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Sub. H. B. No. 383 As Reported by the Senate Insurance, Commerce and Labor CommitteeAs Reported by the Senate Insurance, Commerce and Labor Committee
129th General Assembly | Regular Session | 2011-2012 |
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Cosponsors:
Representatives Grossman, Combs, McGregor, Roegner, Bubp, Letson, Amstutz, Barnes, Blair, Blessing, Boose, Huffman, Milkovich, Rose, Sears, Stebelton, Winburn, Young Speaker Batchelder
Senators Bacon, Schaffer, Jones
A BILL
To amend section 1345.01 and to enact sections
4722.01 to 4722.04 and 4722.06 to 4722.08 of the
Revised Code to make changes relative to
residential construction and the Consumer Sales
Practices Act and to establish laws governing the
practices of home construction service suppliers.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 1345.01 be amended and sections
4722.01, 4722.02, 4722.03, 4722.04, 4722.06, 4722.07, and 4722.08
of the Revised Code be enacted to read as follows:
Sec. 1345.01. As used in sections 1345.01 to 1345.13 of the
Revised Code:
(A) "Consumer transaction" means a sale, lease, assignment,
award by chance, or other transfer of an item of goods, a service,
a franchise, or an intangible, to an individual for purposes that
are primarily personal, family, or household, or solicitation to
supply any of these things. "Consumer transaction" does not
include transactions between persons, defined in sections 4905.03
and 5725.01 of the Revised Code, and their customers, except for
transactions involving a loan made pursuant to sections 1321.35 to
1321.48 of the Revised Code and transactions in connection with
residential mortgages between loan officers, mortgage brokers, or
nonbank mortgage lenders and their customers; transactions
involving a home construction service contract as defined in
section 4722.01 of the Revised Code; transactions between
certified public accountants or public accountants and their
clients; transactions between attorneys, physicians, or dentists
and their clients or patients; and transactions between
veterinarians and their patients that pertain to medical treatment
but not ancillary services.
(B) "Person" includes an individual, corporation, government,
governmental subdivision or agency, business trust, estate, trust,
partnership, association, cooperative, or other legal entity.
(C) "Supplier" means a seller, lessor, assignor, franchisor,
or other person engaged in the business of effecting or soliciting
consumer transactions, whether or not the person deals directly
with the consumer. If the consumer transaction is in connection
with a residential mortgage, "supplier" does not include an
assignee or purchaser of the loan for value, except as otherwise
provided in section 1345.091 of the Revised Code. For purposes of
this division, in a consumer transaction in connection with a
residential mortgage, "seller" means a loan officer, mortgage
broker, or nonbank mortgage lender.
(D) "Consumer" means a person who engages in a consumer
transaction with a supplier.
(E) "Knowledge" means actual awareness, but such actual
awareness may be inferred where objective manifestations indicate
that the individual involved acted with such awareness.
(F) "Natural gas service" means the sale of natural gas,
exclusive of any distribution or ancillary service.
(G) "Public telecommunications service" means the
transmission by electromagnetic or other means, other than by a
telephone company as defined in section 4927.01 of the Revised
Code, of signs, signals, writings, images, sounds, messages, or
data originating in this state regardless of actual call routing.
"Public telecommunications service" excludes a system, including
its construction, maintenance, or operation, for the provision of
telecommunications service, or any portion of such service, by any
entity for the sole and exclusive use of that entity, its parent,
a subsidiary, or an affiliated entity, and not for resale,
directly or indirectly; the provision of terminal equipment used
to originate telecommunications service; broadcast transmission by
radio, television, or satellite broadcast stations regulated by
the federal government; or cable television service.
(H)(1) "Loan officer" means an individual who for
compensation or gain, or in anticipation of compensation or gain,
takes or offers to take a residential mortgage loan application;
assists or offers to assist a buyer in obtaining or applying to
obtain a residential mortgage loan by, among other things,
advising on loan terms, including rates, fees, and other costs;
offers or negotiates terms of a residential mortgage loan; or
issues or offers to issue a commitment for a residential mortgage
loan. "Loan officer" also includes a loan originator as defined in
division (E)(1) of section 1322.01 of the Revised Code.
