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H. B. No. 361 As Introduced
As Introduced
127th General Assembly | Regular Session | 2007-2008 |
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Cosponsors:
Representatives Driehaus, Foley, Healy, Williams, B., Fende, Koziura, Ujvagi, Luckie, Skindell, Lundy, Chandler, DeGeeter
A BILLTo amend sections 5313.01, 5313.02, 5313.06,
5313.08, and 5321.01 and to enact sections
5321.20, 5321.21, 5321.22, 5321.23, and 5321.99 of
the Revised Code to
require that specified
residential units conveyed
pursuant to a land
installment contract receive an appraisal and an
inspection prior to the execution of the contract,
to define residential
lease option contract, to
regulate residential
lease option contracts under
the Ohio Landlord and
Tenant Law, and to provide
penalties.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 5313.01, 5313.02, 5313.06,
5313.08,
and 5321.01 be amended and sections 5321.20, 5321.21, 5321.22,
5321.23, and 5321.99 of the Revised Code be enacted to read as
follows:
Sec. 5313.01. As used in Chapter 5313. of the Revised
Code:
(A) "Land installment contract" means an executory
agreement
which by its terms is not required to be fully
performed by one or
more of the parties to the agreement within
one year of the date
of the agreement and under which the vendor
agrees to convey title
in real property located in this state to
the vendee and the
vendee agrees to pay the purchase price in
installment payments,
while the vendor retains title to the
property as security for the
vendee's obligation. Option
contracts for the purchase of real
property, including "residential lease option contracts" as
defined in section 5321.01 of the Revised Code, are not land
installment contracts.
(B) "Property" means real property located in this state
improved by virtue of a dwelling having been erected on the real
property.
(C) "Vendor" means any individual, partnership,
corporation,
association, trust, or any other group of
individuals however
organized making a sale of property by means
of a land installment
contract.
(D) "Vendee" means the person who acquires an interest in
property pursuant to a land installment contract, or any legal
successor in interest to that person.
(E) "Legal description" means a description of the
property
by metes and bounds or lot numbers of a recorded plat
including a
description of any portion of the property subject to
an easement
or reservation, if any.
(F) "Residential structure" means a structure that contains
one to four dwelling units with each unit intended for occupancy
as a home, residence, or sleeping place by one or more persons who
maintain a household. "Residential structure" includes a
single-family home.
Sec. 5313.02. (A) Every land installment contract shall
be
executed in duplicate, and a copy of the contract shall be
provided to the vendor and the vendee. The contract shall
contain
at least the following provisions:
(1) The full names and then current mailing addresses of
all
the parties to the contract;
(2) The date when the contract was signed by each party;
(3) A legal description of the property conveyed;
(4) The contract price of the property conveyed;
(5) Any charges or fees for services that are includable
in
the contract separate from the contract price;
(6) The amount of the vendee's down payment;
(7) The principal balance owed, which is the sum of
the
specified in divisions (A)(4) and (5) of this section less
the
specified in division (A)(6) of this section;
(8) The amount and due date of each installment payment;
(9) The interest rate on the unpaid balance and the method
of
computing the rate;
(10) A statement of any encumbrances against the property
conveyed;
(11) A statement requiring the vendor to deliver a general
warranty deed on completion of the contract, or another deed that
is available when the vendor is legally unable to deliver a
general warranty deed;
(12) A provision that the vendor provide evidence of title
in
accordance with the prevailing custom in the area in which the
property is located;
(13) A provision that, if the vendor defaults on any
mortgage
on the property, the vendee can pay on the mortgage and
receive
credit on the land installment contract;
(14) A provision that the vendor shall cause a copy of the
contract to be recorded;
(15) A requirement that the vendee be responsible for the
payment of taxes, assessments, and other charges against the
property from the date of the contract, unless agreed to the
contrary;
(16) A statement of any pending order of any public agency
against the property.
(B) No vendor shall enter into a land installment contract
for real estate that contains a
residential structure unless that
vendor has obtained, and has
attached to the contract, both of
the following:
(1) A copy of a written appraisal report of the real property
and the residential structure, conducted within the previous year
by a person who is a state-certified residential real estate
appraiser pursuant to Chapter 4763. of the Revised Code;
(2) A copy of an inspection of the residential structure
conducted by a home inspector who is a member of the American
society of home inspectors.
(C) No vendor shall hold a mortgage on property sold by a
land installment contract in an amount greater than the balance
due under the contract, except a mortgage that covers real
property in addition to the property that is the subject of the
contract where the vendor has made written disclosure to the
vendee of the amount of the mortgage and the release price, if
any, attributable to the property in question.
No vendor shall place a mortgage on the property in an
amount
greater than the balance due on the contract without the
consent
of the vendee.
