
customers; transactions	134

(b) Transactions between certified public accountants or	135
public accountants and their clients; transactions	136

(c) Transactions between attorneys, physicians, or dentists	137
and their clients or patients; and transactions	138

(d) Transactions between veterinarians and their patients	139
that pertain to medical treatment but not ancillary services;	140

(e) Except as otherwise indicated in division (A)(3) of this	141
section, transactions between owners and any of the following:	142

(i) Home improvement contractors licensed pursuant to section	143
4722.02 of the Revised Code;	144

(ii) Home improvement contractors who are not licensed	145
pursuant to section 4722.02 of the Revised Code and who fulfill	146
the criteria described in division (E) of section 4722.08 of the	147
Revised Code;	148

(iii) New residential construction contractors who fulfill	149
the criteria described in division (E) of section 1312.06 of the	150
Revised Code;	151

(iv) New residential construction contractors who fulfill	152
the criteria described in division (B) of section 1312.20 of the	153
Revised Code;	154

(v) New residential construction contractors who provide an	155
express warranty pursuant to the criteria described in division	156
(B) of section 1312.20 of the Revised Code;	157

(vi) Home improvement contractors who provide home	158
improvement goods or services valued at less than one thousand	159
dollars, except that if through changes, modifications, or	160
additions, the value of the home improvement goods or services	161
exceeds one thousand dollars, the transaction shall be a consumer	162
transaction under this section and all of the provisions of	163
sections 1345.01 to 1345.13 of the Revised Code shall apply except	164
for any provisions requiring or relating to written contracts.	165

(3) A transaction described in division (A)(2)(e) of this	166
section shall be considered a consumer transaction under division	167
(A)(1) of this section if the transaction is the basis of a claim	168
for fraud or misrepresentation and the fraud or misrepresentation	169
induces an owner to enter into a contract under this chapter.	170

(4) For purposes of division (A)(2) of this section, "owner,"	171
"home improvement contractor," and "new residential construction	172
contractor" have the same meanings as in section 4722.01 of the	173
Revised Code.	174

(B) "Person" includes an individual, corporation, government,	175
governmental subdivision or agency, business trust, estate, trust,	176
partnership, association, cooperative, or other legal entity.	177

(C) "Supplier" means a seller, lessor, assignor, franchisor,	178
or other person engaged in the business of effecting or soliciting	179
consumer transactions, whether or not the person deals directly	180
with the consumer. If the consumer transaction is in connection	181
with a residential mortgage, "supplier" does not include an	182
assignee or purchaser of the loan for value, except as otherwise	183
provided in section 1345.091 of the Revised Code. For purposes of	184
this division, in a consumer transaction in connection with a	185
residential mortgage, "seller" means a loan officer, mortgage	186
broker, or nonbank mortgage lender.	187

(D) "Consumer" means a person who engages in a consumer	188
transaction with a supplier.	189

(E) "Knowledge" means actual awareness, but such actual	190
awareness may be inferred where objective manifestations indicate	191
that the individual involved acted with such awareness.	192

(F) "Natural gas service" means the sale of natural gas,	193
exclusive of any distribution or ancillary service.	194

(G) "Public telecommunications service" means the	195
transmission by electromagnetic or other means, other than by a	196
telephone company as defined in section 4927.01 of the Revised	197
Code, of signs, signals, writings, images, sounds, messages, or	198
data originating in this state regardless of actual call routing.	199
"Public telecommunications service" excludes a system, including	200
its construction, maintenance, or operation, for the provision of	201
telecommunications service, or any portion of such service, by any	202
entity for the sole and exclusive use of that entity, its parent,	203
a subsidiary, or an affiliated entity, and not for resale,	204
directly or indirectly; the provision of terminal equipment used	205
to originate telecommunications service; broadcast transmission by	206
radio, television, or satellite broadcast stations regulated by	207
the federal government; or cable television service.	208

(H) "Loan officer" has the same meaning as in section 1322.01	209
of the Revised Code, except that it does not include an employee	210
of a bank, savings bank, savings and loan association, credit	211
union, or credit union service organization organized under the	212
laws of this state, another state, or the United States; an	213
employee of a subsidiary of such a bank, savings bank, savings and	214
loan association, or credit union; or an employee of an affiliate	215
that (1) controls, is controlled by, or is under common control	216
with, such a bank, savings bank, savings and loan association, or	217
credit union and (2) is subject to examination, supervision, and	218
regulation, including with respect to the affiliate's compliance	219
with applicable consumer protection requirements, by the board of	220
governors of the federal reserve system, the comptroller of the	221
currency, the office of thrift supervision, the federal deposit	222
insurance corporation, or the national credit union	223
administration.	224

