Author Archives: Finney Law Firm

Often the lease will provide the answer to this question, but in Ohio, absent a provision in the lease, R.C 5301.11 provides the default rule:

The lessee of a building which, without fault or neglect on his part, is destroyed or so injured as to be unfit for occupancy, is not liable to pay rent to the lessor or owner thereof, after such destruction or injury, unless otherwise expressly provided by written agreement or covenant. The lessee thereupon must surrender possession of such premises.

The first sentence of the statute provides that if the fire was not the fault of the lessee (tenant), the tenant is freed of her obligation to pay rent. However, the second sentence provides one condition, in order to be freed of her obligation to pay rent, the tenant must surrender possession of the premises.

Case law in Ohio on this point goes back to 1890, “[b]ut, to secure the benefit of the statute, the tenant must surrender or yield up all that remains of the premises embraced in the lease, without any purpose or intention of resuming possession thereof. The legislature has absolved the tenant from an onerous obligation, but the burden is removed only upon his compliance with the statutory condition.” Gay v. Davey, 47 Ohio St. 396, 402, 25 N.E. 425 (1890).

This makes perfect sense. The tenant is given the power to decide how to proceed, either maintain the lease while the necessary repairs are made and returning to the home, or unilaterally decide to terminate the lease – with the requirement that the tenant fully surrender possession of the premises (i.e. remove her belongings and with the understanding that she will not have a right to return after the repairs are made).

But the law does not allow the tenant to have it both ways. She cannot for example, stop paying rent but leave her personal property at the home, expecting to “restart” the lease once the repairs are made.

As noted above, R.C. 5311.01 is the default rule for both residential and commercial lease in Ohio, but the lease may provide a different provision. As always, read the lease.

Finney Law Firm can assist in drafting and enforcing your residential and commercial leases. Click here to contact us online or call (513) 943-6655 to speak with attorney Christopher P. Finney.

As a recent Wall Street Journal article pointed out, for any number of reasons, both legitimate and otherwise, we have seen a proliferation of service and assistance animals. From miniature horses as therapy animals to small dogs carried by airline passengers, to the more common seeing eye dog, Americans are ever more empowered to assert their entitlement to service and assistance animals.

Landlords are reporting questionable claims of disability that they suspect are aimed at getting around no pet clauses and pet deposits in leases. What is a landlord to do in the face of a suspicious claim of disability?

As part of the effort to protect people with disabilities from discrimination, the Fair Housing Act and the Americans with Disabilities Act limit a landlord’s ability to investigate requests for accommodations for service and assistance animals, but not all questions are foreclosed. This is a good thing and reflects our shared values because we want to encourage people with disabilities to get the necessary treatment and services; we want to open the opportunity for a full life to all. But we also don’t want people to make false claims of disability to obtain an improper benefit or unnecessary accommodation. To do so only serves to detract from those who truly suffer.

Recently a client called us needing help. The client owns a single family rental property and does not allow her tenants to keep animals. The tenant called in October about relaxing the no pets rule because he wanted to get his daughter a puppy for Christmas. The landlord declined. One week later, the tenant called again, this time to claim a need for an assistance animal and to request an accommodation.

The landlord had no prior knowledge of any disability and was obviously suspicious that this sudden need for an accommodation was simply a ruse to get around the no pets rule. She turned to us to determine what she should do. The landlord wanted to do the right thing, she wanted to comply with the law. But she also did not want to be taken advantage of.

After discussing the facts with the client and reviewing relevant statutory and case law, we sent a letter to the tenant explaining that the landlord had no prior knowledge that any member of the tenant’s family suffered from any disability, and asked for some documentation to establish (i) the existence of the disability and (ii) how the animal will provide a service or alleviate some symptom of the disability. We also asked for information about the specific animal they intended to bring into the home.

Not so surprisingly, the tenant never responded to our request for information, and no animal (service or otherwise) was brought into the home.