(C)(D) Within twenty days after a land installment contract
has
been signed by both the vendor and the vendee, the vendor
shall
cause a copy of the contract to be recorded as provided in
section
5301.25 of the Revised Code and a copy of the contract to
be
delivered to the county auditor.
(D)(E) Every land installment contract shall conform to the
formalities required by law for the execution of deeds and
mortgages. The vendor of any land installment contract that
contains a metes and bounds legal description shall have that
description reviewed by the county engineer. The county engineer
shall indicate
his
the engineer's approval of the description on
the contract.
Sec. 5313.06. (A) Following expiration of the period of time
provided in section 5313.05 of the Revised Code, forfeiture of
the
interest of a vendee in default under a land installment
contract
shall be initiated by the vendor or by his the vendor's
successor
in interest, by serving or causing to be served on the vendee or
his the vendee's successor in interest, if known to the vendor
or
his the vendor's successor in interest, a written notice
which:
(A)(1) Reasonably identifies the contract and describes the
property covered by it;
(B)(2) Specifies the terms and conditions of the contract
which have not been complied with;
(C)(3) Notifies the vendee that the contract will stand
forfeited unless the vendee performs the terms and conditions of
the contract within ten days of the completed service of notice
and notifies the vendee to leave the premises.
Such (B) The notice provided pursuant to this section shall
be served by the vendor or his the vendor's
successor in interest
by handing a written copy of the notice to the vendee
or his the
vendee's successor in interest in person, or by
leaving it at his
the usual place of abode of the vendee or
the vendee's successor
or at the property which is the subject of the
contract or by
registered or certified mail by mailing to the last known
address
of the vendee or his the vendee's successor in interest.
(C) Except as otherwise provided in section 5313.07 of the
Revised Code, any action for forfeiture of the vendee's interest
in a property that contains a residential structure may be brought
only pursuant to an action for forfeiture and restitution as
provided in section 5313.08 of the Revised Code.
Sec. 5313.08. If the contract has been in effect for less
than five years, in
addition to any other remedies provided by law
and after the expiration of the
periods prescribed by sections
5313.05 and 5313.06 of the Revised Code, if the
vendee is still in
default of any payment the vendor may bring an action for
forfeiture of the vendee's rights in the a land installment
contract and for
restitution of his
the property under Chapter
1923. of the
Revised
Code. When
bringing the action under Chapter
1923. of the Revised Code, the
vendor
complies with the notice
requirement of division (A) of
section 1923.04 of the
Revised
Code by serving notice pursuant to
section 5313.06 of the Revised
Code.
The court may also grant any
other claim arising out of the
contract.
Sec. 5321.01. As used in this chapter:
(A) "Tenant" means a person entitled under a rental
agreement
to the use and occupancy of residential premises to the
exclusion
of others.
(B) "Landlord" means the owner, lessor, or sublessor of
residential premises, the agent of the owner, lessor, or
sublessor, or any person authorized by the owner, lessor, or
sublessor
to manage the premises or to receive rent from a tenant
under a
rental agreement.
(C) "Residential premises" means a dwelling unit for
residential use and occupancy and the structure of which it is a
part, the facilities and appurtenances in it, and the grounds,
areas, and facilities for the use of tenants generally or the use
of which is promised the tenant. "Residential premises" includes
a
dwelling
unit that is owned or operated by a college or
university. "Residential
premises" does not
include any of the
following:
(1) Prisons, jails, workhouses, and other places of
incarceration or correction, including, but not limited to,
halfway houses or residential arrangements that are used or
occupied as a requirement of a community control sanction, a
post-release control sanction, or parole;
(2) Hospitals and similar institutions with the primary
purpose of providing medical services, and homes licensed
pursuant
to Chapter 3721. of the Revised Code;
(3) Tourist homes, hotels, motels,
recreational vehicle
parks, recreation camps, combined park-camps, temporary
park-camps, and other similar
facilities where circumstances
indicate a transient occupancy;
(4) Elementary and secondary boarding schools, where the
cost
of room and
board is
included as part of the cost of tuition;
(5) Orphanages and similar institutions;
(6) Farm residences furnished in connection with the
rental
of land of a minimum of two acres for production of
agricultural
products by one or more of the occupants;
(7) Dwelling units subject to sections 3733.41 to 3733.49
of
the Revised Code;
(8) Occupancy by an owner of a condominium unit;
(9) Occupancy in a facility licensed as an SRO facility
pursuant
to Chapter 3731. of the Revised Code, if the facility is
owned
or operated by an organization that is exempt from taxation
under
section 501(c)(3) of the
"Internal
Revenue Code
of 1986,"
100 Stat. 2085, 26
U.S.C.A.
501, as amended, or by an entity or
group of entities in which such an
organization has a controlling
interest, and if either of the following
applies:
(a) The occupancy is for a period of less than sixty
days.
