Beyond workmanship: How Ohio’s CSPA creates risk for contractors

Ohio construction industry’s ‘alphabet soup’ article series: 1 of 3

As contractors build and work on projects across the state of Ohio, they face an alphabet soup of potentially applicable statutes: the Consumer Sales Practices Act (CSPA), Home Solicitation Sales Act (HSSA), Home Construction Service Suppliers Act (HCSSA), and Deceptive Trade Practices Act (DTPA). Although their names overlap, the statutes govern different transactions, impose different requirements, and provide different remedies.

Over the next few months, this series will examine them one at a time, with a particular focus on what each means for Ohio’s construction industry. We begin with the broadest: the Ohio Consumer Sales Practices Act.

When does the CSPA apply?

Ohio’s CSPA, R.C. Chapter 1345, generally governs transactions in which goods or services are supplied to an individual primarily for personal, family, or household purposes. It broadly prohibits suppliers from committing unfair, deceptive, or unconscionable acts or practices in connection with consumer transactions, including conduct occurring before, during, or after the transaction.

For construction professionals, the type of customer and purpose of the project matter. A homeowner hiring a contractor to repair or remodel the home in which the homeowner lives may be entering into a consumer transaction. By contrast, a project undertaken primarily for an investment or commercial purpose generally falls outside the scope of the CSPA.

There is another important construction-specific limitation: the CSPA expressly excludes transactions involving a qualifying “home construction service contract” under the HCSSA. As discussed in a prior article, qualifying residential construction, repair, and remodeling contracts for more than $25,000 are governed by the HCSSA rather than the CSPA, including contracts involving work on existing homes. In practical terms, the CSPA therefore remains particularly important for smaller residential projects that do not qualify as HCSSA home construction service contracts.

CSPA liability not limited to poor workmanship

A common mistake is to think of the CSPA simply as a remedy for defective or incomplete work. Ohio’s implementing regulations contain numerous requirements that can create statutory violations independent of whether the finished work was satisfactory. For example, Ohio’s regulations implementing the CSPA may require the supplier (i.e., the contractor) to provide the consumer an opportunity to elect the type of estimate the consumer wishes to receive before work begins, and for work performed at the consumer’s residence, the supplier generally must also orally advise the consumer of the right to an estimate. The rules also restrict unauthorized increases above estimates and require specified itemization of work, materials, and labor, along with clear identification of the project’s anticipated completion date.

Payments create another potential trap. When the CSPA’s deposit regulation applies, an initial deposit requires a dated written receipt containing specified information. Each subsequent partial payment also requires a written receipt identifying the date and amount paid and the remaining amount due.

What is at stake?

The available remedies make those technical requirements significant. Depending on the violation, a consumer may rescind the transaction or recover actual economic damages, up to $5,000 in noneconomic damages, and seek declaratory or injunctive relief. The court may also award the prevailing party reasonable attorney’s fees where the supplier knowingly committed the violation.

Additionally, where the challenged practice previously was declared deceptive or unconscionable by an applicable Attorney General rule or qualifying Ohio court decision, the consumer may recover three times the actual economic damages or $200, whichever is greater, plus up to $5,000 in noneconomic damages.

For owners and officers of closely held construction companies, the CSPA carries another particularly important and somewhat unusual risk: potential personal liability. Under the CSPA, Ohio courts have long recognized that a corporate officer, shareholder, or other individual may be held personally liable for a CSPA violation in which that person personally participated, directed the offending conduct, or otherwise cooperated. That does not mean a contractor becomes personally liable merely because he or she owns the company, nor does the CSPA automatically disregard the corporate form. Rather, the liability flows from the individual’s own participation in the statutory violation.

A recent Ohio construction case illustrates this point. In Sumner v. Roofing Co., Ohio’s Second District Court of Appeals reversed the dismissal of CSPA claims asserted individually against the roofing company’s president and co-owner. The homeowner alleged that he personally inspected the property, prepared the estimate, communicated with her about the work, and participated in the conduct underlying the claimed violations. The court emphasized that he did not need to have physically performed the roofing work himself to potentially face individual CSPA liability; his alleged active participation was sufficient to allow the claims against him to proceed. That distinction matters for small and closely held construction companies where an owner often personally estimates projects, negotiates contracts, communicates with customers, and manages disputes.

Moreover, an affirmative CSPA claim generally must be filed within two years after the occurrence of the violation, subject to statutory exceptions. But contractors considering pursuing collection litigation against homeowners should be aware of an especially important exception: a CSPA claim arising from the same transaction may be asserted as a counterclaim whenever the supplier later sues the consumer on an obligation arising from that transaction, even after the ordinary two-year period has expired. In other words, a contractor's collection lawsuit does not necessarily eliminate an otherwise time-barred CSPA counterclaim arising from the same transaction.

The construction takeaway

For contractors performing residential projects, CSPA compliance involves considerably more than producing quality work and drafting a conventional construction contract. Estimates, authorizations, receipts, disclosures, and other seemingly administrative details can create statutory exposure. And for construction-company owners who personally participate in the sales and project-management process, that exposure may not necessarily stop at the company’s door.

Contractors should therefore understand not only whether the CSPA applies, but also whether their contracts, payment practices, documentation, and customer interactions satisfy its requirements before a dispute arises.

In the next installment covering the Ohio construction industry’s “alphabet soup,” we will look at the Home Solicitation Sales Act (HSSA) and why signing a construction contract at the homeowner’s kitchen table can trigger an entirely separate set of requirements.