(I) "Residential mortgage" or "mortgage" means an obligation	225
to pay a sum of money evidenced by a note and secured by a lien	226
upon real property located within this state containing two or	227
fewer residential units or on which two or fewer residential units	228
are to be constructed and includes such an obligation on a	229
residential condominium or cooperative unit.	230

(J) "Mortgage broker" has the same meaning as in section	231
1322.01 of the Revised Code, except that it does not include a	232
bank, savings bank, savings and loan association, credit union, or	233
credit union service organization organized under the laws of this	234
state, another state, or the United States; a subsidiary of such a	235
bank, savings bank, savings and loan association, or credit union;	236
an affiliate that (1) controls, is controlled by, or is under	237
common control with, such a bank, savings bank, savings and loan	238
association, or credit union and (2) is subject to examination,	239
supervision, and regulation, including with respect to the	240
affiliate's compliance with applicable consumer protection	241
requirements, by the board of governors of the federal reserve	242
system, the comptroller of the currency, the office of thrift	243
supervision, the federal deposit insurance corporation, or the	244
national credit union administration; or an employee of any such	245
entity.	246

(K) "Nonbank mortgage lender" means any person that engages	247
in a consumer transaction in connection with a residential	248
mortgage, except for a bank, savings bank, savings and loan	249
association, credit union, or credit union service organization	250
organized under the laws of this state, another state, or the	251
United States; a subsidiary of such a bank, savings bank, savings	252
and loan association, or credit union; or an affiliate that (1)	253
controls, is controlled by, or is under common control with, such	254
a bank, savings bank, savings and loan association, or credit	255
union and (2) is subject to examination, supervision, and	256
regulation, including with respect to the affiliate's compliance	257
with applicable consumer protection requirements, by the board of	258
governors of the federal reserve system, the comptroller of the	259
currency, the office of thrift supervision, the federal deposit	260
insurance corporation, or the national credit union	261
administration.	262

(L) For purposes of divisions (H), (J), and (K) of this	263
section:	264

(1) "Control" of another entity means ownership, control, or	265
power to vote twenty-five per cent or more of the outstanding	266
shares of any class of voting securities of the other entity,	267
directly or indirectly or acting through one or more other	268
persons.	269

(2) "Credit union service organization" means a CUSO as	270
defined in 12 C.F.R. 702.2.	271

Sec. 4722.01.  As used in this chapter:

272

(A) "Construction defect" means a deficiency that arises	273
directly or indirectly from a home improvement.	274

(B) "Construction project" means any home improvement or new	275
residential construction.	276

(C) "Contractor" means any home improvement contractor or new	277
residential construction contractor.	278

(D) "Dwelling action" means any of the following actions,	279
brought against a home improvement contractor, for damages or the	280
loss of use of real property, caused by a construction defect:	281

(1) A civil action in contract or tort for damages or	282
indemnity;	283

(2) Any action brought pursuant to Chapter 1345. of the	284
Revised Code;	285

(3) Any action brought pursuant to this chapter.

286

(E) "Home improvement" means any repair, alteration, or	287
addition to any residential building, industrialized unit,	288
manufactured home, or mobile home, or to any dwelling unit in	289
any type of structure. "Home improvement" does not include any	290
of the following:	291

(1) Construction of a new residential building,	292
industrialized unit, or manufactured home;	293

(2) Work performed on a structure that contains four or more	294
dwelling units, except for work on an individual dwelling unit	295
within that structure;	296

(3) Work performed on the common area of a condominium	297
property.	298

(F) "Home improvement contractor" means any person who	299
performs or offers to perform any home improvement for	300
compensation.	301

(G) "Industrialized unit," "manufactured home," and	302
"residential building" have the same meanings as in section	303
3781.06 of the Revised Code.	304

(H) "Mobile home" has the meaning as in section 4501.01 of	305
the Revised Code.	306

(I) "New residential construction" means any original	307
construction of a residential building.	308

(J) "New residential construction contractor" means any	309
person who performs or offers to perform any new residential	310
construction for compensation.	311

(K) "Owner" means the person who contracts with a contractor	312
for a construction project. "Owner" may include the owner of the	313
property, a tenant who occupies the dwelling unit on which the	314
construction project is performed, or a person the owner	315
authorizes to act on the owner's behalf to contract for a	316
construction project, and any other person who contracts for a	317
construction project.	318

Sec. 4722.02.  (A) The Ohio construction industry licensing	319
board shall issue licenses to home improvement contractors in a	320
manner prescribed by the board in rules it adopts under division	321
(B) of this section. Any home improvement contractor may apply	322
for a license by filing with the board a written application,	323
accompanied by the filing fee established pursuant to rules the	324
board adopts under division (B)(1) of this section. A home	325
improvement contractor is not required to maintain a license	326
issued pursuant to this section to perform construction projects	327
in this state.	328

(B) The Ohio construction industry licensing board shall	329
adopt rules in accordance with Chapter 119. of the Revised Code to	330
establish all of the following:	331

(1) Fees for license issuance and renewal, including late	332
fees, subject to the approval of the controlling board.	333

(2) Continuing education requirements for license renewal,	334
including a requirement that a licensed home improvement	335
contractor satisfactorily complete not less than ten hours of	336
continuing education courses per year.	337

(3) A code of ethics for home improvement contractors.