(b) The occupancy is for participation in a program operated
by
the facility, or by a public entity or private charitable
organization
pursuant
to a contract with the facility, to provide
either of the following:
(i) Services licensed, certified, registered, or approved by
a
governmental agency or private accrediting organization for the
rehabilitation of mentally ill persons, developmentally
disabled
persons, adults or juveniles convicted of criminal offenses, or
persons suffering from substance abuse;
(ii) Shelter for juvenile runaways, victims of domestic
violence,
or homeless persons.
(10) Emergency shelters operated by organizations exempt
from
federal
income taxation under section 501(c)(3) of the
"Internal
Revenue Code
of 1986," 100 Stat. 2085, 26
U.S.C.A.
501,
as
amended, for persons whose circumstances indicate a transient
occupancy, including homeless people, victims of domestic
violence, and
juvenile runaways.
(D) "Rental agreement" means any agreement or lease,
written
or oral, which establishes or modifies the terms,
conditions,
rules, or any other provisions concerning the use and
occupancy of
residential premises by one of the parties.
(E) "Security deposit" means any deposit of money or
property
to secure performance by the tenant under a rental
agreement.
(F) "Dwelling unit" means a structure or the part of a
structure that is used as a home, residence, or sleeping place by
one person who maintains a household or by two or more persons
who
maintain a common household.
(G) "Controlled substance" has the same meaning as in
section
3719.01 of the Revised Code.
(H) "Student tenant" means a person who occupies a dwelling
unit owned or
operated by the college or university at which the
person is
a student, and who has a
rental agreement that is
contingent upon the person's status
as a student.
(I) "Recreational vehicle park," "recreation camp," "combined
park-camp," and "temporary park-camp" have the same meanings as in
section 3729.01 of the Revised Code.
(J)
"Community control sanction" has the same meaning as in
section 2929.01 of the Revised Code.
(K)
"Post-release control sanction" has the same meaning as
in
section 2967.01 of the Revised Code.
(L) "School premises" has the same meaning as in section
2925.01 of the Revised Code.
(M) "Sexually oriented offense" and "child-victim oriented
offense" have the same meanings as in
section 2950.01 of the
Revised Code.
(N) "Preschool or child day-care center premises" has the the
same meaning as in section 2950.034 of the Revised Code.
(O) "Residential lease option contract" means any executory
agreement without regard to its title, description, or whether
comprised of a single document, a portion of a document, or a
number of documents, that does all of the following:
(1) Contains an option agreement that confers upon the tenant
a qualified or unqualified right to purchase the landlord's
interest in the residential premise that the tenant occupies or
intends to occupy;
(2) Requires the tenant to pay a fee for the option to
purchase upon execution of the contract and to pay rent during the
term of the contract;
(3) Retains the landlord's legal and equitable title to the
residential premise until the tenant exercises the option and
purchases the property.
"Residential lease option contract" does not include a lease
for agricultural, business, or commercial purposes, personal
property, intangible personal property, a lease with a tenant
that is not an individual, or a contract to purchase that is a
"land installment contract" as defined in section 5313.01 of the
Revised Code.
(P) "Option agreement" means a contract or the portion of a
contract that is executory in nature and defines the terms and
conditions under which a tenant may purchase the residential
premise that the tenant occupies or intends to occupy.
Sec. 5321.20. (A)(1) A residential lease option contract is
deemed to be a
rental agreement that is subject to the
requirements of this chapter. A
person who offers a residential
lease option contract to a tenant
is a landlord pursuant to this
chapter and a person who enters
into a residential lease option
contract as a tenant is a tenant
pursuant to this chapter.
(B) A residential lease option contract shall clearly state
that the tenant is renting the property and has all rights and
responsibilities of a tenant pursuant to Chapter 5321. of the
Revised Code. The contract shall contain the following statements
printed clearly and conspicuously in boldface type of the same
size font as used for the text of the contract and in close
proximity to the statement of the amount of the option fee:
The tenant is renting this property and has all rights of a
tenant under The Ohio Landlords and Tenants Law, Chapter 5321. of
the Revised Code.
The tenant has paid an additional fee of $...... for the
right to purchase the property located at ..................
If the tenant does not pay the monthly rent or violates other
terms of the lease, the landlord may initiate eviction proceedings
pursuant to Chapters 5321. and 1923. of the Revised Code.
Sec. 5321.21. (A) Any residential lease option contract shall
clearly set forth that the contract is not a contract to purchase.
The contract shall contain, at the top of the first page of the
contract and again directly above the tenant's signature on the
same contract, the following printed in at least fourteen-point
boldface type in all capital letters:
THIS IS NOT A CONTRACT TO BUY. THIS CONTRACT GIVES YOU THE
RIGHT TO BUY THE PROPERTY DESCRIBED IN IT. YOU WILL NOT OWN THE
PROPERTY UNTIL YOU FIND FINANCING TO PAY THE PURCHASE PRICE IN
FULL AND FULFILL THE OTHER TERMS OF THIS CONTRACT.
