Bill Text: OH HB145 | 2009-2010 | 128th General Assembly | Introduced

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Bill Title: To require that residential units conveyed pursuant to a land installment contract receive an appraisal and an inspection, to define residential lease option contract, to regulate residential lease option contracts under the Ohio Landlord and Tenant Law, and to provide penalties.

Spectrum: Strong Partisan Bill (Democrat 12-1)

Status: (Introduced - Dead) 2009-04-23 - To Civil & Commercial Law [HB145 Detail]

Download: Ohio-2009-HB145-Introduced.html

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As Introduced

128th General Assembly Regular Session 2009-2010

H. B. No. 145

Representative Yuko 

Cosponsors: Representatives Murray, Williams, B., Phillips, Foley, Hagan, Luckie, Heard, Chandler, Winburn, Fende, Ujvagi, Boyd 

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A BILL

To amend sections 5313.01, 5313.02, 5313.06,

1

5313.08, and 5321.01 and to enact sections

2

5321.20, 5321.21, 5321.22, 5321.23, and 5321.24 of

3

the Revised Code to require that residential

4

units conveyed pursuant to a land installment

5

contract receive an appraisal and an inspection,

6

to define residential lease option contract, to

7

regulate residential lease option contracts under

8

the Ohio Landlord and Tenant Law, and to provide

9

penalties.

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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 5313.01, 5313.02, 5313.06, 5313.08,	11
and 5321.01 be amended and sections 5321.20, 5321.21, 5321.22,	12
5321.23, and 5321.24 of the Revised Code be enacted to read as	13
follows:	14

Sec. 5313.01.  As used in Chapter 5313. of the Revised Code:

15

(A) "Land installment contract" means an executory agreement	16
which by its terms is not required to be fully performed by one or	17
more of the parties to the agreement within one year of the date	18
of the agreement and under which the vendor agrees to convey title	19
in real property located in this state to the vendee and the	20
vendee agrees to pay the purchase price in installment payments,	21
while the vendor retains title to the property as security for the	22
vendee's obligation. Option contracts for the purchase of real	23
property, including "residential lease option contracts" as	24
defined in section 5321.01 of the Revised Code, are not land	25
installment contracts.	26

(B) "Property" means real property located in this state	27
improved by virtue of a dwelling having been erected on the real	28
property.	29

(C) "Vendor" means any individual, partnership, corporation,	30
association, trust, or any other group of individuals however	31
organized making a sale of property by means of a land installment	32
contract or any successor in interest of the individual,	33
partnership, corporation, association, trust, or any group	34
thereof.	35

(D) "Vendee" means the person who acquires an interest in	36
property pursuant to a land installment contract, or any legal	37
successor in interest to that person.	38

(E) "Legal description" means a description of the property	39
by metes and bounds or lot numbers of a recorded plat including a	40
description of any portion of the property subject to an easement	41
or reservation, if any.	42

(F) "Residential structure" means a structure that contains	43
one to four dwelling units, each of which is intended for	44
occupancy as a home, residence, or sleeping place by one or more	45
persons who maintain a household. "Residential structure"	46
includes a single-family home.	47

Sec. 5313.02.  (A) Every land installment contract shall be	48
executed in duplicate, and a copy of the contract shall be	49
provided to the vendor and the vendee. The contract shall contain	50
at least the following provisions:	51

(1) The full names and then current mailing addresses of all	52
the parties to the contract;	53

(2) The date when the contract was signed by each party;

54

(3) A legal description of the property conveyed;

55

(4) The contract price of the property conveyed;

56

(5) Any charges or fees for services that are includable in	57
the contract separate from the contract price;	58

(6) The amount of the vendee's down payment;

59

(7) The principal balance owed, which is the sum of the	60
specified in divisions (A)(4) and (5) of this section less the	61
specified in division (A)(6) of this section;	62

(8) The amount and due date of each installment payment;

63

(9) The interest rate on the unpaid balance and the method of	64
computing the rate;	65

(10) A statement of any encumbrances against the property	66
conveyed;	67

(11) A statement requiring the vendor to deliver a general	68
warranty deed on completion of the contract, or another deed that	69
is available when the vendor is legally unable to deliver a	70
general warranty deed;	71

