Opinion
No. 88-1651
Submitted October 25, 1989 —
Decided February 21, 1990.
Consumer transactions — Consumer Sales Practices Act — R.C. Chapter 1345 does not apply to residential lease transactions.
O.Jur 3d Consumer Protection § 3.
O.Jur 3d Landlord and Tenant §§ 1, 4.
R.C. Chapter 1345 (Consumer Sales Practices Act) does not apply to residential lease transactions.
APPEAL from the Court of Appeals for Ross County, No. 1423.
On February 11, 1985, defendant-appellant, Ruth Deacon, and plaintiff-appellee, Heritage Hills, Ltd., entered into a residential lease agreement whereby appellant agreed to rent unit No. 67 in appellee's federally subsidized apartment complex in Chillicothe, Ohio. The lease provided in relevant part:
"DAMAGES: Whenever damage is caused by carelessness, misuse, or neglect on the part of the Tenant, his/her family or visitors, in the unit, project grounds, or common areas, the Tenant agrees to pay:
"a. The cost of all repairs and do so within 30 days after receipt of the Landlord's demand for the repair charges, and
"b. rent for the period the unit is damaged whether or not the unit is habitable. The Tenant understands that HUD will not make assistance payments for any period in which the unit is not habitable. For any such period, the Tenant agrees to pay the HUD-approved market rent rather than the Tenant rent shown in Paragraph #3 of this Agreement."
In March 1985, appellant assumed occupancy of the apartment. On March 20, 1985, appellee instituted a policy whereby tenants were required to establish by conclusive proof that any damage to the premises was caused by persons other than the tenant, the tenant's family or the tenant's visitors. In the absence of such proof, the tenant would be held liable for the damage.
During her residency, appellant reported to appellee that a screen door was missing and that a kitchen window was in need of repair. In May 1986, the screen door was replaced at a cost of $45. In September 1986, the window was replaced at a cost of $35.
Thereafter, appellee billed appellant for the cost of repairs. When the demand for payment went unheeded, appellee instituted the present action in Chillicothe Municipal Court on October 30, 1986. On December 1, 1986, appellant filed an answer denying liability and asserting a counterclaim that appellee's demand for payment under its policy was an unfair, deceptive or unconscionable consumer sales practice in violation of R.C. 1345.02 and 1345.03.
On March 25, 1987, a bench trial commenced. Following trial, the court filed findings of fact and conclusions of law, holding that appellee's policy was unenforceable for lack of mutual assent. The court determined further that appellant could not avail herself of the declaratory or injunctive relief afforded by R.C. 1345.09. The trial court's determination as to the counterclaim was appealed to the court of appeals on May 6, 1987. On July 22, 1988, the court of appeals affirmed.
The cause is now before this court pursuant to the allowance of a motion to certify the record.
Southeastern Ohio Legal Services, Gary M. Smith, Ohio State Legal Services Assn. and Kalpana Yalamanchili, for appellant.
Schottenstein, Treneff Williams and Craig P. Treneff, for appellee.
Eslocker, Grim, Hodson Dioguardi and William A. Grim, urging reversal for amicus curiae, Athens Metropolitan Housing Authority.
Legal Aid Society of Cleveland, Paul Herdeg and Peter M. Iskin, urging reversal for amicus curiae, Cleveland Tenants Organization.
Bruce H. Kiracofe, urging reversal for amici curiae, Columbus Housing Law Project and Columbus Tenants Union.
Crabbe, Brown, Jones, Potts Schmidt, Jeffrey M. Brown and Theodore F. Claypoole, urging affirmance for amicus curiae, Columbus Apartment Association.
Emens, Hurd, Kegler Ritter and Lawrence F. Feheley, urging affirmance for amicus curiae, Ohio Housing Authorities Conference.
Appellant has sought declaratory and injunctive relief pursuant to R.C. 1345.09 to prevent appellee from enforcing its policy of ascribing responsibility for all unexplained damages to an apartment to the lessee thereof. R.C. 1345.09(D) provides:
"Any consumer may seek a declaratory judgment, an injunction, or other appropriate relief against an act or practice that violates this chapter."