(2) "Loan officer" does not include an employee of a bank,
savings bank, savings and loan association, credit union, or
credit union service organization organized under the laws of this
state, another state, or the United States; an employee of a
subsidiary of such a bank, savings bank, savings and loan
association, or credit union; or an employee of an affiliate that
(a) controls, is controlled by, or is under common control with,
such a bank, savings bank, savings and loan association, or credit
union and (b) is subject to examination, supervision, and
regulation, including with respect to the affiliate's compliance
with applicable consumer protection requirements, by the board of
governors of the federal reserve system, the comptroller of the
currency, the office of thrift supervision, the federal deposit
insurance corporation, or the national credit union
administration.
(I) "Residential mortgage" or "mortgage" means an obligation
to pay a sum of money evidenced by a note and secured by a lien
upon real property located within this state containing two or
fewer residential units or on which two or fewer residential units
are to be constructed and includes such an obligation on a
residential condominium or cooperative unit.
(J)(1) "Mortgage broker" means any of the following:
(a) A person that holds that person out as being able to
assist a buyer in obtaining a mortgage and charges or receives
from either the buyer or lender money or other valuable
consideration readily convertible into money for providing this
assistance;
(b) A person that solicits financial and mortgage information
from the public, provides that information to a mortgage broker or
a person that makes residential mortgage loans, and charges or
receives from either of them money or other valuable consideration
readily convertible into money for providing the information;
(c) A person engaged in table-funding or warehouse-lending
mortgage loans that are residential mortgage loans.
(2) "Mortgage broker" does not include a bank, savings bank,
savings and loan association, credit union, or credit union
service organization organized under the laws of this state,
another state, or the United States; a subsidiary of such a bank,
savings bank, savings and loan association, or credit union; an
affiliate that (a) controls, is controlled by, or is under common
control with, such a bank, savings bank, savings and loan
association, or credit union and (b) is subject to examination,
supervision, and regulation, including with respect to the
affiliate's compliance with applicable consumer protection
requirements, by the board of governors of the federal reserve
system, the comptroller of the currency, the office of thrift
supervision, the federal deposit insurance corporation, or the
national credit union administration; or an employee of any such
entity.
(K) "Nonbank mortgage lender" means any person that engages
in a consumer transaction in connection with a residential
mortgage, except for a bank, savings bank, savings and loan
association, credit union, or credit union service organization
organized under the laws of this state, another state, or the
United States; a subsidiary of such a bank, savings bank, savings
and loan association, or credit union; or an affiliate that (1)
controls, is controlled by, or is under common control with, such
a bank, savings bank, savings and loan association, or credit
union and (2) is subject to examination, supervision, and
regulation, including with respect to the affiliate's compliance
with applicable consumer protection requirements, by the board of
governors of the federal reserve system, the comptroller of the
currency, the office of thrift supervision, the federal deposit
insurance corporation, or the national credit union
administration.
(L) For purposes of divisions (H), (J), and (K) of this
section:
(1) "Control" of another entity means ownership, control, or
power to vote twenty-five per cent or more of the outstanding
shares of any class of voting securities of the other entity,
directly or indirectly or acting through one or more other
persons.
(2) "Credit union service organization" means a CUSO as
defined in 12 C.F.R. 702.2.
Sec. 4722.01. As used in this chapter:
(A) "Cost–plus contract" means a contract entered into
between an owner and a home construction service supplier under
which payment to the supplier is based on the cost of a product
plus the supplier's rate for labor to install the product plus an
agreed percentage of profit or a stipulated fee.
(B) "Home construction service" means the construction of a
residential building. "Home construction service" does not include
construction performed on a structure that contains four or more
dwelling units, except for work on an individual dwelling unit
within that structure, or construction performed on the common
area of a condominium property.
(C) "Home construction service contract" means 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.
(D) "Home construction service supplier" or "supplier" means
a person 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.