(12) A provision that the vendor provide evidence of title in	72
accordance with the prevailing custom in the area in which the	73
property is located;	74

(13) A provision that, if the vendor defaults on any mortgage	75
on the property, the vendee can pay on the mortgage and receive	76
credit on the land installment contract;	77

(14) A provision that the vendor shall cause a copy of the	78
contract to be recorded;	79

(15) A requirement that the vendee be responsible for the	80
payment of taxes, assessments, and other charges against the	81
property from the date of the contract, unless agreed to the	82
contrary;	83

(16) A statement of any pending order of any public agency	84
against the property.	85

(B) No vendor shall enter into a land installment contract	86
for real estate that contains a residential structure unless that	87
vendor obtains and attaches to the contract, both of the	88
following:	89

(1) A copy of a written appraisal report of the real property	90
and the residential structure, conducted within the previous year	91
by an appraiser who is certified as a residential real estate	92
appraiser pursuant to Chapter 4763. of the Revised Code;	93

(2) A copy of an inspection of the residential structure	94
conducted by a home inspector who is a member of the American	95
society of home inspectors.	96

(C) No vendor shall hold a mortgage on property sold by a	97
land installment contract in an amount greater than the balance	98
due under the contract, except a mortgage that covers real	99
property in addition to the property that is the subject of the	100
contract where the vendor has made written disclosure to the	101
vendee of the amount of the mortgage and the release price, if	102
any, attributable to the property in question.	103

No vendor shall place a mortgage on the property in an amount	104
greater than the balance due on the contract without the consent	105
of the vendee.	106

(C)(D) Within twenty days after a land installment contract	107
has been signed by both the vendor and the vendee, the vendor	108
shall cause a copy of the contract to be recorded as provided in	109
section 5301.25 of the Revised Code and a copy of the contract to	110
be delivered to the county auditor.	111

(D)(E) Every land installment contract shall conform to the	112
formalities required by law for the execution of deeds and	113
mortgages. The vendor of any land installment contract that	114
contains a metes and bounds legal description shall have that	115
description reviewed by the county engineer. The county engineer	116
shall indicate histhe engineer's approval of the description on	117
the contract.	118

Sec. 5313.06. (A) Following expiration of the period of time	119
provided in section 5313.05 of the Revised Code, forfeiture of the	120
interest of a vendee in default under a land installment contract	121
shall be initiated by the vendor or by his successor in interest,	122
by serving or causing to be served on the vendee or his successor	123
in interest, if known to the vendor or his successor in interest,	124
a written notice which:	125

(A)(1) Reasonably identifies the contract and describes the	126
property covered by it;	127

(B)(2) Specifies the terms and conditions of the contract	128
which have not been complied with;	129

(C)(3) Notifies the vendee that the contract will stand	130
forfeited unless the vendee performs the terms and conditions of	131
the contract within ten days of the completed service of notice	132
and notifies the vendee to leave the premises.	133

Such(B) The notice provided pursuant to this section shall	134
be served by the vendor or his successor in interest by handing a	135
written copy of the notice to the vendee or his successor in	136
interest in person, or by leaving it at histhe vendee's usual	137
place of abode or at the property which is the subject of the	138
contract or by registered or certified mail by mailing to the	139
vendee's last known address of the vendee or his successor in	140
interest.	141

(C) Except as otherwise provided in section 5313.07 of the	142
Revised Code, any action for forfeiture of the vendee's interest	143
in a property that contains a residential structure may be brought	144
only pursuant to an action for forfeiture and restitution as	145
provided in section 5313.08 of the Revised Code.	146

Sec. 5313.08.  If the contract has been in effect for less	147
than five years, in addition to any other remedies provided by law	148
and after the expiration of the periods prescribed by sections	149
5313.05 and 5313.06 of the Revised Code, if the vendee is still in	150
default of any payment the vendor may bring an action for	151
forfeiture of the vendee's rights in thea land installment	152
contract and for restitution of histhe property under Chapter	153
1923. of the Revised Code. When bringing the action under Chapter	154
1923. of the Revised Code, the vendor complies with the notice	155
requirement of division (A) of section 1923.04 of the Revised	156
Code by serving notice pursuant to section 5313.06 of the Revised	157
Code. The court may also grant any other claim arising out of the	158
contract.	159

