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Extinguishing a Land Installment Contract where the buyer is in default

Author By Christopher P. FinneyPosted on

We recently completed a litigation project for a commercial client to extinguish a Land Installment Contract where the buyer was in default and the owner wanted to lease or sell the property to another party by judicially extinguishing the buyer’s rights under the Land Installment Contract.

As a starting point, this article explains, in seller financing situations involving real property, there are several options available to structure and document the transaction.  As we explain, a Land Installment Contract is more difficult to extinguish than a lease with option to purchase, but less involved than a foreclosure action under a note secured by a mortgage against the property to be sold.

Thus, in the specified assignment, we proceeded with an action for “forfeiture” in Common Pleas Court before Hamilton County Judge Beth Myers.

Ohio’s Land Installment Contract statute requires that a foreclosure action be pursued in situations where the buyer has made payments under contract for more than five years or paid more than 20% of the principal portion of the purchase price.  O.R.C. Section 5313.07.  (In such case, the buyer is then entitled to any excess of the sale price from foreclosure sale over the remaining balance of the purchase price under the Land Installment Contract.)  However, Ohio Courts have found that this protection extends only to residential purchasers, and does not protect buyers in commercial real estate transactions.  See, e.g., P.M.D. Land Co. v. Warner Realty, 2009-Ohio-6704 (11th Dist., 2009).

Therefore, simple judicial action for “forfeiture” of the rights of the buyer is called for in a commercial setting.  It is not a truncated, expedited proceeding such as an eviction, but it is far less involved than a foreclosure action would be, and vests fewer rights in the buyer.

As it turns out, in our case the buyer defaulted and we then were able to quiet title in the name of our client, the property owner, the Land Installment Contract was judicially extinguished, and the title was thus quieted in favor of our client, freeing him to lease or sell the property to another tenant or buyer.

 

 

 

FEC Enforcement: “It’s the Wild West out there.”

Author By Christopher P. FinneyPosted on

Consider — really consider — how bold the drafters of the First Amendment must have been, to thrust a new nation into the hitherto entirely uncharted waters of unrestrained free speech.  Certainly, among the Founding Fathers there must have been someone concerned with the havoc wrought upon government and society by these radical notion of freedom of speech, freedom of association, freedom of religion and freedom on conscience.  Yet there were no “if”s or “but”s in the First Amendment; it was written in absolutist terms.

Thus, it is interesting to see in today’s New York Times that some are complaining that “its the wild west” in terms of enforcement of campaign finance laws by the Federal Elections Commission.  Read it here.  That is entirely consistent with the First Amendment, isn’t it?

Now, don’t get me wrong.  I have had a case pending before the FEC for now 43 months (not a typo) awaiting a decision.  The agency should be embarrassed that it can’t reach a decision in even that ridiculous timeframe on an essentially agreed set of facts.

But the big picture that the FEC has stopped interfering in elections seems to us possibly consistent with the “Spirit of ’76.”

What we mean by “Making a Difference”

Author By Christopher P. FinneyPosted on

I was recently at a social forum with attorneys and Judges and three separate participants made some reference to our firm tag line of “Making a Difference.”  I am thrilled that the marketing thrust  seems to have penetrated with the legal community, and indeed with our client base as well.

This is so because to me “Making a Difference” is more than just a tag line, but rather embodies the objective each of our professionals has as we approach legal opportunities and challenges — “how can we provide value to the client in this assignment?”

The practice of law is a challenging discipline, and can devolve into the rote provision of services in exchange for an hourly rate.  It can be difficult, given the inefficiencies and vicissitudes of the legal system, to provide a positive net outcome for the client in litigation, or even in transactional services.

Thus, we have attuned our professionals to strategize and to discuss with the client — from the intake of the case forward — how we can structure the relationship, proceed with the case, and bring it to conclusion, in a manner that limits the client’s risk and maximizes his return.

Our tag line, which is becoming familiar to the Cincinnati and northern Kentucky community, is at the heart of our aspiration in each case we undertake.  Please let us “Make a Difference” for you.