338

(4) Standards for minimal best practices of licensed home	339
improvement contractors that the licensed home improvement	340
contractors shall follow, including, but not limited to, rules	341
specifying unfair contractor practices.	342

(5) Disciplinary procedures for contractors who violate the	343
minimal best practices rules adopted by the board pursuant to	344
division (B)(4) of this section.	345

(6) Requirements by which an arbitration procedure, if any,	346
may be certified for use between contractors and owners to address	347
disputes, to assure that an arbitration procedure does not contain	348
unconscionable provisions, and to require the use of neutral	349
arbitrators.	350

(7) Any other requirement that is necessary and proper for	351
the implementation of this section.	352

(C) The Ohio construction industry licensing board has the	353
same powers as those described in divisions (A), (B), and (C) of	354
section 4740.10 of the Revised Code to discipline and investigate	355
a licensee who violates this chapter.	356

(D) Any person who wishes to make a complaint against a	357
person who, on the date the action or event upon which the	358
complaint is based held a valid license issued pursuant to this	359
section, shall submit the complaint in writing to the Ohio	360
construction industry licensing board within ten years after the	361
date the owner has knowledge of the event upon which the complaint	362
is based.	363

(E) Any contractor holding a valid, unexpired license may	364
renew the license by submitting an application to the Ohio	365
construction industry licensing board not more than ninety	366
calendar days before the expiration of the license, along with	367
the renewal fee the board establishes pursuant to rules it adopts	368
under division (B)(1) of this section and proof of compliance	369
with the applicable continuing education requirements.	370

(F) Upon application and within one calendar year after a	371
license has expired, the board may waive any of the requirements	372
for renewal of a license upon finding that an applicant	373
substantially meets the renewal requirements or that failure to	374
timely apply for renewal is due to excusable neglect. If the	375
board waives requirements for renewal of a license, the board may	376
impose conditions upon the licensee and assess a late renewal fee	377
of not more than double the usual renewal fee. The board shall	378
not reissue a license to an applicant until after that applicant	379
has satisfied every condition the board imposed upon that	380
applicant for reissuance of a license.	381

(G) Any person who previously held a license issued pursuant	382
to division (A) of this section that subsequently had that	383
licensed revoked by the board pursuant to a disciplinary action	384
under division (C) of this section or pursuant to rules adopted	385
under division (B)(5) of this section shall not engage in	386
construction projects in this state.	387

Sec. 4722.03.  (A) No contractor shall perform any	388
construction project the cost of which equals or exceeds one	389
thousand dollars unless that person enters into a written	390
contract with the owner. The contract shall include all	391
agreements and conditions related to the construction project,	392
including all of the following:	393

(1) The contractor's name, physical business address,	394
business telephone number, and, if licensed under section 4722.02	395
of the Revised Code, license number, but if not licensed, also the	396
contractor's taxpayer identification number and physical home	397
address;	398

(2) The owner's name, address, and telephone number;

399

(3) The address of the property where the construction	400
project is to be performed;	401

(4) A detailed description of the construction project,	402
including the goods and services to be furnished as part of the	403
construction project;	404

(5) The date or time period the construction project is to	405
begin and the date or time period it is to be completed;	406

(6) The total cost of the construction project;

407

(7) Any cost of installation, delivery, or other cost that	408
the total cost does not cover;	409

(8) The dated signatures of the owner and the contractor;

410

(9) A notice of applicable right to cure provisions in	411
substantially the following language:	412

"RIGHT TO CURE

413

IN THE EVENT THAT THE CONSTRUCTION PROJECT THAT IS THE	414
SUBJECT OF THIS CONTRACT RESULTS IN A CONSTRUCTION DEFECT, THE	415
CONTRACTOR NAMED IN THIS CONTRACT WILL HAVE THE RIGHT TO CURE THE	416
CONSTRUCTION DEFECT IN A MANNER CONSISTENT WITH CHAPTER 1312. OF	417
THE REVISED CODE IF THE CONSTRUCTION DEFECT ARISES FROM NEW	418
RESIDENTIAL CONSTRUCTION, OR CHAPTER 4722. OF THE REVISED CODE IF	419
THE CONSTRUCTION DEFECT ARISES FROM A HOME IMPROVEMENT. GENERALLY	420
THE RIGHT TO CURE PROVISIONS PROVIDE THE CONTRACTOR SIXTY (60)	421
DAYS TO CURE ANY CONSTRUCTION DEFECT, BUT SEE THE APPLICABLE	422
SECTIONS OF THE REVISED CODE TO DETERMINE SPECIFIC TIME AND NOTICE	423
REQUIREMENTS.";	424

