The real estate legal “pro tip” of the day is carefully assuring your property legal descriptions are updated after each partial conveyance  so that the description of the “residue” is property on record with the county offices dealing with real estate matters.

When commercial and residential property owners acquire property, the deed into the buyer or grantee must have a legal description attached that is acceptable in form to the County Engineer, Auditor and Recorder in Ohio.  If it is an existing property description (i.e., no change from when the seller took title to the property), there will be a legal description, and an already-created Auditor’s parcel associated with that land.  It is thus not an issue that would impair the new closing.  For new cut-ups and subdivisions, the developer/seller usually undertakes that process with the County Engineer, Auditor and Recorder before it is time for closing.  At least it should.

As we approach a closing, commercial or residential, however, where we occasionally run into problems with getting a deed recorded because of a “new” legal descriptions is a situation in which an owner has conveyed away a part of the property that was originally deeded to him during the seller’s ownership of the property.  Because of an eminent domain taking, a property line dispute with a neighbor, a conveyance of a sliver to an adjoining property owner, or a combination with an adjoining parcel, the legal description by which the owner took title is no longer current or accurate, and thus needs to be updated with the County Engineer, Auditor and Recorder.

This “updating” starts with two things: (1) A plat of new survey of the property showing the new boundaries, along with a “closure chart” that shows that the ending point of the legal description meets up with the starting point, and (2) a new legal description of the parcel to be conveyed.  Then, it must be processed through the County offices to update the records of each.  Finally, the deed should be ready for recording.  But until these things are completed a deed is not recordable.  Thus, it is hard to close a transaction unless and until the legal descriptions are thusly updated inasmuch as monetary liens and and other interests can slip in during this “gap.”

It is best to take these preliminary steps at the time of the act “cutting up” your parcel (i.e., concurrent with the eminent domain taking, the property line dispute with a neighbor, the conveyance of a sliver to an adjoining property owner, or the combination with an adjoining parcel), rather than waiting for a closing on a sale that might be years later, so that the time needed for a new survey and legal description, and processing with the Engineering, Auditor and Recorder do not delay your closing.  Also, it is a smart practice to see if the buyer of the parcel (at the time of the original cutup) will pay the cost and handle the paperwork associated with getting the new plat and legal processed by the County.

Contact Isaac Heintz (513.946.6654), Eli N. Krafte-Jacobs (513.797.2853) or Jennings D. Kleeman (513.797.2858) for help with your real estate legal needs.

While the real estate market seems to have slowed slightly, our title company, Ivy Pointe Title, continues to close a record-breaking number of transactions. Perhaps due to challenges that buyers are facing in making competitive offers and having those offers accepted, our firm has also noticed an uptick in the number of (actual or attempted) contract terminations prior to closing – this phenomenon, when unjustified under the terms of the contract, is often referred to as an “anticipatory repudiation.”

An anticipatory repudiation is “‘a repudiation of the promisor’s contractual duty before the time fixed for performance has arrived.’” Sunesis Trucking Co. v. Thistledown Racetrack, L.L.C., 2014-Ohio-3333, ¶ 29 (8th Dist. 2014), quoting McDonald v. Bedford Datsun, 59 Ohio App.3d 38, 40, 570 N.E.2d 299 (8th Dist.1989). For example, if you have a contract to sell your property to a buyer, and the buyer backs out three days before the closing for any reason not justified under the terms of the contract – or for no reason at all – an anticipatory repudiation of the contract has likely occurred. It is akin to a breach of the contract; however, because it occurs before “the time fixed for performance” (i.e., the closing), it is considered “anticipatory.”

Remedies

“If an anticipatory breach of contract is found to occur, the injured party has the option of (1) terminating the contract and suing the breaching party immediately, or (2) continuing the contract and suing the breaching party for damages after the time for performance has passed.” Sunesis, at ¶ 33, citing 18 Ohio Jurisprudence 3d Contracts, Section 238 (2011). It is worth noting that the “repudiation” must be unequivocal. If you are unsure whether a party’s statement amounts to a repudiation or whether they intend to still fulfill their obligations under the contract, you should seek “adequate assurances” as to whether they intend to comply.