(B) A residential lease option contract shall disclose the
amount of the option fee and include a statement that sets forth,
in United States dollars, the amount of the option fee that will
be credited against the purchase price if the tenant exercises the
option to purchase. The contract shall contain the following
statement printed clearly and conspicuously in at least
fourteen-point boldface type in all capital letters:
THE OPTION FEE PAID PURSUANT TO THIS CONTRACT IS NOT A
SECURITY DEPOSIT AND MAY NOT BE REFUNDED IF YOU DO NOT BUY THE
PROPERTY FOR ANY REASON.
(C) No landlord shall offer a residential lease option
contract to a tenant unless that contract contains all of the
following in addition to any other requirements of this chapter:
(1) The full name and mailing address of each party to the
contract;
(2) The date each party signs the contract;
(3) The amount of the tenant's monthly rent;
(4) The period of time during which the tenant may exercise
the right to buy the property;
(5) The agreed upon sales price of the property and any
adjustments that may be made to the sales price, the circumstances
under which those adjustments may be made, and the amount of rent
that will be applied to reduce the sales price;
(6) A legal description of the property by metes and bounds
or lot numbers of a recorded plat, including a description of any
portion of the property subject to an easement or reservation;
(7) A statement of any known encumbrances or encumbrances
that could be reasonably ascertained against the property;
(8) A statement of any pending order of a public agency
against the property;
(9) A statement specifying any liens and mortgages against
the property for which the tenant will assume responsibility at
the time of closing and the current dollar amount of each;
(10) A statement that the landlord will remove any liens and
mortgages against the property prior to the time of the closing,
except those specified in the contract to be assumed by the
tenant;
(11) A statement that the tenant has received, reviewed, and
signed a completed copy of the residential real property
disclosure form the director of commerce prescribed pursuant to
section 5302.30 of the Revised Code;
(12) A statement of the landlord's ownership interest in the
property and information regarding the location of documentation
of that ownership interest;
(13) A provision requiring the landlord to provide evidence
of title and to deliver a general warranty deed, or the best
available deed if unable to deliver a general warranty deed, at
the closing upon exercise of the option;
(14) A statement setting forth which expenses of closing and
sale are the responsibility of the landlord and which are the
responsibility of the tenant.
Sec. 5321.22. (A) Prior to the tenant signing a residential
lease option contract, the landlord shall provide the tenant with
a completed and signed copy of the residential real property
disclosure form required pursuant to section 5302.20 of the
Revised Code, and any other documents federal, state, or local law
require.
(B) The landlord shall provide each tenant who is a party to
a residential lease option contract a copy of the contract signed
by the landlord and by each tenant and a receipt for any fees paid
to the landlord pursuant to the contract.
Sec. 5321.23. (A) Any landlord who enters into a residential
lease option contract, at the request of a tenant shall provide
an updated statement of the current purchase price that shows all
calculations used to reach that price, including any credit toward
the purchase price and any addition to the purchase price. The
landlord shall prepare the updated statement within ten days of a
tenant's request and either deliver the statement in person, with
the tenant signing a copy of the statement as evidence of its
receipt, or by certified mail to the property address. A landlord
is obligated to provide the information this division requires not
more than twice during any twelve-month period.
(B) During any year in which a residential lease option
contract is in effect, the fee for the option to purchase may not
exceed one and one-half times the amount that is charged for one
month's rent that year. During the entire term that the option is
in effect, the total of the fees charged for the option may not
exceed four times the amount of the monthly rent that was charged
during the first year of the option.
Sec. 5321.99. A court of competent jurisdiction may find any
landlord who fails to substantially comply with sections 5321.20
and 5321.21 of the Revised Code liable for damages in an amount
not less than ninety dollars and not more than five hundred
dollars for each violation, together with actual damages and
reasonable attorney's fees, and may void the contract and order
any fees or deposits be returned to the tenant. A tenant may seek
enforcement of sections 5321.20 to 5321.23 of the Revised Code in
a municipal court, county court, or court of common pleas and,
upon determining that the landlord has failed to comply with any
of these sections, the court shall grant appropriate relief.
Section 2. That existing sections 5313.01, 5313.02,
5313.06,
5313.08, and 5321.01 of the Revised Code are hereby
repealed.
Section 3. Section 5313.02 of the Revised Code is presented
in this act
as a composite of the section as amended by both
Sub.
H.B. 95 and Am. Sub. H.B. 473 of the 119th General Assembly. The
General Assembly, applying the
principle stated in division (B) of
section 1.52 of the Revised
Code that amendments are to be
harmonized if reasonably capable of
simultaneous operation, finds
that the composite is the resulting
version of the section in
effect prior to the effective date of
the section as presented in
this act.
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