To 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 5321.24 of the Revised Code 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.

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 5321.24 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 or any successor in interest of the individual, partnership, corporation, association, trust, or any group thereof.

(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, each of which is 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 obtains and attaches 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 an appraiser who is certified as a 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 successor in interest, by serving or causing to be served on the vendee or his successor in interest, if known to the vendor or his 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 successor in interest by handing a written copy of the notice to the vendee or his successor in interest in person, or by leaving it at his the vendee's usual place of abode or at the property which is the subject of the contract or by registered or certified mail by mailing to the vendee's last known address of the vendee or his 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 or description, that is comprised of a single document, a portion of a document, or a number of documents, and 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;

(2) Requires the tenant to pay a fee for the option to purchase 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 contract 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.

Sec. 5321.20. (A)(1) A residential lease option contract is deemed to be a rental agreement subject to this chapter. A person who offers a residential lease option contract is a landlord pursuant to this chapter and a person who enters into a residential lease option contract with that landlord 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. The contract shall contain the following statement in boldface type of the same size font as used for the text of the contract, in close proximity to the statement of the amount of the rent:

"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.

If the tenant does not pay the monthly rent or violates other terms of the contract, 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 state that the contract is not a contract to purchase. It shall contain, at the top of the first page of the contract and again directly above the tenant's signature, 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 PAY THE PURCHASE PRICE IN FULL AND FULFILL THE OTHER TERMS OF THIS CONTRACT.

(B)(1) The contract shall disclose the amount of the option fee and state 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 TENANT HAS PAID AN ADDITIONAL FEE OF $...... FOR THE RIGHT TO PURCHASE THE PROPERTY LOCATED AT ..................

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

(2) 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. 5321.22. (A) 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 described in 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.

(B) 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 described in section 5302.20 of the Revised Code, and any other documents federal, state, or local law require.

(C) 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 tenant who enters into a residential lease option contract may request the landlord to prepare an updated statement of the amount needed to purchase the property. Within ten days of such a request, the landlord shall prepare a statement of the current price to purchase the property. The statement shall show all calculations used to reach the current price including credits toward the purchase price and additions to the purchase price. The landlord shall 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 not obligated to provide the information this division requires more than twice during any twelve-month period.

Sec. 5321.24. 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.