An anticipatory repudiation may stem from a buyer submitting offers on multiple listings to increase the odds of one of their offers being accepted (certainly plausible in this market) or a seller receiving a higher back-up offer and having remorse over having accepted a previous, lower offer. In either event, the non-repudiating party has a right to enforce the contract or sue for their damages. For instance, in the above hypothetical, the seller could re-list the property and, if the property sells for lower than the contract price with the original buyer, sue for the difference.

Affidavit of Title

An additional mechanism that is often helpful for a buyer (where the seller repudiates) is an affidavit of title. Pursuant to Ohio R.C. 5301.252, a person having an interest in real estate by virtue of a contract may assert his or her interests via an affidavit recorded in the real property records. This effectively encumbers the real estate such that most title companies will not close a transaction on the property while the affidavit is pending. In other words, it prevents the seller from being able to sell the property to someone else where you have a valid and enforceable contract to purchase that same property – it forces them to “deal with” you and your contractual interest in the property. Importantly, the affidavit of title has various technical requirements and, if containing any untrue statements, could serve as the basis for a slander of title claim. Therefore, it is important to consult with an experienced attorney before utilizing this mechanism to make sure that it is properly prepared and recorded.

If you would like to know more about your rights relative to a real estate contract, please don’t hesitate to contact us. We would be happy to meet with you and explore your options.

 

Today, the First District Court of Appeals for Ohio unanimously (on all counts) ruled in favor of Plaintiffs Andrew White and Vena Jones-Cox that the City of Cincinnati’s charges to property owners with alarm systems are an unconstitutional tax.  That decision is linked here.  They remanded the matter back to Common Pleas Judge Leslie Ghiz for determination of class certification, refund of illegally-collected fees, and other matters.  Judge Ghiz originally had ruled that fee was a constitutional assessment imposed by the City.

Attorneys for the Plaintiffs are Maurice Thompson of the 1851 Center for Constitutional Law and Christopher P. Finney of the Finney Law Firm.

You may contact Christopher P. Finney (513.943.6655) for more information.

 

Attorney and founder of Finney Law Firm, Chris Finney, on September 28, presented “Seven Deadly Sins of Commercial Real Estate” to  the Ohio Association of Realtors annual convention in Columbus, Ohio.  The course addressed the costly mistakes (some common, some not-so-common) made by real estate sellers, purchasers and lenders, including due diligence mistakes, regulatory swamps and paying unnecessary taxes.

We are proud that the proficiency, experience and reach of Finney Law Firm in real estate and real estate-based litigation is being recognized throughout the State.

Frequently we are asked by clients whether they are permitted to do “x” on their property: Move lot lines, build above a certain height, use a certain type of siding or trim or modify building setback lines. What rules govern these concerns?

The answer is: Both governmental restrictions and private contracts or covenants.

Let us explain.

Governmental restrictions

Zoning code, building code, fire code, subdivision regulations, engineer rules, and on and on and on, there a host of governmental regulations that dictate the use of, development of and construction on private property. And for each of these restrictions, there is a procedure for altering or “varying” the strict compliance with the restriction. These might include a board of zoning appeals, a board of building appeals,  or even an administrative appeal in Ohio Common Pleas Court or Kentucky Circuit Court.

So, once you jump through the hoops to get governmental approval, you are good to go, right?  Ummm, wrong.

