Let the Seller Beware

We have all heard the saying, caveat emptor, “let the buyer beware,” but there is a less common phrase, caveat venditor, “let the seller beware.” This is especially true in Ohio where we have some extremely tough consumer laws. With so many individuals unable to find jobs, many industrious job seekers, especially those with home improvement skills, might consider providing household maintenance, repairs, landscaping, painting or even home cleaning services to fill the gap while searching for new employment. If you are one of these people, before you take on your first project, you should know about Ohio’s consumer protection laws, especially the Home Solicitation Sales Act. The Ohio Home Solicitation Sales Act (the “HSSA”) is found in Chapter 1345 of the Ohio Revised Code. The HSSA allows consumers to cancel contracts and receive a full refund in situations where the seller fails to follow the HSSA’s specific notice requirements. Even if the job is already completed, the consumer can still obtain a full refund, plus attorney fees with no set off for labor and materials provided.

If you engage in selling goods or services at a Consumer’s residence, either by invitation or by making a personal solicitation, you may be considered a “Supplier” under Ohio law and be entering into a “Home Solicitation Sale.” If you, as a Supplier, fail to include specific language in your contract or fail to follow the rules found in the HSSA, you could end up costing yourself more money than you can imagine. Perhaps more than the profits you made on the contract you agreed to perform.

The most important part of the HSSA about which every Supplier should be aware is that every contract between a Supplier and a consumer must contain a 3-day right to cancel and, in addition, every Supplier must give the consumer two copies of a document called a “Notice of Cancellation”. It is not enough to simply tell the consumer that he or she has three days to cancel the contract. The Supplier must use the exact language set forth in the HSSA and the notice must be in writing. Failing to provide these written notices in the exact manner provided in the Ohio Revised Code is a violation of the HSSA and the Ohio Consumer Sales Practices Act. If a Supplier violates these laws, a consumer is entitled to cancel the contract or receive three times the amount of actual damages suffered, plus attorney fees.

Once the Supplier provides the consumer with the 3-day right to cancel, the Supplier is prohibited from commencing work during the 3-day cancellation period (there is an emergency exception). If a Supplier fails to give the consumer the 3-day cancellation notice and the two copies of the Notice of Cancellation, the consumer has the absolute right to cancel the contract at any time in the future and is entitled to the return of all funds paid—even if all the services have been performed. This unfettered right to cancel continues until the Supplier complies with the HSSA by providing the 3-day cancellation notice and the Notices of Cancellation. This penalty is what makes the HSSA particularly dangerous for Suppliers who are unaware of it. I have personally seen this law used against Suppliers two years after the performance of a contract.

The most common scenario seen by attorneys, however, is as follows: A homeowner hires a contractor to perform work at her residence. Let’s say in this case it is a bathroom remodel. The contractor quotes a price of $6,000 for labor and materials and the homeowner pays for everything except the last $1,000 of the contract. When the Supplier requests the final payment, the homeowner refuses to pay because she is dissatisfied with some aspect of the job. Thinking it’s a claim he cannot lose, the Contractor might file a lawsuit against the homeowner in small claims court to collect his money. If the contractor is extremely unlucky, however, homeowner hires an attorney who discovers that she was never provided her 3-day cancellation notice. The homeowner can immediately cancel the contract and request all of her money back—the entire $6,000, plus her attorney fees. This is true even if the job is completely finished. There is no provision in the HSSA which requires that the court provide a set-off for labor and materials already installed in the home. There is an abundance of Ohio case law which favors the Consumer and states that a Supplier who begins work prior to providing the 3-day cancellation notice does so at his own risk.

While I am not trying to discourage anyone from trying to earn an extra buck these days, I would certainly caution you that if you do enter into a home solicitation sale without following the mandates of the HSSA, you do so at your own risk. If you do not remember the saying, “let the seller beware,” you better remember that “the customer is always right.” If your customer is unhappy, you could end up paying her and her attorney. All it takes is a little time to prepare contracts which comply with the HSSA and, most importantly, a lot of patience in carrying out the task which you are hired to perform.