(E) "Owner" means the person who contracts with a home
construction service supplier. "Owner" may include the owner of
the property, a tenant who occupies the dwelling unit on which the
home construction service is performed, or a person the owner
authorizes to act on the owner's behalf to contract for a home
construction service, and any other person who contracts for a
home construction service.
(F) "Residential building" means a one-, two-, or
three-family dwelling and any accessory construction incidental to
the dwelling. "Residential building" does not include any of the
following:
(1) An industrialized unit as described in section 3781.06 of
the Revised Code;
(2) A manufactured home as described in section 3781.06 of
the Revised Code;
(3) A mobile home as described in section 4501.01 of the
Revised Code.
(G) "Workmanlike manner" means the home construction service
supplier has engaged in construction that meets or exceeds the
minimum quantifiable standards promulgated by the Ohio home
builders association.
Sec. 4722.02. (A) Except as provided in division (C) of this
section, no home construction service supplier shall perform any
home construction service the cost of which equals or exceeds
twenty-five thousand dollars unless the supplier enters into a
written home construction services contract with the owner. The
contract shall include all agreements and conditions related to
the home construction service, including all of the following:
(1) The supplier's name, physical business address, business
telephone number, and taxpayer identification number;
(2) The owner's name, address, and telephone number;
(3) The address or location of the property where the home
construction service is to be performed;
(4) A general description of the home construction service,
including the goods and services to be furnished as part of the
service;
(5) The anticipated date or time period the home construction
service is to begin and the anticipated date or time period it is
to be completed;
(6) The total estimated cost of the home construction
service;
(7) Any cost of installation, delivery, or other cost that
the total estimated cost does not cover;
(8) A copy of the supplier's certificate of insurance showing
general liability coverage in an amount of not less than two
hundred fifty thousand dollars;
(9) The dated signatures of the owner and the supplier.
(B)(1) If the total amount of reasonably unforeseen, but
necessary, excess costs of a home construction service at any time
exceeds five thousand dollars over the course of the entire home
construction contract, prior to performing the work related to the
excess costs, the home construction service supplier shall provide
an owner with a notice that contains a written or oral estimate,
depending on which type the owner has designated in the contract.
(2) To determine the type of notice an owner requires when
the costs of a home construction service exceed the estimate
provided in the contract, the contract shall include a statement
in substantially the following language:
IF AT ANY TIME A HOME CONSTRUCTION SERVICE REQUIRES EXTRA
COSTS ABOVE THE COST SPECIFIED OR ESTIMATED IN THE CONTRACT THAT
WERE REASONABLY UNFORESEEN, BUT NECESSARY, AND THE TOTAL OF ALL
EXTRA COSTS TO DATE EXCEEDS TEN PER CENT OF THE CONTRACT COST, YOU
HAVE A RIGHT TO AN ESTIMATE OF THOSE EXCESS COSTS BEFORE THE HOME
CONSTRUCTION SERVICE SUPPLIER BEGINS WORK RELATED TO THOSE COSTS.
INITIAL YOUR CHOICE OF THE TYPE OF ESTIMATE YOU REQUIRE:
..... written estimate ..... oral estimate"
(3) If the contract stipulates that the specified cost of the
home construction service is a firm price and the home
construction service supplier will not charge the owner with any
excess costs, the home construction service supplier need not
comply with the notice requirements of this division.
(C) A home construction service supplier who enters into a
cost-plus contract with an owner for a home construction service
need not comply with the requirements in divisions (A) and (B) of
this section.