(10) A notice stating whether or not the contractor has	425
performance bonds or other insurance beyond the insurance required	426
by section 4722.11 of the Revised Code that will cover losses	427
incurred through defects or breach of contract terms by the	428
contractor.	429

(B)(1) To determine the type of notice an owner requires when	430
the costs of a construction project exceed the estimate provided	431
in the contract, the contract shall include a statement in	432
substantially the following language:	433

"EXCESS COSTS

434

IF AT ANY TIME A CONSTRUCTION PROJECT REQUIRES EXTRA COSTS	435
ABOVE THE COST SPECIFIED OR ESTIMATED IN THE CONTRACT WHICH WERE	436
UNFORESEEN, BUT REASONABLY NECESSARY, AND THE TOTAL OF ALL EXTRA	437
COSTS TO DATE EXCEEDS TEN PER CENT OF THE CONTRACT COST, YOU	438
HAVE A RIGHT TO AN ESTIMATE OF THOSE EXCESS COSTS BEFORE THE	439
CONTRACTOR BEGINS WORK RELATED TO THOSE COSTS. INITIAL YOUR	440
CHOICE OF THE TYPE OF ESTIMATE YOU REQUIRE:	441

..... written estimate ..... oral estimate"	442

(2) If the total amount of unforeseen, but reasonably	443
necessary excess costs of a construction project at any time	444
exceeds ten per cent of the cost estimated or specified in the	445
contract, prior to performing the work related to the excess	446
costs, the contractor shall provide an owner with the type of	447
notice the owner has designated in the contract.	448

(3) If the contract stipulates that the specified cost of the	449
construction project is a firm price and the contractor will not	450
charge the owner with any excess costs, the contractor need not	451
comply with the notice requirements of this division.	452

(4) An owner is not liable for any excess costs unless the	453
costs were unforeseen, but reasonably necessary, and unless the	454
contractor complies with this section's notice requirements.	455

Sec. 4722.04. No contractor shall do any of the following:

456

(A) Prior to commencing work related to the construction	457
project, fail to enter into a written contract that complies	458
with this chapter;	459

(B) After entering into a contract with an owner and prior to	460
commencing any work that is related to an excess cost, fail to	461
provide an estimate of the excess costs as this chapter requires;	462

(C) After entering into a contract with an owner, do any of	463
the following:	464

(1) Fail to disclose, prior to the owner's acceptance of any	465
goods or work related to an excess cost, that in failing to	466
approve an excess cost, completion of the work may not be possible	467
and a charge may be imposed for any disassembly, reassembly, or	468
partially completed work, which shall be directly related to the	469
actual labor or parts involved;	470

(2) Charge for any excess cost that the owner has not	471
approved;	472

(3) Represent that repairs or work have been performed when	473
such is not the fact;	474

(4) Fail to provide the owner, upon the owner's request, a	475
written itemized list of repairs performed or services rendered,	476
including a list of parts or materials and a statement of whether	477
they are used, manufactured, or rebuilt, if not new, the cost to	478
the owner, the amount charged for labor, and the identity of the	479
individual performing the repair or service;	480

(5) Fail to tender to the owner any replaced parts, unless	481
the parts are to be rebuilt or sold by the contractor, or returned	482
to the manufacturer in connection with a warranted repair or	483
service, and the intended reuse or return is made known to the	484
owner prior to commencing any repair or services;	485

(6) Fail to provide a full refund for any goods or services	486
that the contractor has failed to deliver in accordance with the	487
terms and conditions of the contract required by section 4722.03	488
of the Revised Code and for which the contractor has received	489
payment;	490

(7) Fail to provide to the owner, upon the owner's request,	491
a written, itemized receipt for any item of goods that are left	492
with, or turned over to, the contractor for repair or services.	493
The receipt shall include all of the following:	494

(a) The identity of the person who will perform the repair or	495
services;	496

(b) The name and dated signature of the person or	497
representative who actually accepts the goods;	498

(c) A description including make and model number or other	499
features that will reasonably identify the goods that are turned	500
over and the repair or services that are to be performed.	501

(D) Make the performance of any construction project	502
contingent upon a consumer's waiver of any rights this chapter	503
provides;	504

(E) Represent that repairs, services, or work is necessary	505
when such is not the fact;	506

(F) Represent that an item of goods or any part thereof that	507
is being inspected or diagnosed for a construction project is in a	508
dangerous condition, or that its continued use may be harmful,	509
when such is not the fact;	510

(G) Materially understate or misstate the estimated cost of	511
the construction project;	512

(H) Fraudulently misrepresent any aspect of the transaction	513
or the nature or the quality of the work or materials;	514