Advanced commercial real estate law: The power of Lis Pendens in Ohio

Author By Finney Law FirmPosted on 1 Comment on Advanced commercial real estate law: The power of Lis Pendens in Ohio

Lis Pendens, Latin for “suit pending,” means that any interest in real property acquired while a case is pending relating to that property is subject to the final determination of the case.

As set forth in R.C. 2703.26: “When a complaint is filed, the action is pending so as to charge a third person with notice of its pendency. While pending, no interest can be acquired by third persons in the subject of the action, as against the plaintiff’s title.”  Under this doctrine, the outcome of the litigation applies to, and is binding upon, any person who acquires an interest in the property; whether a party to the lawsuit or not. Indeed the purpose of the doctrine is to bind non-parties.

“The effect of lis pendens is that if a third party acquires an interest in the property while the lawsuit is pending, the third party takes the property subject to the final outcome of the suit.” Gunlock v. Z.B.P. Partnership, 1997 WL 598394, at *1 (Ohio App. 12 Dist., 1997). Indeed, “if the trial court awards the plaintiff rights in the property, the plaintiff takes free of any interest acquired by third parties during the lawsuit.” Martin, Rochford & Durr v. Lawyer’s Title Ins. Corp., 619 N.E.2d 1130, 1131, 86 Ohio App.3d 20, 22 (Ohio App. 9 Dist., 1993).

“In order for the plaintiff to utilize the doctrine of lis pendens, the property that is described for the purpose of invoking lis pendens must be at the very essence of the controversy between the litigants.” Levin v. George Fraam & Sons, Inc., 585 N.E.2d 527, 530, 65 Ohio App.3d 841, 846 (Ohio App. 9 Dist., 1990).

If the property is Unregistered Land, and the lawsuit is filed in the same county in which all of the property is located, Lis Pendens attaches upon the initial filing of a complaint relating to the ownership of real property and a description of the property in the complaint. Any interest in the property that is recorded after the filing of the lawsuit is subject to the Judge’s final ruling. If the suit is brought in a county other than that in which the property is located, a certified copy of the complaint must be filed with the Common Pleas Court in which the property is located (this also applies to property that straddles two or more county lines). See Civil Rule 3(F).

In a recent case we represented a buyer in a specific performance case.  Our client was under contract to purchase a parcel of unregistered land in Hamilton County. The seller informed our client that the seller would not complete the sale; rather he would sell to another buyer for a higher price. Our client was insistent on completing the purchase and forcing the sale.

Before the seller recorded the deed transferring the property to the third party, we filed suit for specific performance and included a notice of Lis Pendens in the complaint. After we filed the complaint, not only did the third party record a deed, that third party then sold the property to another third party who also recorded a deed. Bear in mind though, that each of these deeds were recorded after the lawsuit had been initiated, and thus those purchasers’ interests were subject to the outcome of our lawsuit.

Ultimately, we prevailed and the property was re-titled in the name of our client and the interests of the two third party purchasers were extinguished.  The third party purchasers now have to look to the original seller to recoup their money.

For Registered Land, Lis Pendens does not attach until after the complaint is filed with the Court and a Notice of Lis Pendens is filed with the County Recorder. Civil Rule 3(F) also applies where the suit is brought in county other than that in which all of the property is located.  What this means for purchasers of Unregistered Land is that certainty of your interest requires not only that you search the title, but that you also search the court filings for any litigation involving the property.

For a party seeking to invoke Lis Pendens over registered land, the process is slightly more complex. The party must first file the complaint with the court, then present a certified certificate of the pendency of the suit with the county recorder and a memorial of the suit entered on the certificate of title by the county recorder.

While the road to Lis Pendens against registered land is more cumbersome for the plaintiff, the third party buyer can rest easy that he has good title by simply looking at the county recorder’s certificate of title for the property to see if there is a memorial of a lawsuit on the certificate. Simply stated with registered land, the certificate of title tells the whole story.

Recreational Activity and Liability for Injury

Author By Finney Law FirmPosted on

SoccerWe’ve heard it from television commentators and even youth league coaches, “injuries are part of the game.” Nearly every game; from football to soccer, baseball, basketball, cycling, and running; whatever the sport, there comes with it a chance of injury.