Sec. 4722.03. (A) No home construction service supplier shall
do any of the following:
(1) Prior to commencing work related to the home construction
service, fail to enter into a written contract that complies with
this chapter;
(2) After entering into a contract with an owner and prior to
commencing any work that is related to an excess cost, fail to
provide an estimate of the excess costs as this chapter requires;
(3) After entering into a contract with an owner, do any of
the following:
(a) Fail to disclose, prior to the owner's acceptance of any
goods or work related to an excess cost, that in failing to
approve an excess cost, completion of the work may not be possible
and a charge may be imposed for any disassembly, reassembly, or
partially completed work, which shall be directly related to the
actual labor or parts involved;
(b) Charge for any excess cost that the owner has not
approved;
(c) Represent that repairs or work have been performed when
such is not the fact;
(d) Fail to perform the home construction service in a
workmanlike manner;
(e) Fail to tender to the owner, within a reasonable time and
upon the owner's request, any replaced parts, unless the parts are
to be rebuilt or sold by the home construction service supplier,
or returned to the manufacturer in connection with a warranted
repair or service, and the intended reuse or return is made known
to the owner prior to commencing any repair or services;
(f) Fail to provide a full refund within a reasonable time
period for any goods or services that the home construction
service supplier has failed to deliver in accordance with the
terms and conditions of the contract required by section 4722.02
of the Revised Code and for which the supplier has received
payment;
(g) Fail to provide to the owner, within a reasonable time
and upon the owner's request, a written, itemized receipt for any
item of goods that is left with, or turned over to, the home
construction service supplier for repair or services. The receipt
shall include all of the following:
(i) The identity of the person who will perform the repair or
services;
(ii) The name and dated signature of the person or
representative who actually accepts the goods;
(iii) A description, including make and model number or other
features that will reasonably identify the goods that are turned
over, and the repair or services that are to be performed.
(4) Make the performance of any home construction service
contingent upon an owner's waiver of any rights this chapter
provides;
(5) Represent that repairs, services, or work is necessary to
comply with the residential building code when such is not the
fact;
(6) Represent that an item of goods or any part thereof that
is being inspected or diagnosed for a home construction service is
in a dangerous condition, or that its continued use may be
harmful, when such is not the fact;
(7) Intentionally understate or intentionally misstate the
estimated cost of the home construction service;
(8) Intentionally misrepresent any aspect of the transaction
or the nature or the quality of the work or materials;
(9) Fail at the time any owner signs or initials any document
to provide the owner with a copy of the document within a
reasonable time period;
(10) Fail to disclose to the owner prior to the commencement
of any repair or service that any part of the repair or service
will be performed by a person other than the home construction
service supplier or employee of the supplier if the contract
disclaims any warranty of the repair or service that the other
person performs;
(11) Represent that repairs or services must be performed
away from the property on which the home construction service is
being performed when that is not the fact.
(B) A home construction service supplier who enters into a
cost-plus contract with an owner for a home construction service
need not comply with the requirements regarding excess costs
provided in this section.
Sec. 4722.04. A home construction service supplier may take
as a down payment not more than ten per cent of the contract price
before the supplier's performance that is required by the contract
begins, except a supplier may take as a down payment not more than
seventy-five per cent of the total cost of any special order item
that is otherwise not returnable or usable before the supplier's
performance that is required by the contract begins. This section
does not apply to a home construction service supplier who enters
into a cost-plus contract. A supplier may accept payments from a
construction loan in connection with a home construction service
contract.
Sec. 4722.06. (A) If, by the attorney general's own
inquiries or as a result of complaints, the attorney general has
reasonable cause to believe that a person has engaged or is
engaging in an act or practice that violates this chapter, the
attorney general may investigate.
(B) For this purpose, the attorney general may administer
oaths, subpoena witnesses, adduce evidence, and require the
production of relevant matter.
If matter that the attorney general requires to be produced
is located outside the state, the attorney general may designate
representatives, including officials of the state in which the
matter is located, to inspect the matter on the attorney general's
behalf, and the attorney general may respond to similar requests
from officials of other states. The person subpoenaed may make the
matter available to the attorney general at a convenient location
within the state or pay the reasonable and necessary expenses for
the attorney general or the attorney general's representative to
examine the matter at the place where it is located, provided that
expenses shall not be charged to a party not subsequently found to
have engaged in an act or practice violative of this chapter.
(C) Within twenty days after a subpoena has been served, a
motion to extend the return day, or to modify or quash the
subpoena, stating good cause, may be filed in the court of common
pleas of Franklin county or the county in which the person served
resides or has the person's principal place of business.