(I) Fail at the time any owner signs or initials any	515
document to provide the owner with a copy of the document;	516

(J) Fail to disclose to the owner prior to the commencement	517
of any repair or service, that any part of the repair or service	518
will be performed by a person other than the contractor or	519
employee of the contractor if the contract disclaims any	520
warranty of the repair or service that the other person	521
performs;	522

(K) Represent that repairs or services must be performed	523
away from the property on which the construction project is being	524
performed when that is not the fact.	525

Sec. 4722.05. (A) A home improvement contractor who is not	526
licensed under section 4722.02 of the Revised Code may take as a	527
down payment not more than ten per cent of the contract price	528
before the home improvement contractor's performance that is	529
required by the contract is completed, except a home improvement	530
contractor may take as a down payment not more than seventy-five	531
per cent of the total cost of any special order item that is	532
otherwise not returnable or usable before the home improvement	533
contractor's performance that is required by the contract is	534
completed.	535

(B) A contractor shall begin work on the date or within	536
the time period the contract specifies and shall complete the	537
construction project pursuant to any agreed-upon schedule unless	538
delay is due to reasonable cause beyond the contractor's control.	539
In no case shall an owner be required to pay more than ten per	540
cent of the value of the work completed by the contractor.	541

Sec. 4722.06.  (A) No owner shall commence arbitration	542
proceedings or file a dwelling action against a home improvement	543
contractor unless, at least sixty days before commencing the	544
proceedings or filing the action, the owner provides the home	545
improvement contractor with written notice of the construction	546
defect that would be the basis of the arbitration proceedings or	547
the dwelling action. The notice shall be in writing and mailed,	548
sent by telegram, delivered in person, or sent by any means the	549
home improvement contractor has indicated communications may be	550
sent, including facsimile transmission and electronic mail. The	551
notice shall substantially comply with the requirements set forth	552
in division (B) of this section.	553

(B) Any notice that an owner provides to a home improvement	554
contractor pursuant to this section shall substantially do all of	555
the following:	556

(1) Assert a claim involving a construction defect by	557
itemizing and describing those construction defects;	558

(2) Include or attach a copy of any documentation concerning	559
the construction defects prepared by a person who inspected the	560
building for the owner;	561

(3) Include the name, address, and telephone number of the	562
owner and the home improvement contractor and the address of the	563
building that is the subject of the claim.	564

(C) After receiving a notice of defects, a home improvement	565
contractor may request an owner to provide a description of the	566
cause of the defects and the nature and extent of repairs	567
necessary to remedy the defects. An owner may provide this	568
information if the owner has knowledge of the cause of the defects	569
and the repairs necessary to remedy those defects.	570

(D) If a home improvement contractor files a mechanics lien	571
or commences any type of arbitration proceedings or legal action	572
against an owner, this section does not apply, and the owner	573
immediately may counterclaim, commence arbitration proceedings, or	574
file a dwelling action against the home improvement contractor.	575

Sec. 4722.07.  (A) A home improvement contractor shall	576
provide the owner with a good faith written response to any notice	577
provided pursuant to section 4722.06 of the Revised Code. The	578
response shall be provided within twenty-one days after the owner	579
mailed the notice, delivered it by personal delivery, or	580
transmitted it by telegram, facsimile, or electronic mail. In the	581
response, the home improvement contractor shall offer to take one	582
of the following actions:	583

(1) Inspect the building that is the subject of the claim;

584

(2) Compromise and settle the claim without an inspection;

585

(3) Dispute the claim.

586

(B) If a home improvement contractor fails to respond as	587
required by division (A) of this section or disputes the claim, an	588
owner is deemed to have complied with this section and may	589
commence arbitration proceedings or file a dwelling action without	590
further notice to the home improvement contractor.	591

(C) If an owner rejects a home improvement contractor's offer	592
to inspect the property or to compromise and settle a claim, the	593
owner shall notify the home improvement contractor of that	594
rejection within fourteen days after receiving the home	595
improvement contractor's offer. The rejection notice shall be in	596
writing and include a reason for the rejection.	597

(D) After providing a rejection notice, an owner has complied	598
with this section and may commence arbitration proceedings or file	599
a dwelling action without further notice to the contractor.	600

Sec. 4722.08.  (A) If an owner accepts a home improvement	601
contractor's offer to inspect the building, the owner shall notify	602
the home improvement contractor of that acceptance within fourteen	603
days after receipt of the notice described in division (A) of	604
section 4722.07 of the Revised Code. After accepting the offer to	605
inspect, the owner shall allow the home improvement contractor	606
reasonable access to the building during normal working hours. The	607
home improvement contractor shall inspect the building within	608
fourteen days after the owner notifies the home improvement	609
contractor that the owner accepts the offer to inspect the	610
building. The home improvement contractor shall take reasonable	611
measures to determine the nature and cause of the construction	612
defects and the appropriate remedy. The measures the contractor	613
takes may include, but are not limited to, testing.	614