And it’s not just sports commentators and coaches who understand the risk of injury. Ohio’s courts recognize the old maxim as well. Ohio law protects against liability for injuries sustained during recreational activity, where that injury was the result of mere negligence.

As enunciated by Ohio’s Supreme Court: “Where individuals engage in recreational or sports activities, they assume the ordinary risks of the activity and cannot recover for any injury unless it can be shown that the other participant’s actions were either ‘reckless’ or ‘intentional’” Marchetti v. Kalish.

Underlying this rule is the assumption that by voluntarily participating in a recreational activity, one has consented to the ordinary risks inherent in that activity.

This rule has been applied not only on the field of traditional sports, but even in some rather unusual “recreational activities.” In Konrad v. Morant, the “recreational activity” involved two children and one BB gun. They took turns chasing each other and shooting at each other, all very fair and sportsmanlike. Likewise, in Marcum v. Zerkle, there was no liability for injuries sustained in a paintball game.

This same rule has also been applied to injuries sustained by spectators.

In Ohio, whether you’re on the field or in the stands, you’ve assumed the ordinary risks associated with the activity you’re engaged in or even merely watching.

Chris Finney featured in new book, the “Site Seer”

Author By Christopher P. FinneyPosted on

A former site selection and development professional for McDonalds Restaurants and Albertsons Supermarkets,  Mike Emmert, has authored a new book, The Site Seer.

In that book Mike Emmert shares his knowledge and experiences as a real estate professional.  Finney Law Firm founder Chris Finney has been privileged to work with Emmert on development projects in Ohio and was impressed with his skills.  As a result, they formed a fast and lasting friendship.

Chris Finney is featured in Emmert’s new book with a quote of endorsement and encouragement.

We heartily recommend the book for the reading of any real estate professional, or aspiring investor, or student of real estate.

Read it about it and buy it through this link.  Read Mr. Finney’s comments here.

Chris Finney to speak Tuesday night at Beyond Civility event on Religious Liberties/Women’s Rights

Author By Christopher P. FinneyPosted on

Tuesday night of this week, Finney Law Firm founder Chris Finney and Jennifer Branch of the law firm of Gerhardstein & Branch will discuss recent legal developments in the area of Religious Liberties and Women’s Rights before the ground-breaking community forum Beyond Civility.

The Back-to-Back series hosted by Beyond Civility asks participants to debate a controversial topic from a position different than that which they would normally advocate.  This session addresses the twin Supreme Court decisions from last session in Burwell v. Hobby Lobby and Wheaton College v. Burwell.  

Jennifer Branch, who sits on the Board of Planned Parenthood, Southwest Ohio region will take the “”conservative” position in favor of the Hobby Lobby and Wheaton College decisions, and Chris Finney, co-founder of the Coalition Opposed to Additional Spending and Taxes (COAST), will take the opposing position.

The successful Back-to-Back series hosted by Beyond Civility has featured prior programs such as:

Beyond Civility’s distinguished Board of Directors is here.

To RSVP to attend Tuesday Night’s free event, which offers CLE credits, click here.  Click here to obtain CLE credits.

Finney Law Firm wins for client important appellate victory in $3.5 million case

Author By Christopher P. FinneyPosted on

In an important decision for this firm and several of our clients, the Finney Law Firm this week won an important victory in a $3.5 civil conspiracy case.

The case involved a 2004 sale of real property in Hamilton County Ohio.  There, the buyer quickly marked up and “flipped” the property to several tenant-in-common owners as part of tax-free 1031 exchanges.  The middleman was accused of making certain fraudulent misrepresentations in the sale to its buyers.  Our clients, the first sellers, knew nothing about the transaction between the initial buyer and the ultimate investors, yet was charged at the trial with being part of a civil conspiracy to defraud the TIC owners.

Another firm handled the six week jury trial.  We were hired as appellate counsel.  The First District Court of Appeals correctly ruled that Plaintiffs in a civil conspiracy “must at least show ‘a common understanding or design, even if tacit, to commit an unlawful act.'”  Because in this case there was not a shred of evidence that our clients knew of, much less participated in the acts to defraud the TIC owners, summary judgment should have been rendered in our client’s favor.  The Court of Appeals ruled that the matter never should have been presented to a jury.