Note that landlords can be found in violation of the Fair Housing Act and Americans with Disabilities Act for even seemingly innocuous questions. If your tenant requests a disability related accommodation, you should consult an attorney about your specific facts and circumstances before making any investigation into the request for an accommodation. More information from the Department of Housing and Urban Development, Office of Fair Housing and Equal Opportunity can be found here.

If you have questions about your obligations under the Americans with Disabilities Act and the Fair Housing Act, use our secure contact page, or call Julie Gugino at 513-943-5669.

What does Ohio’s Land Installment Contract Statute mean for commercial properties?

Not much, if you don’t incorporate it into your contract.

Ohio’s Land Installment Contract Statute, Chapter 5313 of the Ohio Revised Code, makes clear that the consumer protections apply only to the sale of residential property, and not to the sale of commercial property. Specifically, R.C. 5313.01(B) defines “Property” as “real property located in this state improved by virtue of a dwelling having been erected on the real property.” Thus, if the property to be sold has not had a “dwelling” erected upon it, Chapter 5313 applies only to the extent the parties incorporate it into their contract.

In a case out of Clermont County in Ohio’s 12^th District Court of Appeals, a “run down mobile home” on farmland in which people lived “at least part of the time” satisfied the requirements of a “dwelling,” thus implicating R.C. 5313. Marcus v. Seidner, 2011-Ohio-5592, ¶ 31 (Ct. App.). Conversely, in Johnson v. Maxwell, 51 Ohio App. 3d 137, 140, 554 N.E.2d 1370, 1373 (1988), the 9^th District Court of Appeals found that R.C. 5313 did not apply to property on which there was no dwelling.

Such rulings suggest that Ohio law would allow forfeiture of all payments under a commercial land installment contract in the event of breach, no matter the amount paid or for how long such payments had been made. However, as set forth in Maxwell, “forfeiture clauses contained in land installment contracts are enforceable in Ohio, so long as the resulting benefit to the vendor is not ‘extravagantly unreasonable or manifestly disproportionate to the actual damages sustained” by the vendor.’” Id., at 140 (quoting Norpac Realty Co. v. Schackne (1923), 107 Ohio St. 425, 140 N.E. 480, paragraph one of the syllabus. Thus, in commercial land installment contracts, if the parties don’t include remedies that are less “extravagantly unreasonable” than forfeiture where the vendee has paid a substantial portion of the purchase price, it will be up to the judge to determine the appropriate remedy. Courts will also consider whether an increase to the value of the property since the contract was entered into would result in a windfall to the seller. “Given the wide disparity in the value of the property now and at the time appellees sold it, we refuse to disturb the trial court’s attempt at achieving equity.” Fannin v. Reagan, 11th Dist. Portage No. 94-P-0091, 1995 Ohio App. LEXIS 5023, at *13 (Nov. 9, 1995)

So why does this matter?

While Chapter 5313 calls for foreclosure when the buyer has paid 20% or more of the purchase price or paid for more than five years, in a commercial transaction, the parties are not bound to this restriction. Presumably, the court would use the standards of 5313 as a guideline, but there could be a scenario where the judge finds that it would be inequitable to allow forfeiture in a commercial land installment contract even where the buyer paid less than 20% of the purchase price. A properly drafted contract can allow the parties to avoid an uncertain result in the event of a breach.

Preparing to enter into a land installment contract or have questions about an existing land installment contract? Finney Law Firm can help you understand your rights and obligations and draft a contract that will work for you.

One pitfall in real estate purchase contracts – residential and commercial — involves the failure of the parties and the Realtors to assure that earnest money called for in the contract has in fact been collected and placed in the Realtor’s escrow account.

Earnest money is a deposit made by the buyer that is applied toward the purchase price at closing or disbursed in accordance with the purchase agreement.  The act of a paying an earnest money deposit is a good faith showing to the seller that the buyer is serious about purchasing the real estate.  (Read here and here that it is nothing more than that.)