(B) Within ten days after a home improvement contractor	615
conducts an inspection as described in division (A) of this	616
section, the home improvement contractor shall provide the owner	617
with one of the following:	618

(1) A written offer to remedy the defects at no cost to the	619
owner, an inspection report, a prediction of the additional	620
construction work necessary to remedy each defect, and a timetable	621
for completing the work necessary to remedy the defects;	622

(2) A written offer to settle the claim;

623

(3) A written statement asserting that the home improvement	624
contractor does not intend to remedy the defects.	625

(C) An owner has complied with sections 4722.06, 4722.07,	626
4722.08, 4722.09, and 4722.10 of the Revised Code and may commence	627
arbitration proceedings or file a dwelling action without further	628
notice to the home improvement contractor if any of the following	629
occur:	630

(1) The home improvement contractor does not inspect the	631
property within fourteen days after the owner notifies the home	632
improvement contractor that the owner accepts the offer to	633
inspect.	634

(2) Within ten days after the home improvement contractor	635
conducts the inspection, the home improvement contractor does not	636
provide a written response as required under division (B) of this	637
section.	638

(3) The home improvement contractor notifies the owner that	639
the home improvement contractor does not intend to remedy the	640
defects.	641

(4) The home improvement contractor fails to remedy the	642
defects in the manner the home improvement contractor describes or	643
within the timetable the home improvement contractor provides.	644

(D) If a home improvement contractor makes or provides for	645
any repair or replacement to remedy a construction defect, the	646
home improvement contractor may take reasonable steps to document	647
the repair or replacement and to inspect the repair or replacement	648
or have it inspected.	649

(E) If an owner accepts an offer that a home improvement	650
contractor makes in compliance with sections 4722.06, 4722.07,	651
4722.08, 4722.09, and 4722.10 of the Revised Code to compromise	652
and settle the claim, to remedy the defects, or to settle the	653
claim, and the contractor fulfills that offer in compliance with	654
sections 4722.06, 4722.07, 4722.08, 4722.09, and 4722.10 of the	655
Revised Code, the owner is barred from bringing a dwelling action	656
or commencing arbitration proceedings for the claim, except for	657
claims of fraud or misrepresentation and the fraud or	658
misrepresentation induces an owner to enter into a contract.	659

Sec. 4722.09.  Unless otherwise indicated in sections	660
4722.06, 4722.07, 4722.08, and 4722.10 of the Revised Code, an	661
owner has complied with those sections and may commence	662
arbitration proceedings or file a dwelling action sixty days after	663
the owner mails, delivers, sends by facsimile transmission or	664
electronic mail, or otherwise provides the home improvement	665
contractor with a defect notice pursuant to division (A) of	666
section 4722.06 of the Revised Code.	667

Sec. 4722.10.  (A) All applicable statutes of limitation or	668
repose are tolled from the time the owner sends a notice of defect	669
to a home improvement contractor pursuant to section 4722.06 of	670
the Revised Code until the owner has complied with this chapter.	671

(B) If an owner files a dwelling action or commences	672
arbitration proceedings without having complied with sections	673
4722.06, 4722.07, 4722.08, and 4722.09 of the Revised Code, the	674
court or arbitrator shall dismiss that action or those proceedings	675
without prejudice. The owner may again file a dwelling action or	676
commence arbitration proceedings after complying with those	677
sections.	678

(C) Sections 4722.06, 4722.07, 4722.08, and 4722.09 of the	679
Revised Code do not apply to any civil action in tort alleging	680
personal injury or wrongful death to a person resulting from a	681
construction defect.	682

(D) This section and sections 4722.06, 4722.07, 4722.08, and	683
4722.09 of the Revised Code do not apply to any dwelling action	684
arising out of a construction defect where that construction	685
defect will jeopardize the welfare, health, or safety of the owner	686
or any other occupant of the residential building or the	687
residential building has been rendered uninhabitable by the	688
construction defect.	689

Sec. 4722.11. A contractor shall maintain general liability	690
insurance in an amount not less than two hundred fifty thousand	691
dollars.	692

Sec. 4722.12. (A) An owner may initiate a civil action in a	693
court of common pleas for damages due to any breach of contract or	694
for breach of any duty this chapter imposes. The court may grant	695
an injunction, a temporary restraining order, actual damages, or	696
other appropriate relief for a violation of this chapter.	697

(B) The court may award the owner treble damages if it finds	698
a contractor knowingly committed an act or practice that	699
violates this chapter.	700

(C) In any action pursuant to this chapter, the court may	701
award to the prevailing party a reasonable attorney's fee limited	702
to the work reasonably performed, if either of the following	703
applies:	704

