SENATE BILL 77

What does SB 77 make illegal?

Under SB 77, a contractor is prohibited from doing any of the following:

1. Advertising, promising to pay, or rebating any portion of an insurance deductible as an inducement to the sale of goods or services, including granting an allowance or

offering a discount against the fees to be charged or paying the consumer, or any

person directly or indirectly associated with the property in question, any form of

compensation;

2. Inducing the sale of any goods or services by doing any of the following, unless the

contractor and consumer sign a written addendum to the contract providing

otherwise:

a. Offering or providing any upgraded work, material, or product not specified

in the contract;

b. Granting any allowance or offering any discount against the fees to be

charged;

c. Paying to the consumer or any other person directly or indirectly associated

with the property in question, any form of compensation, including a gift,

prize, bonus, coupon, credit, referral fee, trade-in or trade-in payment,

advertising, or other fee or payment.

3. Requiring a deposit of more than half the contract price;

1. SGW Comment: Signing over the ACV check as the deposit now

becomes problematic. With our progress on the labor depreciation

front, many ACV checks are now greater than half the contract price.

2. Good news here is there’s clarity on how much you can accept as a

deposit. Bad news is you won’t just be able to accept the ACV check.

4. Abandoning or failing to perform, without justification, any ongoing contract or

deviating from or disregarding plans or specifications in any material respect without

the consumer’s consent;

1. SGW Comment: This means you absolutely must do written change

orders.

5. Failing to credit the consumer for any payment the consumer has made to the

contractor in connection with the contract;

6. Making any material misrepresentation in the procurement of a contract or making

any false promise likely to influence, persuade, or induce the procurement of a

contract;

1. SGW Comment: No more overpromising on what the insurance

should cover in order to close the sale. Overpromising under SB 77

could mean a judgment against your business that includes attorneys

fees and/or punitive damages.

7. Violating any applicable state or local building codes;

1. SGW Comment: What used to be a negligence or simple breach of

contract issue now becomes a consumer protection violation

(attorneys fees, punitive damages, etc.).

2. This doesn’t leave any wiggle room even if there’s customer consent.

8. Failing to pay for materials or services rendered in connection with operating as a

contractor where the contractor has received sufficient funds as payment for the

particular construction work, project, or operation for which the services or materials were rendered or purchased;

1. SGW Comment: This seems to imply that you must pay your subs

and material warehouses before you pay yourself.

9. Reporting, adjusting, or negotiating a claim on behalf of the consumer or receiving

compensation for referring a claim to any person who reports, adjusts, or negotiates

a claim on a consumer’s behalf;

1. SGW Comment: As things stand, the Unauthorized Practice of

Public Adjusting in Ohio is only a $500.00 fine per occurrence and

usually just a nasty-gram letter from the ODI. Generally, the only

way to get hammered on this is admissions of UPPA in your contracts

and then getting multiple fines. Now, SB 77 makes UPPA a

consumer protection violation that could result in judgments that are

tens of thousands of dollars (attorneys fees, punitive damages, etc.)

which could cripple a business. Now, an adjuster can also complain

to the Ohio Attorney General in addition to the Ohio Department of

Insurance with respect to UPPA. And the AG has major teeth—

where you might have got a letter and small fine from the ODI.

2. This provision will highly benefit public adjusters and attorneys but

hurt roofers and ultimately consumers. There is a severe shortage of

public adjusters and attorneys who handle smaller roof claims. Here

in Ohio, it is the roofer who most often stands up for the policyholder

on roof claims.

10. Failing to possess any insurance required under state, federal, or local laws;

11. Seeking or obtaining a power of attorney on a consumer’s behalf;

1. SGW Comment: No more POA to sign checks.

12. Representing, negotiating, obtaining, or attempting to obtain an assignment of claims,

rights, benefits, or proceeds from a consumer;

1. SGW Comment: No more AOC or AOB, period.

13. Offering or advertising to represent, negotiate, obtain, or attempt to obtain an

assignment of claims, rights, benefits, or proceeds from a consumer.

Per S.B. 77, a contractor may provide information or a professional opinion about a

claim directly to a consumer.

1. SGW Comment: So they did at least leave you that…

(Stephen Whetstone)