III. Real Property Law
Senate Bill 134 Memoranda of trust
A product of the OSBA Real Property Section
Effective January 17, 2008
Under prior law, Section 5301.255 of the Revised Code established a procedure by which constructive notice of the existence of trusts may be provided in the real estate records of the Recorder’s Office without the need for filing the entire trust instrument. Instead, a memorandum providing certain specified information with respect to the existence of the trust is filed.
While there is no requirement that a memorandum of trust be filed, most real estate lawyers and title examiners believe that it is the best practice to do so, and the intent of the statute was to encourage the use of memoranda of trusts. However, in practice, the statute has not been used to the extent intended due to the requirement that the memorandum of trust disclose the name of and be signed by the settler (the person creating the trust) in addition to the trustee. This requirement, which adds no important information regarding the trust from a real estate title standpoint, provides a significant disincentive to the use of a memorandum of trust.
The requirement relative to the settler is a disincentive in two respects. First, many people create trusts to hold property for the very purpose of shielding their ownership interest in real estate in the public records. Second, if the settler is deceased, the settler is no longer around to execute any amendments to the memorandum of trust, such as when a new trustee is appointed after the death of the settler, and thus it is impossible to do so, which makes the Recorder’s records incorrect.
The purpose of this act is to remove this disincentive by deleting the requirements that the name of the settler be disclosed in the memorandum of trust and that the settler sign the memorandum of trust. This change will have no negative impact because the name of the settler is not important information for the purpose of the memorandum of trust, and the title to real estate owned through a trust is actually titled in the name of the trustee, which is disclosed.
Adapted from testimony prepared by Steven Buchenroth of the OSBA Real Property Section.
House Bill 138 Judicial sales of property
Effective September 11, 2008
House Bill 138 arises in part due to the increase in foreclosures in Ohio.
House Bill 138:
- requires purchasers of real property at a judicial sale to provide certain identifying information;
- requires purchasers to pay the balance due on the purchase price within 30 days of the confirmation of the sale;
- allows municipal corporations to conduct inspections of property subject to a writ of execution;
- requires judicial sales to be confirmed within 30 days of sale;
- requires officers who sell real property at a judicial sale to file a deed within 14 days of payment of the balance due on the purchase price;
- authorizes courts and county boards of revision to transfer certain tax delinquent lands subject to judicial foreclosure without appraisal or sale;
- permits a summary property description to be read at a judicial sale;
- allows the courts to perform mediation in an action for the foreclosure of a mortgage; and
- offers property that did not sell at a judicial sale to a political subdivision before forfeiture to the state.
Senate Bill 7 Eminent domain
Effective October 10, 2007
In response to recommendations issued by the Task Force to Study Eminent Domain, the General Assembly enacted Senate Bill 7, which reforms Ohio’s eminent domain laws. The Task Force was created to study the use of eminent domain in Ohio and the impact of the United States Supreme Court’s decision in Kelo v. City of New London, 545 U.S. 469 (2005), which authorized the taking of property for private economic development under the Fifth Amendment’s Takings Clause.
The legislature debated two competing proposals for reforming eminent domain, Senate Bill 7 and House Bill 5. Both bills generally prohibited the appropriation of property for the purpose of developing it economically or for any other private use, unless the property is “blighted.” Each bill extensively defined those characteristics that constitute “blight” and each bill defined those characteristics that make a geographic area with multiple parcels “blighted” and subject to taking. The key point of difference between the two bills was the percentage of properties in a geographic area that had to be blighted before an area-wide taking could occur. The Senate version required that 90% of those properties be blighted, while the House version required that only 50% of the properties be blighted. Senate Bill 7, which became the vehicle, requires that 70% of properties in an area satisfy the conditions for blight before an appropriation may occur.
Senate Bill 7 permits property owners to immediately appeal a necessity determination and certain other court findings before the jury reaches a determination on the amount of compensation to be awarded to the property owner. The act also removes a provision in prior law that prohibited courts from granting stays to property owners during the appeals process. The act expressly authorizes courts to grant such stays upon the posting of a supersedeas bond.
Senate Joint Resolution 1, a related piece of legislation, proposed a constitutional amendment that would have placed the same limitations on municipalities’ powers of eminent domain as that placed upon the state and its agencies, notwithstanding cities’ home rule authority. Senate Joint Resolution 1 passed the Senate but was defeated in the House. Senate Joint Resolution 3 was introduced in a second attempt to enact the proposal.
Adapted from materials prepared by the Ohio Judicial Conference by Andre Imbrogno. A more extensive analysis is attached as Appendix C.
House Bill 222 Real property sale notification
Pending in the House Local and Municipal Government and Urban Revitalization Committee
House Bill 222 would permit, rather than require, that public notices and advertisements of the sale of lands and tenements taken in execution contain a description of the lands and tenements. In addition, the bill would permit those public notices and advertisements to be made on the sheriff’s web-site.
The OSBA Real Property Section has expressed concern about the latter provision because the sheriff’s web-site may not provide adequate notice, especially when the public would expect to find the information elsewhere.
Senate Bill 103 Adverse possession
Pending in the Senate State and Local Government Committee
Senate Bill 103, initiated by the Ohio Farm Bureau Federation, would amend Section 5301.01 of the Revised Code (“Action to Quiet Title”) to establish an additional requirement that a party must prove to establish title to real property by adverse possession. This additional element is that “the person seeking title by adverse possession paid, in a timely manner, all taxes and special assessments that the person reasonably believed to be due on the property during the period that the person seeking title by adverse possession claims to have been in possession of the property.”
According to the OSBA Real Property Section, the impact of this amendment would be to effectively do away with the right of a party to obtain title by adverse possession in Ohio. This is because in virtually no case where a party is claiming title by adverse possession has that party paid the real estate taxes on the property to which it is claiming title by adverse possession. On the contrary, the real estate taxes are charged on the auditor’s tax duplicate against the fee owner of the property. Adverse possession is a method in which a party who has been in exclusive possession of that property openly, notoriously, adversely, and continuously for a period of 21 years, and proves the same to a court by clear and convincing evidence is entitled to become the fee owner of the property as against the title of the actual fee owner.
While the statute of limitations period for proving adverse possession of 21 years is statutorily established in Section 2305.04 of the Revised Code, the other elements of adverse possession are common law elements that have been a part of English common law for over 500 years and the law of the Ohio for more than two centuries.
The concept of adverse possession was developed by the common law as a fair and equitable method for determining disputed titles of real property. It recognizes that possession, where it has been exclusive, open and notorious, and adverse to the interest of the fee owner for a continuous period of 21 years, can “trump” the title of the fee owner.
The Real Property Council believes that there is still a place for adverse possession in Ohio law and has recommended that the OSBA oppose the bill. The OSBA is working with the Ohio Farm Bureau Federation.
House Bill 56 Manufactured home parks; eviction
Signed by the Governor on July 19, 2007; effective October 18, 2007
House Bill 56 will authorize forcible entry and detainer proceedings against a manufactured home park resident, or the estate of such resident, who as a result of death or otherwise, has been absent from the home park for 30 consecutive days prior to the commencement of the action and whose manufactured home, mobile home, or recreational vehicle has been left unoccupied for the 30 day period without notice to the park operator and without payment of rent due under the rental agreement.