More often than not, sellers will require buyers to deposit earnest money to avoid wasting time in an already time consuming process.  Generally in real estate transactions, the escrow is the account in which the earnest money is safely kept until the time of closing or until some other triggering event occurs.  An escrow agent or a real estate broker is appointed to manage and disburse the escrow funds in accordance with the purchase agreement.  The escrow agent or real estate broker acts as fiduciary for both the buyer and seller.

Under the standard Cincinnati Area Board of Realtors contract, there is a section below the buyers’ and seller’s signatures where the Realtor is supposed to acknowledge receipt of the earnest money.  If that is completed and signed by the Realtor, the buyer and seller should be able to rely upon that signed receipt in proceeding with the transaction.  If the check later bounces, the Realtor holding the escrow likely has a duty to inform the parties of that occurrence.

Conversely, if the receipt is not signed by the Realtor, the Seller should assume that the earnest money has not been paid, and – assuming that is a material part of the consideration he wants to assure buyer performance under the contract – he should follow up with the buyer’s Realtor to assure that check has been received and deposited, and get a signed receipt for the same.  Absent that assurance, the seller could and likely should terminate the purchase contract and sell it to a more reliable buyer.

A failure to deposit the earnest money in the escrow account will likely constitute a breach of the purchase agreement by the buyer.  Once a breach occurs, the seller may be able to force specific performance from the buyer or completely walk away from the deal.  A buyer in breach who still wants to purchase the real estate may be out of luck if the seller decides to terminate the contract or renegotiate for a larger sum.

We have seen circumstances in which real estate investors who are simply trying to tie up property to see if they can quickly flip it, will sign a contract with loads of contingencies, and never actually pay the promised earnest money.  (Read more about that here.)  Obviously, sellers want to avoid tying up their property with these bogus buyers.

The lesson here is that the seller should confirm the earnest money deposit is in the selling Realtor’s escrow account by getting written acknowledgement of that.  Buyers are forewarned that in this hot real estate market, the failure to pay that promised sum into escrow could result in termination of the contract by the seller.

According to the National Association of Realtors, all parties engaged in real estate transactions should be cautious of emails requesting wired funds.  Recent trends show that real estate transactions have increasingly become the target of a sophisticated phishing scam, commonly known as “spear phishing.”

The hackers break into email accounts seeking information about current or upcoming real estate transactions – looking for names and identifiable information of sellers, agents, buyers, title companies, or attorneys.  The hackers then use this information, while posing as a party to the transaction, to request a wired funds deposit into their account.  Sometimes the hackers will use an email address that is different from the sellers email address by one letter, which goes unnoticed by the buyer.  The victim, believing the wired funds deposit is for closing, unsuspectingly transfers the funds and the hacker makes off with money.

Many people are lured into a false sense of security that hackers only go after large companies, like Sony, Target, Home Depot, and eBay.  However, small businesses and home buyers are much more susceptible to “spear phishing” because they lack the sophistication, technology, and legal assets to prevent such attacks.

“Spear phishing” involving wired funds in real transactions has occurred in numerous states and defrauded large sums of money from its victims.  According to an article by Sam Silverstein in Realtor®Mag, multiple incidents of fraud were reported in North Carolina, including an incident involving a $200,000 loss.  A separate article by Rose Meily in the San Jose Mercury News mentions a first time buyer losing $13,000.00 to a spear phishing scam.

However, there are ways to prevent or guard against spear phishing.  Here are some recommendations:

• remain vigilant to suspicious activity during a real estate transaction
• always call to verify all the information before a wired transfer
• develop a face-to-face relationship and/or voice contact with parties involved
• exchange and verify contact information of parties involved
• maintain communication with parties involved
• maintain strong email passwords
• change email passwords
• use two-step verification for emails
• encrypt emails and documents
• clean out email accounts
• use data security programs and anti-virus software

Let our real estate team “make a difference” for you in your real estate transactions.  Contact Dylan Sizemore (513-943-6659) or Isaac Heintz (513-943-6654) to assist in your real estate needs.