Private covenants

For most modern subdivisions, commercial and residential, and for older ones going back decades, there are a series of private covenants against the land that many times mirror and then exceed the requirements in the governmental regulations. These covenants are recorded in the land records — in Ohio the County Recorder’s Office and in Kentucky in the County Clerk’s office. These covenants — whether the property owner is actually aware of them or not — are binding on each property owner in the subdivision as if the owner himself signed them. They are, in essence, a contract to which each subdivision property owner has expressly agreed.  These covenants may be in a textual document (many exceeding 50-100 pages) and they may be on a plat of subdivision as a graphically-drawn easement or restriction or text on the face of a plat.  Each have equal weight under the law. (Consider: did you understand as a property buyer that you were entering into 100-page contract and were bound to each provision thereof?)

Take for example building setbacks.  Zoning might require a minimum front yard of 25′, but the private covenants may require 50′. As to front entry garages, zoning may allow them, but private covenants may prohibit them.

Under private covenants, the “varying” or waiver could require unanimous approval of all lot owners, could require approval of the homeowners association board or an architectural committee thereof. Some covenants can be waived simply by a signature of the developer. The bottom line is that they are a matter of contract.  What the restrictions are and how they are waivered or varied is a question typically answered in the document itself.

Effect of governmental variance on private covenants (and vice versa)

So, as a property owner, once you go through the entire governmental variance process to allow a front entry garage or a smaller front yard setback, does that then solve the covenant problem?  Absolutely not. These two sets of restrictions each stand alone and must be modified or waived independently.

Similarly, if a property owner were to pursue a variance from requirements from a homeowners’ association, would that “fix” the violation of the governmental restriction? Still, no.

Thus, it will many times require two sets of approvals to get around a restriction that is in both the zoning code and the subdivision covenants.

Conclusion

For assistance with a zoning or covenant issue, please contact Jennings Kleeman (513.797.2858), Eli Krafte-Jacobs (513.797.2853) or Isaac Heintz (513.943.6654).

This firm and the firm of Markovits, Stock & DeMarco have undertaken a complex piece of real estate class action litigation against Build Realty, First Title, George Triantafillou and many others involving hundreds of victims. After many years and much discovery and motion work, the Motion for Class Certification has finally been fully briefed for Judge Douglas Cole. Many of our readers are following that litigation and check in for updates.

Attached are the following pleadings relating to that motion:

We would expect (but cannot assure) a decision on this motion sometime before the end of 2021 and then will advise prospective class members thereafter.  In the meantime, if you have questions, please contact attorney Chris Finney at 513.943.6655.

Sometimes a client comes to the Finney Law Firm concerned about their neighbor’s rights to an easement over their land leading to the question: who has the duty to maintain and repair the easement? A big concern for these clients is the cost of the maintenance and repair of the easement. These easements tend be associated with driveways and sewer lines. This blog post is designed provide some general background as to what easements are and address the cost concern for individuals in similar situations.

Background on easements

An easement is an interest that may burden another persons’ land. The interest entitles the owner of the easement to use the land in some limited way. The extent of that interest is determined by the process which creates the easement.

There are two kinds of easements, the easement appurtenant, and the easement in gross. The easement appurtenant deal with two pieces of land (e.g., two neighboring parcels) and tend to be conveyed with a sale of the land. The easement in gross deal with one piece of land (e.g., one parcel and another person’ right to use the one parcel) and tend to not be conveyed with a sale of the land.

This blog post deals with easements appurtenant.

Creation

An easement may be created by deed, prescription, or implication from the particular set of facts and circumstances. Likewise, some courts allow for an equitable easement, which is referred to as an easement by estoppel. The owner of the easement’s land is called the dominant estate. The dominant estate benefits from the easement. The burdened land is referend to as the servient estate.

Who maintains and repairs?

Generally, it is the duty of the dominant estate to maintain and repair the easement. Likewise, the dominant estate must make the necessary repairs to prevent the dominant estate from created an annoyance or nuisance to the servient estate.

That said, the servient estate can expressly undertake the duty to maintain and repair the easement. This may be done in many ways (e.g., through a maintenance agreement, a grant in a deed, or operation of law).

What if the servient estate also uses the easement?