(1) The owner complaining of the act or practice that	705
violated this chapter has brought or maintained an action that is	706
groundless, and the owner filed or maintained the action in bad	707
faith;	708

(2) The contractor knowingly committed an act or practice	709
that violates this chapter.	710

(D) Nothing in this section limits any other action brought	711
by an owner or contractor at common law.	712

Sec. 4722.13. The attorney general may initiate criminal	713
proceedings for a prosecution under section 4722.99 of the Revised	714
Code, or any other section of the Revised Code for claims related	715
to or arising out of a construction project, by presenting	716
evidence of criminal violations to the prosecuting attorney of	717
the city or county in which the offense may be prosecuted. If the	718
prosecuting attorney notifies the attorney general in writing that	719
the prosecuting attorney does not wish to prosecute the	720
violations, or at the request of the prosecuting attorney, the	721
attorney general may proceed in the prosecution with all the	722
rights, privileges, and powers conferred by law on prosecuting	723
attorneys, including the power to appear before grand juries and	724
to interrogate witnesses before grand juries.	725

Sec. 4722.14. (A) Any instrumentality, as defined in division	726
(B)(6) of section 2981.01 of the Revised Code, of a contractor	727
convicted of an offense in connection with a construction project,	728
shall be subject to the forfeiture provisions of Chapter 2981. of	729
the Revised Code.	730

(B) If a contractor is convicted of a criminal offense in	731
connection with a construction project, the sentencing court, when	732
sentencing that contractor, shall consider and specify a plan of	733
restitution to the owner of the property harmed by the offense,	734
pursuant to any community control sanctions ordered pursuant to	735
sections 2929.15 to 2929.28 of the Revised Code.	736

Sec. 4722.99.  (A) Whoever knowingly violates section 4722.03	737
of the Revised Code is guilty of a misdemeanor of the fourth	738
degree.	739

(B) Any contractor who knowingly engages in a pattern of	740
misrepresentation to consumers or knowingly and improperly	741
represents quality, timeliness, or quantity of the work that was	742
or is to be performed for a construction project is guilty of a	743
misdemeanor of the first degree.	744

(C) Whoever violates division (F) of section 4722.02 of the	745
Revised Code is guilty of a misdemeanor of the first degree for	746
each violation.	747

Sec. 4740.04.  The administrative section of the Ohio	748
construction industry licensing board is responsible for the	749
administration of this chapter and shall do all of the following:	750

(A) Schedule the contractor examinations each of the other	751
sections of the board directs. Each type of examination shall be	752
held at least four times per year.	753

(B) Select and contract with one or more persons to do all of	754
the following relative to the examinations:	755

(1) Prepare, administer, score, and maintain the	756
confidentiality of the examinations;	757

(2) Be responsible for all the expenses required to fulfill	758
division (B)(1) of this section;	759

(3) Charge an applicant a fee in an amount the	760
administrative section of the board authorizes for administering	761
the examination;	762

(4) Design the examination for each type of contractor to	763
determine an applicant's competence to perform that type of	764
contracting.	765

(C) Issue and renew licenses as follows:

766

(1) Issue a license to any individual who the appropriate	767
section of the board determines is qualified pursuant to section	768
4740.06 of the Revised Code to hold a license and has attained a	769
score on the examination that the appropriate section authorizes	770
for the licensed trade.	771

(a) Each license shall include a license number and an	772
expiration date.	773

(b) Each license issued to an individual who holds more than	774
one valid license shall contain the same license number and	775
expiration date as the original license issued to that individual.	776

(2) Renew licenses for individuals who meet the renewal	777
requirements of section 4740.06 of the Revised Code.	778

(D) Make an annual written report to the director of commerce	779
on proceedings had by or before the board for the previous year	780
and make an annual statement of all money received and expended by	781
the board during the year;	782

(E) Keep a record containing the name, address, the date on	783
which the board issues or renews a license to, and the license	784
number of, every heating, ventilating, and air conditioning	785
contractor, refrigeration contractor, electrical contractor,	786
plumbing contractor, and hydronics contractor issued a license	787
pursuant to this chapter;	788

(F) Regulate a contractor's use and display of a license	789
issued pursuant to this chapter and of any information contained	790
in that license;	791

(G) Adopt rules in accordance with Chapter 119. of the	792
Revised Code as necessary to properly discharge the administrative	793
section's duties under this chapter. The rules shall include, but	794
not be limited to, the following:	795

(1) Application procedures for examinations;

796

(2) Specifications for continuing education requirements for	797
license renewal that address all of the following:	798

(a) A requirement that an individual who holds any number of	799
valid and unexpired licenses accrue a total of ten hours of	800
continuing education courses per year;	801