Sec. 5321.01.  As used in this chapter:

160

(A) "Tenant" means a person entitled under a rental agreement	161
to the use and occupancy of residential premises to the exclusion	162
of others.	163

(B) "Landlord" means the owner, lessor, or sublessor of	164
residential premises, the agent of the owner, lessor, or	165
sublessor, or any person authorized by the owner, lessor, or	166
sublessor to manage the premises or to receive rent from a tenant	167
under a rental agreement.	168

(C) "Residential premises" means a dwelling unit for	169
residential use and occupancy and the structure of which it is a	170
part, the facilities and appurtenances in it, and the grounds,	171
areas, and facilities for the use of tenants generally or the use	172
of which is promised the tenant. "Residential premises" includes a	173
dwelling unit that is owned or operated by a college or	174
university. "Residential premises" does not include any of the	175
following:	176

(1) Prisons, jails, workhouses, and other places of	177
incarceration or correction, including, but not limited to,	178
halfway houses or residential arrangements that are used or	179
occupied as a requirement of a community control sanction, a	180
post-release control sanction, or parole;	181

(2) Hospitals and similar institutions with the primary	182
purpose of providing medical services, and homes licensed pursuant	183
to Chapter 3721. of the Revised Code;	184

(3) Tourist homes, hotels, motels, recreational vehicle	185
parks, recreation camps, combined park-camps, temporary	186
park-camps, and other similar facilities where circumstances	187
indicate a transient occupancy;	188

(4) Elementary and secondary boarding schools, where the cost	189
of room and board is included as part of the cost of tuition;	190

(5) Orphanages and similar institutions;

191

(6) Farm residences furnished in connection with the rental	192
of land of a minimum of two acres for production of agricultural	193
products by one or more of the occupants;	194

(7) Dwelling units subject to sections 3733.41 to 3733.49 of	195
the Revised Code;	196

(8) Occupancy by an owner of a condominium unit;

197

(9) Occupancy in a facility licensed as an SRO facility	198
pursuant to Chapter 3731. of the Revised Code, if the facility is	199
owned or operated by an organization that is exempt from taxation	200
under section 501(c)(3) of the "Internal Revenue Code of 1986,"	201
100 Stat. 2085, 26 U.S.C.A. 501, as amended, or by an entity or	202
group of entities in which such an organization has a controlling	203
interest, and if either of the following applies:	204

(a) The occupancy is for a period of less than sixty days.

205

(b) The occupancy is for participation in a program operated	206
by the facility, or by a public entity or private charitable	207
organization pursuant to a contract with the facility, to provide	208
either of the following:	209

(i) Services licensed, certified, registered, or approved by	210
a governmental agency or private accrediting organization for the	211
rehabilitation of mentally ill persons, developmentally disabled	212
persons, adults or juveniles convicted of criminal offenses, or	213
persons suffering from substance abuse;	214

(ii) Shelter for juvenile runaways, victims of domestic	215
violence, or homeless persons.	216

(10) Emergency shelters operated by organizations exempt from	217
federal income taxation under section 501(c)(3) of the "Internal	218
Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 501, as	219
amended, for persons whose circumstances indicate a transient	220
occupancy, including homeless people, victims of domestic	221
violence, and juvenile runaways.	222

(D) "Rental agreement" means any agreement or lease, written	223
or oral, which establishes or modifies the terms, conditions,	224
rules, or any other provisions concerning the use and occupancy of	225
residential premises by one of the parties.	226

(E) "Security deposit" means any deposit of money or property	227
to secure performance by the tenant under a rental agreement.	228

(F) "Dwelling unit" means a structure or the part of a	229
structure that is used as a home, residence, or sleeping place by	230
one person who maintains a household or by two or more persons who	231
maintain a common household.	232

(G) "Controlled substance" has the same meaning as in section	233
3719.01 of the Revised Code.	234

(H) "Student tenant" means a person who occupies a dwelling	235
unit owned or operated by the college or university at which the	236
person is a student, and who has a rental agreement that is	237
contingent upon the person's status as a student.	238

(I) "Recreational vehicle park," "recreation camp," "combined	239
park-camp," and "temporary park-camp" have the same meanings as in	240
section 3729.01 of the Revised Code.	241