What quality of title are you getting in that real estate contract?

Author By Christopher P. FinneyPosted on

The essence of a real estate contract is an exchange of (i) cash from the buyer for (ii) some conveyance of title, and some quality of title from the seller.  Certainly, there are many other provisions of a contract that are important and we review each of these, but the exchange of money for title to real estate is the core transaction taking place.

When I review a purchase contract, the first place my eyes go, is asking “what is the standard of title, the quality of title that the seller has to convey to the buyer.”  The standards in the “industry” are markedly divergent on this issue (there is no legal requirement of the minimum quality of title to be conveyed; it is a matter of contact).  The most common standards are:

o   Good, clear and marketable title, subject to “no” exceptions.  This quality of title basically does not exist for most properties located in an urban area because of subdivision covenants, utility easements, and other standard encumbrances.

o   Good, clear and marketable title subject to such exceptions as will not interfere with the use and enjoyment of the property for its intended use (e.g., residential  retail, manufacturing, etc.).  This is the most common form of residential title provision and this is the provision presently in the standard Cincinnati Area Board of Realtors contract.  As a practical matter this provides the buyer the right to object to title matters through the closing.

o   The Buyer checks the quality of title and within a number of days approves the quality or rejects the quality, terminating the contract.  If he does not reject title exceptions within “x” number of days, he is bound to accept them.  This is the type of title exception most common in commercial real estate contracts.

These provisions are fundamentally different standards that, depending on the circumstances, could materially affect the buyer’s rights under the contact.  (There are other standards as well; each contract may be different.)

I once appeared before a Judge who posited to me that Ohio’s Marketable Title Act,  R.C. §5301.47, et seq., dictates as between a buyer and a seller the quality of title that must be conveyed at the closing.  This is unquestionably a misapplication of the statute.  Ohio’s Marketable Title Act defines marketable title as an objective standard.  This may be helpful for interpreting contract provisions relative to the quality of title to be conveyed (i.e., if the parties promise one another that marketable title is what will be delivered, or perhaps the standard in the absence of a contractual provision), but the contract itself will define what the parties have promised one another and are therefore obligated, respectively, to deliver and accept.

Each buyer and seller should carefully consider the consequences of the title covenants in a contract, because those covenants will dictate how they must proceed thereafter and their relative rights and responsibilities under the contract.  This typically is the centerpiece of the relationship under a real estate contract.

You have been notified to show up for Jury Duty. Do you have to show?

Author By Christopher P. FinneyPosted on

Occasionally, we get calls from clients who have received a notice from the Courts to show up for Jury Duty.  Usually, they relate that they have busy lives and responsibilities and don’t want to take time to serve.  Do they have to appear?

First, from a legal perspective, yes, you do have to show.  The summons form the Court is a legal notice that is ignored at your peril.  You could be arrested and serve time for contempt of Court if you fail to comply.

Second, if the dates you have been summoned to Jury Duty are temporarily inconvenient, it can be fairly easy to schedule your service to another time.  This is because the Jury Commissioner is glad to have cooperation from responsible citizens.  It is, of course, responsible citizens who have jobs, civic responsibilities, and family obligationss and it is that type of citizen that the officials are delighted to see serve on jurys.

Further, if your life circumstances — work travel schedule, health issues, family duties —  simply makes it impossible to serve, it is possible to be formally excused from jury service.  This can be handled informally, or by formal motion to the Court.

However, we advise clients to make every attempt to cooperate in serving on jury duty.  It is always interesting.  And, even though you typically are summoned to serve for two weeks, most jurors really serve just a few days.  And finally, consider if we take from jury duty the responsible citizens who hold jobs, raise families and have active civic involvement, then to whom are we relegating jury duty?  Judges, prosecutors, and defense attorneys want intelligent, engaged, active, jurors who have diverse life experiences to whom to present and argue the tough cases.  If those with your unique background refuse to serve, aren’t the participants deprived of your life experience and knowledge?

Consider serving if you possibly can fit it in..

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