In order to ascertain whether appellant is entitled to the relief under the preceding subsection, it is necessary to determine whether a residential lease agreement constitutes a "consumer transaction" as defined by R.C. 1345.01(A). This subsection, at the time relevant herein, provided as follows:
"As used in section 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, franchise, or an intangible, except those transactions between persons, defined in sections 4905.03 and 5725.01 of the Revised Code, and their customers, or between attorneys or physicians and their clients or patients, to an individual for purposes that are primarily personal, family, or household, or solicitation to supply any of these things." (Emphasis added.)
While the Act does not specifically exclude a lease of real property, the Official Comment by the National Conference of Commissioners on Uniform State Laws regarding the definition of "consumer transaction" in the model Act (upon which R.C. Chapter 1345 is founded) is instructive. The comment states as follows:
"A consumer transaction typically involves a natural person who obtains or is solicited to obtain an item of goods, a service, or an intangible primarily for personal, family, or household purposes. Also included are certain analogous transactions in which a natural person obtains or is solicited to obtain a business opportunity in which he has not been previously engaged. In view of the extensive state regulation of securities transactions, their inclusion is left optional. On the assumption that land transactions frequently are, and should be, regulated by specialized legislation, they are excluded altogether." (Emphasis added.) 7A Uniform Laws Annotated, Business and Financial Laws (Master Ed. 1985), Uniform Consumer Sales Practices Act, 233, Official Comment to Section 2(1), at 235.
Appellant maintains that the aforementioned exclusion applies only to the sale of real property. It is therefore the contention of appellant that a lease is merely the provision of a service, rather than a "land transaction." However, this court has previously observed in Brenner v. Spiegle (1927), 116 Ohio St. 631, 157 N.E. 491, at paragraph one of the syllabus:
"A lease of real estate is a conveyance by the owner of an estate in land of a portion of the owner's interest therein to the lessee for a term less than the owner's own, and it passes a present interest in the land. Such a conveyance for a consideration constitutes a sale of an interest in real estate."
Appellant criticizes the reliance by the appellate court on the decision of the Washington Supreme Court in State v. Schwab (1985), 103 Wn.2d 542, 693 P.2d 108. The criticism is based in part on the observation that the Schwab court was aware that the Washington Legislature had previously rejected application of the provisions of its Residential Landlord-Tenant Act to its version of the Consumer Sales Practices Act. However, as noted by appellee, a bill (S.B. No. 156) specifically including the lease of real property within the definition of "consumer transaction" was similarly rejected by the Ohio General Assembly. See Note, H.B. 681: An Amendment to Ohio's Consumer Sales Practices Act (1979), 4 U. Dayton L. Rev. 519, 521, at fn. 17.
Additionally, R.C. Chapter 5321 specifically addresses the landlord-tenant relationship. R.C. 5321.14(A) is directed toward unconscionable clauses in residential agreements. It provides:
"If the court as a matter of law finds a rental agreement, or any clause thereof, to have been unconscionable at the time it was made, it may refuse to enforce the rental agreement or it may enforce the remainder of the rental agreement without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result."
This specific statutory scheme for resolving landlord-tenant disputes would appear to exclude application of R.C. Chapter 1345 to residential leases. In a similar context, the Kansas Supreme Court in Chelsea Plaza Homes, Inc. v. Moore (1979), 226 Kan. 430, 434, 601 P.2d 1100, 1104, observed as follows:
"Clearly, the Consumer Protection Act covers a very broad area of transactions; whereas, the Residential Landlord and Tenant Act covers one very specific small area of transactions, and is complete within itself for that area. We therefore must conclude that for all transactions within its purview the Residential Landlord and Tenant Act controls and preempts the field."
Accordingly, we hold that R.C. Chapter 1345 (Consumer Sales Practices Act) does not apply to residential lease transactions.
For the reasons stated above, the judgment of the court of appeals is affirmed.
Judgment affirmed.
MOYER, C.J., HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.