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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. | 10 |
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
| 60 |
61 | |
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 |
| 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 |
| 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
| 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 | 122 |
by serving or causing to be served on the vendee or
| 123 |
in interest, if known | 124 |
a written notice which: | 125 |
| 126 |
property covered by it; | 127 |
| 128 |
which have not been complied with; | 129 |
| 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 |
| 134 |
be served by the vendor | 135 |
written copy of the notice to the vendee
| 136 |
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
| 140 |
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 | 152 |
contract and for
restitution of | 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 | 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 |