The servient estate may also use the land on which the dominant estate enjoys an easement. However, that use must be in a way that is not contrary to the dominant estate’s limited use of the land. When an easement is used jointly by the dominant estate and the servient estate, the cost of maintenance and repair of such easement must be apportioned between the dominant estate and the servient estate, based on relative use.

Conclusion

So, if you have a similar situation to those clients that come to the Finney Law Firm concerned about their neighbor’s rights to an easement over their land and who bears the maintenance and repair costs, then it might be time to call the Finney Law Firm.

 

“A mortgage is a conveyance of property to secure the performance of some obligation, which is designed to come void upon due performance thereof.”[1] The Ohio Revised Code characterizes mortgages as “liens.”[2] Mortgage liens are only applicable to real property, as with the land and the buildings attached to it.

Mortgagors (the party granting the mortgage) tend to grant mortgages to secure payment of money from the mortgagee (the party granting a loan in consideration for the mortgage).[3] The instrument evidencing the debt secured by the mortgage is generally referred to as a “note.” However, mortgagors may grant mortgages to secure the performance of other obligations, like an environmental indemnification.

Notes and mortgages, as contracts, are negotiable by the parties to them. As such, notes and mortgages include all sorts of obligations and remedies. That said, there are three basic remedies that a mortgagee can pursue to enforce the note and mortgage.[4] Mortgages can pursue all three of the following remedies at the same time or separately.[5] However, in doing so, a mortgagee must keep in mind the different statute of limitations periods for each remedy.

(1) An action on the debt secured by the mortgage (the note).

When a mortgagee brings an action on the debt secured by the mortgage, the mortgagee is bringing an action for a personal judgment debt evidenced by the note against the mortgagor (or any other maker of the note, even if they did not sign the mortgage).[6]

In Ohio, written instruments, such as notes, have a six-year statute of limitations, running from the due date(s) or, if applicable, the date the debt is accelerated.[7] When the statute of limitations runs on the note, the mortgagee can still go after the mortgagor with a foreclosure action, as the statute of limitations on the mortgage is longer. The statute of limitations for the foreclosure does not run by virtue of the statute of limitations on the note running.[8]

(2) An action to foreclose on the mortgaged property.

When a mortgagee brings an action to foreclose on the mortgaged property, the mortgagee is attempting to secure the mortgagee’s conditional interest (conditional on mortgagor default) in the property.[9] If the mortgagee succeeds here, the mortgagee will have superior title to the property than that of the mortgagor.[10] The go-to remedy for mortgagees is that of an action to foreclose on the mortgaged property.[11]

In Ohio, foreclosure actions have an eight-year statute of limitations, running from the date that the breach occurred.[12] The statute of limitations for foreclosures was changed from fifteen years to eight years on September 28, 2012.[13] For breaches that occurred before September 28, 2012, the statute of limitations runs at the end of the fifteen-year period from the breach or September 27, 2020, whichever is earlier.[14]

(3) An action of ejectment against the occupier of the mortgaged property.[15]

When a mortgagee brings an action of ejectment against the occupier of the mortgaged property, the mortgagee is attempting to take possession of the property.[16] In doing this, the mortgagee is taking advantage of the mortgagee’s superior title to the property to that of the mortgagor. [17]

In Ohio, ejectment actions have a twenty-one-year statute of limitations, running from the date that the mortgage becomes due.[18]

The aforementioned information regarding the statute of limitations does not apply to the mortgage itself. A mortgage, that is unsatisfied or unreleased of record, remains in effect for twenty-one-years from the date of the mortgage or twenty-one-years from the date of the maturity date (if any), whichever is later.[19] This, however, deals more with the purchasing of encumbered property free from the prior mortgage, and the mortgagee’s ability to enforce a prior mortgage against purchaser.

If you, as a mortgagee, have a mortgagor in default and want to enforce the note, mortgage, or both, call the Finney Law Firm today!