(D) A person subpoenaed under this section shall comply with
the terms of the subpoena, unless the parties agree to modify the
terms of the subpoena or unless the court has modified or quashed
the subpoena, extended the return day of the subpoena, or issued
any other order with respect to the subpoena prior to its return
day.
If a person fails without lawful excuse to obey a subpoena or
to produce relevant matter, the attorney general may apply to the
court of common pleas of the county in which the person subpoenaed
resides or has the person's principal place of business for an
order compelling compliance.
(E) The attorney general may request that an individual who
refuses to testify or to produce relevant matter on the ground
that the testimony or matter may incriminate the individual be
ordered by the court to provide the testimony or matter. With the
exception of a prosecution for perjury and an action for damages
under this chapter, an individual who complies with a court order
to provide testimony or matter, after asserting a privilege
against self-incrimination to which the individual is entitled by
law, shall not be subjected to a criminal proceeding or to a civil
penalty or forfeiture on the basis of the testimony or matter
required to be disclosed or testimony or matter discovered through
that testimony or matter.
(F) The attorney general may:
(1) During an investigation under this section, afford, in a
manner considered appropriate to the attorney general, a supplier
an opportunity to cease and desist from any suspected violation.
The attorney general may suspend the investigation during the time
period that the attorney general permits the supplier to cease and
desist; however, the suspension of the investigation or the
affording of an opportunity to cease and desist shall not
prejudice or prohibit any further investigation by the attorney
general under this section.
(2) Terminate an investigation under this section upon
acceptance of a written assurance of voluntary compliance from a
supplier who is suspected of a violation of this chapter.
Acceptance of an assurance may be conditioned upon an
undertaking to reimburse or to take other appropriate action with
respect to identifiable owners damaged by an alleged violation of
this chapter. An assurance of compliance given by a supplier is
not evidence of violation of this chapter. The attorney general
may, at any time, reopen an investigation terminated by the
acceptance of an assurance of voluntary compliance, if the
attorney general believes that further proceedings are in the
public interest. Evidence of a violation of an assurance of
voluntary compliance is prima-facie evidence of an act or practice
in violation of this chapter, if presented after the violation in
an action brought under this chapter. An assurance of voluntary
compliance may be filed with the court and if approved by the
court, entered as a consent judgment.
(G) The procedures available to the attorney general under
this section are cumulative and concurrent, and the exercise of
one procedure by the attorney general does not preclude or require
the exercise of any other procedure.
Sec. 4722.07. (A) If the attorney general, by the attorney
general's own inquiries or as a result of complaints, has
reasonable cause to believe that a supplier has engaged or is
engaging in an act or practice that violates this chapter, and
that the action would be in the public interest, the attorney
general may bring any of the following:
(1) An action to obtain a declaratory judgment that the act
or practice violates this chapter;
(2)(a) An action, with notice as required by Civil Rule 65,
to obtain a temporary restraining order, preliminary injunction,
or permanent injunction to restrain the act or practice. If the
attorney general shows by a preponderance of the evidence that the
supplier has violated or is violating this chapter, the court may
issue a temporary restraining order, preliminary injunction, or
permanent injunction to restrain and prevent the act or practice.
(b) On motion of the attorney general, or on its own motion,
the court may impose a civil penalty of not more than five
thousand dollars for each day of violation of a temporary
restraining order, preliminary injunction, or permanent injunction
issued under this section, if the supplier received notice of the
action. The civil penalties shall be paid as provided in division
(G) of this section.
(c) Upon the commencement of an action under division (A)(2)
of this section against a supplier who operates under a license,
permit, certificate, commission, or other authorization issued by
the supreme court or by a board, commission, department, division,
or other agency of this state, the attorney general shall
immediately notify the supreme court or agency that such an action
has been commenced against the supplier.
(3) A class action under Civil Rule 23, as amended, on behalf
of owners who have engaged in home construction service contracts
in this state for damage caused by an act or practice described in
this chapter.