(J) "Community control sanction" has the same meaning as in	242
section 2929.01 of the Revised Code.	243

(K) "Post-release control sanction" has the same meaning as	244
in section 2967.01 of the Revised Code.	245

(L) "School premises" has the same meaning as in section	246
2925.01 of the Revised Code.	247

(M) "Sexually oriented offense" and "child-victim oriented	248
offense" have the same meanings as in section 2950.01 of the	249
Revised Code.	250

(N) "Preschool or child day-care center premises" has the the	251
same meaning as in section 2950.034 of the Revised Code.	252

(O) "Residential lease option contract" means any executory	253
agreement without regard to its title or description, that is	254
comprised of a single document, a portion of a document, or a	255
number of documents, and that does all of the following:	256

(1) Contains an option agreement that confers upon the tenant	257
a qualified or unqualified right to purchase the landlord's	258
interest in the residential premise;	259

(2) Requires the tenant to pay a fee for the option to	260
purchase and to pay rent during the term of the contract;	261

(3) Retains the landlord's legal and equitable title to the	262
residential premise until the tenant exercises the option and	263
purchases the property.	264

"Residential lease option contract" does not include a lease	265
for agricultural, business, or commercial purposes, personal	266
property, intangible personal property, a contract with a tenant	267
that is not an individual, or a contract to purchase that is a	268
"land installment contract" as defined in section 5313.01 of the	269
Revised Code.	270

(P) "Option agreement" means a contract or the portion of a	271
contract that is executory in nature and defines the terms and	272
conditions under which a tenant may purchase the residential	273
premise.	274

Sec. 5321.20. (A)(1) A residential lease option contract is	275
deemed to be a rental agreement subject to this chapter. A	276
person who offers a residential lease option contract is a	277
landlord pursuant to this chapter and a person who enters into a	278
residential lease option contract with that landlord is a tenant	279
pursuant to this chapter.	280

(B) A residential lease option contract shall clearly state	281
that the tenant is renting the property and has all rights and	282
responsibilities of a tenant. The contract shall contain the	283
following statement in boldface type of the same size font as	284
used for the text of the contract, in close proximity to the	285
statement of the amount of the rent:	286

"The tenant is renting this property and has all rights of a	287
tenant under The Ohio Landlords and Tenants Law, Chapter 5321. of	288
the Revised Code.	289

If the tenant does not pay the monthly rent or violates other	290
terms of the contract, the landlord may initiate eviction	291
proceedings pursuant to Chapters 5321. and 1923. of the Revised	292
Code."	293

Sec. 5321.21. (A) Any residential lease option contract shall	294
clearly state that the contract is not a contract to purchase. It	295
shall contain, at the top of the first page of the contract and	296
again directly above the tenant's signature, the following	297
printed in at least fourteen-point boldface type in all capital	298
letters:	299

THIS IS NOT A CONTRACT TO BUY. THIS CONTRACT GIVES YOU THE	300
RIGHT TO BUY THE PROPERTY DESCRIBED IN IT. YOU WILL NOT OWN THE	301
PROPERTY UNTIL YOU PAY THE PURCHASE PRICE IN FULL AND FULFILL THE	302
OTHER TERMS OF THIS CONTRACT.	303

(B)(1) The contract shall disclose the amount of the option	304
fee and state the amount of the option fee that will be credited	305
against the purchase price if the tenant exercises the option to	306
purchase. The contract shall contain the following statement	307
printed clearly and conspicuously in at least fourteen-point	308
boldface type in all capital letters:	309

THE TENANT HAS PAID AN ADDITIONAL FEE OF $...... FOR THE	310
RIGHT TO PURCHASE THE PROPERTY LOCATED AT ..................	311

THIS OPTION FEE IS NOT A SECURITY DEPOSIT AND MAY NOT BE	312
REFUNDED IF FOR ANY REASON THE TENANT DOES NOT BUY THE PROPERTY.	313

(2) During any year in which a residential lease option	314
contract is in effect, the fee for the option to purchase may not	315
exceed one and one-half times the amount that is charged for one	316
month's rent that year. During the entire term that the option is	317
in effect, the total of the fees charged for the option may not	318
exceed four times the amount of the monthly rent that was charged	319
during the first year of the option.	320