[1] Barnets, Inc. v. Johnson, Case No. CA2004-02-005, 2005 Ohio App. LEXIS 703, *8 (Ohio App. 12th Dist. Feb. 22, 2005), citing Brown v. First Nat. Bank, 44 Ohio St. 269, 274 (1886).

[2] Barnets, at *8.

[3] Barnets. at *9.

[4] Barnets, at *9.

[5] Barnets, at *9.

[6] United States Bank Nat’l Ass’n v. O’Malley, 150 N.E.3d 532 (Ohio App. 8th Dist. Dec. 26, 2019).

[7] ORC Section 1303.16.

[8] O’Malley, at 532.

[9] O’Malley, at 532.

[10] Search Mgmt. L.L.C. v. Fillinger, 2020 Ohio App. LEXIS 1966, *1.

[11] Barnets, at *9.

[12] ORC Section 2305.06.

[13]Ohio Real Property Law and Practice § 19.10 (2020).

[14] Ohio Real Property Law and Practice § 19.10 (2020)

[15] Barnets, at *9.

[16] Fillinger, at *1.

[17] Fillinger, at *1.

[18] Cont’l W. Reserve v. Island Dev. Corp., 1997 Ohio App. LEXIS 962, *1.

[19] ORC Section 5301.30.

Contractors, laborers, and materialmen tend to run into issues receiving payment for their work on certain projects. A terrific way for contractors, laborers, and materialmen to guard against not getting paid is to attach a Mechanic’s Lien to the property on which the contractors, laborers, and materialmen performed their work. From an extremely general point of view, to perfect a Mechanic’s Lien, contractors, laborers, and materialmen must file an “Affidavit for Mechanic’s Lien,” with the recorder’s office in the county where the property is located.

It is key to remember that there are time limits that must be adhered to on the front end and back end of filing an Affidavit for Mechanic’s Lien.

The Front End

When it comes to the front end, the time limit will vary based on the type of project.

If the Mechanic’s Lien is associated with a residential property, like a family home or condominium, then a contractor, laborer, or materialman claiming a Mechanic’s Lien has sixty (60) days from the date that the last labor was performed, or material was provided by the contractor, laborer, or materialman.[1]

If a Mechanic’s Lien is associated with oil or gas wells or facilities, then a contractor, laborer, or materialman claiming a Mechanic’s Lien has one hundred and twenty (120) days from the date that the last labor was performed, or material was provided by the contractor, laborer, or materialman.[2]

For all other Mechanic’s Liens, a contractor, laborer, or materialman claiming a Mechanic’s Lien has one seventy-five (75) days from the date that the last labor was performed, or material was provided by the contractor, laborer, or materialman.[3]

The Back End

ORC Section 1311.13 deals with attachment of liens, continuance, and priority. ORC Section 1311.13(C) states that Mechanic’s Liens, under sections 1311.01 to 1311.24, continue for six years after the Affidavit for Mechanic’s Lien is filed with the county recorder, as required by ORC Section 1311. If a cause of action based on a Mechanic’s Lien is brought within the six years, then the Mechanic’s Lien will continue “in force until final adjudication thereof.”

If a cause of action based on a Mechanic’s Lien is not brought within the six-year period, then the rights associated with the Mechanic’s Lien are extinguished.[4] Thus, there is a six-year statute of limitations to bring a cause of action based on a Mechanic’s Lien.[5] Furthermore, “the statutory scheme for the filing and enforcement of [M]echanic’s [L]iens does not provide for the tolling or expansion of designated statutory time limits.”[6]

If you have a Mechanic’s Lien and need to act, please feel free to reach out to the Finney Law Firm, before it is too late!

_____________________

[1] ORC Ann. 1311.06(B)(1).

[2] ORC Ann. 1311.06(B)(2).

[3] ORC Ann. 1311.06(B)(2).

[4] Banner Constr. Co. v. Koester, 2000 Ohio App. LEXIS 1313, *1.

[5] Id.

[6] Id.