(B) On motion of the attorney general and without bond, in
the attorney general's action under this section, the court may
make appropriate orders, including appointment of a referee or a
receiver, for sequestration of assets, to reimburse owners found
to have been damaged, to carry out a home construction service
contract in accordance with an owner's reasonable expectations, to
strike or limit the application of unconscionable clauses of
contracts so as to avoid an unconscionable result, or to grant
other appropriate relief. The court may assess the expenses of a
referee or receiver against the supplier.
(C) Any moneys or property recovered by the attorney general
in an action under this section that cannot with due diligence
within five years be restored by a referee to owners shall be
unclaimed funds reportable under Chapter 169. of the Revised Code.
(D) In addition to the other remedies provided in this
section, the attorney general may request and the court may impose
a civil penalty of not more than twenty-five thousand dollars
against the supplier for each violation of an act or practice
described in this chapter. The civil penalties shall be paid as
provided in division (G) of this section.
(E) No action may be brought by the attorney general under
this section to recover for a home construction service contract
more than two years after the occurrence of a violation.
(F) If a court determines that provision has been made for
reimbursement or other appropriate corrective action, insofar as
practicable, with respect to all consumers damaged by a violation,
or in any other appropriate case, the attorney general, with court
approval, may terminate enforcement proceedings brought by the
attorney general upon acceptance of an assurance from the supplier
of voluntary compliance with this chapter, with respect to the
alleged violation. The assurance shall be filed with the court and
entered as a consent judgment. A consent judgment is not evidence
of prior violation of such chapter. Disregard of the terms of a
consent judgment entered upon an assurance shall be treated as a
violation of an injunction issued under this section.
(G) Civil penalties ordered pursuant to divisions (A) or (D)
of this section shall be paid as follows: one-fourth of the amount
to the treasurer of the county in which the action is brought and
three-fourths to the consumer protection enforcement fund created
by section 1345.51 of the Revised Code.
(H) The remedies available to the attorney general under this
section are cumulative and concurrent, and the exercise of one
remedy by the attorney general does not preclude or require the
exercise of any other remedy.
(I) In carrying out the attorney general's official duties,
the attorney general shall not disclose publicly the identity of
any supplier who is or was the subject of an investigation under
this chapter or any facts developed during such an investigation
unless those matters have become a matter of public record in
enforcement proceedings, or the supplier who is the subject of the
investigation gives written consent to public disclosure of those
matters.
(J) The attorney general shall cooperate with state and local
officials, officials of other states, and officials of the federal
government in the administration of statutes comparable to this
chapter.
Sec. 4722.08. For a violation of Chapter 4722. of the
Revised Code, an owner has a cause of action and is entitled to
relief as follows:
(A) Where the violation was an act prohibited by section
4722.02, 4722.03, or 4722.04 of the Revised Code, the owner may,
in an individual action, rescind the transaction or recover the
owner's actual economic damages plus an amount not exceeding five
thousand dollars in noneconomic damages.
(B) In any action for rescission, revocation of the
transaction must occur within a reasonable time after the owner
discovers or should have discovered the ground for it and before
any substantial change in condition of the subject of the
transaction.
(C) Any owner may seek a declaratory judgment, an injunction,
or other appropriate relief against an act or practice that
violates this chapter.
(D) The court may award to the prevailing party a reasonable
attorney's fee limited to the work reasonably performed, if either
of the following apply:
(1) The owner complaining of the act or practice that
violated this chapter has brought or maintained an action that is
groundless, and the owner filed or maintained the action in bad
faith;
(2) The home construction service supplier has knowingly
committed an act or practice that violates this chapter.
(E) As used in this section, "actual economic damages" means
damages for direct, incidental, or consequential pecuniary losses
resulting from a violation of Chapter 4722. of the Revised Code
and does not include damages for noneconomic loss as defined in
section 2315.18 of the Revised Code.
(F) Nothing in this section shall preclude an owner from also
proceeding with a cause of action under any other theory of law.
Section 2. That existing section 1345.01 of the Revised Code
is hereby repealed.
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