Sec. 5321.22. (A) No landlord shall offer a residential lease	321
option contract to a tenant unless that contract contains all of	322
the following in addition to any other requirements of this	323
chapter:	324

(1) The full name and mailing address of each party to the	325
contract;	326

(2) The date each party signs the contract;

327

(3) The amount of the tenant's monthly rent;

328

(4) The period of time during which the tenant may exercise	329
the right to buy the property;	330

(5) The agreed upon sales price of the property and any	331
adjustments that may be made to the sales price, the circumstances	332
under which those adjustments may be made, and the amount of rent	333
that will be applied to reduce the sales price;	334

(6) A legal description of the property by metes and bounds	335
or lot numbers of a recorded plat, including a description of any	336
portion of the property subject to an easement or reservation;	337

(7) A statement of any known encumbrances or encumbrances	338
that could be reasonably ascertained against the property;	339

(8) A statement of any pending order of a public agency	340
against the property;	341

(9) A statement specifying any liens and mortgages against	342
the property for which the tenant will assume responsibility at	343
the time of closing and the current dollar amount of each;	344

(10) A statement that the landlord will remove any liens and	345
mortgages against the property prior to the time of the closing,	346
except those specified in the contract to be assumed by the	347
tenant;	348

(11) A statement that the tenant has received, reviewed, and	349
signed a completed copy of the residential real property	350
disclosure form described in section 5302.30 of the Revised Code;	351

(12) A statement of the landlord's ownership interest in the	352
property and information regarding the location of documentation	353
of that ownership interest;	354

(13) A provision requiring the landlord to provide evidence	355
of title and to deliver a general warranty deed, or the best	356
available deed if unable to deliver a general warranty deed, at	357
the closing upon exercise of the option;	358

(14) A statement setting forth which expenses of closing and	359
sale are the responsibility of the landlord and which are the	360
responsibility of the tenant.	361

(B) Prior to the tenant signing a residential lease option	362
contract, the landlord shall provide the tenant with a completed	363
and signed copy of the residential real property disclosure form	364
described in section 5302.20 of the Revised Code, and any other	365
documents federal, state, or local law require.	366

(C) The landlord shall provide each tenant who is a party to	367
a residential lease option contract a copy of the contract signed	368
by the landlord and by each tenant and a receipt for any fees paid	369
to the landlord pursuant to the contract.	370

Sec. 5321.23. A tenant who enters into a residential lease	371
option contract may request the landlord to prepare an updated	372
statement of the amount needed to purchase the property. Within	373
ten days of such a request, the landlord shall prepare a statement	374
of the current price to purchase the property. The statement shall	375
show all calculations used to reach the current price including	376
credits toward the purchase price and additions to the purchase	377
price. The landlord shall either deliver the statement in person,	378
with the tenant signing a copy of the statement as evidence of	379
its receipt, or by certified mail to the property address. A	380
landlord is not obligated to provide the information this	381
division requires more than twice during any twelve-month period.	382

Sec. 5321.24. A court of competent jurisdiction may find any	383
landlord who fails to substantially comply with sections 5321.20	384
and 5321.21 of the Revised Code liable for damages in an amount	385
not less than ninety dollars and not more than five hundred	386
dollars for each violation, together with actual damages and	387
reasonable attorney's fees, and may void the contract and order	388
any fees or deposits be returned to the tenant. A tenant may seek	389
enforcement of sections 5321.20 to 5321.23 of the Revised Code in	390
a municipal court, county court, or court of common pleas and,	391
upon determining that the landlord has failed to comply with any	392
of these sections, the court shall grant appropriate relief.	393

Section 2. That existing sections 5313.01, 5313.02, 5313.06,	394
5313.08, and 5321.01 of the Revised Code are hereby repealed.	395

Section 3.  Section 5313.02 of the Revised Code is presented	396
in this act as a composite of the section as amended by both Sub.	397
H.B. 95 and Am. Sub. H.B. 473 of the 119th General Assembly. The	398
General Assembly, applying the principle stated in division (B) of	399
section 1.52 of the Revised Code that amendments are to be	400
harmonized if reasonably capable of simultaneous operation, finds	401
that the composite is the resulting version of the section in	402
effect prior to the effective date of the section as presented in	403
this act.	404