(b) Fees the board charges to persons who provide continuing	802
education courses, in an amount of twenty-five dollars annually	803
for each person approved to provide courses, not more than ten	804
dollars plus one dollar per credit hour for each course offered,	805
and one dollar per credit hour of instruction per attendee;	806

(c) A provision limiting approval of continuing education	807
courses to one year.	808

(3) Requirements for criminal records checks of applicants	809
under section 4776.03 of the Revised Code.	810

(H) Adopt any continuing education curriculum as the other	811
sections of the board establish or approve pursuant to division	812
(C) of section 4740.05 of the Revised Code;	813

(I) Keep a record of its proceedings and do all things	814
necessary to carry out this chapter;	815

(J) Fulfill the duties and obligations required by section	816
4722.02 of the Revised Code.	817

Sec. 4740.14.  (A) There is hereby created within the	818
department of commerce the residential construction advisory	819
committee consisting of nine persons the director of commerce	820
appoints. Of the advisory committee's members, three shall be	821
general contractors who have recognized ability and experience in	822
the construction of residential buildings, two shall be building	823
officials who have experience administering and enforcing a	824
residential building code, one, chosen from a list of three names	825
the Ohio fire chief's association submits, shall be from the fire	826
service certified as a fire safety inspector who has at least ten	827
years of experience enforcing fire or building codes, one shall be	828
a residential contractor who has recognized ability and experience	829
in the remodeling and construction of residential buildings, one	830
shall be an architect registered pursuant to Chapter 4703. of the	831
Revised Code, with recognized ability and experience in the	832
architecture of residential buildings, and one, chosen from a list	833
of three names the Ohio municipal league submits to the director,	834
shall be a mayor of a municipal corporation in which the Ohio	835
residential building code is being enforced in the municipal	836
corporation by a certified building department.	837

(B) The director shall make appointments to the advisory	838
committee within ninety days after May 27, 2005. Terms of office	839
shall be for three years, with each term ending on the date three	840
years after the date of appointment. Each member shall hold office	841
from the date of appointment until the end of the term for which	842
the member was appointed. The director shall fill a vacancy in the	843
manner provided for initial appointments. Any member appointed to	844
fill a vacancy in an unexpired term shall hold office for the	845
remainder of that term.	846

(C) The advisory committee shall do all of the following:

847

(1) Recommend to the board of building standards a building	848
code for residential buildings. The committee shall recommend a	849
code that it models on a residential building code a national	850
model code organization issues, with adaptations necessary to	851
implement the code in this state. If the board of building	852
standards decides not to adopt a code the committee recommends,	853
the committee shall revise the code and resubmit it until the	854
board adopts a code the committee recommends as the state	855
residential building code;	856

(2) Advise the board regarding the establishment of standards	857
for certification of building officials who enforce the state	858
residential building code;	859

(3) Assist the board in providing information and guidance to	860
residential contractors and building officials who enforce the	861
state residential building code;	862

(4) Advise the board regarding the interpretation of the	863
state residential building code;	864

(5) Develop guidelines to use in determining what is a	865
"workerlike manner" in the construction and rehabilitation of	866
residential buildings as referenced in section 1312.20 of the	867
Revised Code;	868

(6) Adopt rules under Chapter 119. of the Revised Code to	869
establish dispute resolution procedures for the timely resolution	870
of disputes between an owner and a contractor regarding an alleged	871
breach of warranty or the construction of a residential building	872
when the contractor has provided an express warranty that complies	873
with division (A) of section 1312.20 of the Revised Code. The	874
rules shall specify that decisions made pursuant to these dispute	875
resolution procedures are not binding on the owner or other	876
parties involved in the dispute;	877

(7) Provide other assistance the committee considers	878
necessary.	879

(D) In making its recommendation to the board pursuant to	880
division (C)(1) of this section, the advisory committee shall	881
consider all of the following:	882

(1) The impact that the state residential building code may	883
have upon the health, safety, and welfare of the public;	884

(2) The economic reasonableness of the residential building	885
code;	886

(3) The technical feasibility of the residential building	887
code;	888

(4) The financial impact that the residential building code	889
may have on the public's ability to purchase affordable housing.	890

(E) Members of the advisory committee shall receive no salary	891
for the performance of their duties as members, but shall receive	892
their actual and necessary expenses incurred in the performance of	893
their duties as members of the advisory committee and shall	894
receive a per diem for each day in attendance at an official	895
meeting of the committee, to be paid from the industrial	896
compliance operating fund in the state treasury, using fees	897
collected in connection with residential buildings pursuant to	898
division (F)(2) of section 3781.102 of the Revised Code and	899
deposited in that fund.	900

(F) The advisory committee is not subject to divisions (A)	901
and (B) of section 101.84 of the Revised Code.	902

Section 2. That existing sections 1345.01, 4740.04, and	903
4740.14 of the Revised Code are hereby repealed.	904