CRE Trends, Presented by Qualia, Featuring Omni Title

Recently, one of Omni Title’s Title and Escrow Officers, Brad Linville, was asked to address commercial real estate trends and serve on a Panel for Qualia’s on-demand program.  Omni Title has been using Qualia’s software for two years, and that software has enabled our company to work more efficiently and to serve the needs of our Clients at the highest level.  To check out Qualia’s LinkedIn post on the subject, which links out to the on-demand program, click here.

Specific Closing Instructions Required to Impose Extraordinary Escrow Duties

An Ohio Court of Appeals recently ruled in favor of a major title insurance underwriter on title coverage and closing protection coverage issues.  See Johnson v. U.S. Title Agency, Inc., 2020-Ohio-4056.  In that case, Plaintiff asserted claims for breach of contract and bad faith arising from mechanic’s liens that were recorded after the issuance of an Owner’s Policy of Title Insurance.   The jury specifically found that the underwriter did not breach the terms of the Policy or Closing Protection Letter, and entered a defense verdict on all claims.

The Court of Appeals unanimously affirmed the jury’s verdict.  The Court of Appeals held that the mechanic’s liens were not covered matters under the Owner’s Policy because those liens arose after the Owner’s Policy was issued.  Plaintiff’s transactional counsel claimed to have given vague, oral closing instructions to the closing agent, and the Court of Appeals recognized that was not enough evidence to entitle Plaintiff to the extraordinary relief that Plaintiff sought.

Certain fundamental escrow duties exist on commercial real estate deals as a matter of custom and practice.  The Johnson case recognizes that any duties beyond those fundamental duties require specific closing instructions stating those additional duties.

Ohio’s Judgment Lien Statute May Improve

On July 24, 2020, Mike Sikora presented to the Ohio State Bar Association’s Council of Delegates – consisting of over 200 lawyers from all throughout Ohio – on suggested improvements to Ohio’s Judgment Lien Statute.  Those recommendations presented by Mike Sikora were approved by the Council of Delegates, and now the Ohio State Bar Association will take the lead on advancing this initiative through its legislative advocacy process.

Clear Reservation Language Necessary to Exclude Something from a Transfer

The Supreme Court of Ohio recently decided a dispute involving commercial real estate and held that, absent an express reservation, the right to receive rents from a lessee runs with the land and follows legal title.  See LRC Realty, Inc. v. B.E.B. Properties, 2020-Ohio-319.  The Supreme Court of Ohio’s decision in LRC overturned a lower court’s decision regarding a dispute over whether the buyer or seller was entitled to receive rental payments from the owner of cell tower located on the commercial real estate that had been transferred to the buyer.  The LRC Court summarized the general rule in Ohio that all real property rights transfer with title, unless there is a clearly stated reservation of rights to the contrary.  Thus, the Court concluded that the buyer was entitled to those rental payments, despite the seller’s receipt of some of them and the seller’s mistaken belief that it was entitled to receive them and keep them.

Purchasing or Developing Property Out of a Board of Revision Foreclosure Case

In a recent Supreme Court of Ohio case, the Cuyahoga County Board of Revision flexed its muscles over a deal involving the foreclosure of tax-delinquent abandoned land.  See State ex. rel. Feltner v. Cuyahoga Cty. Bd. of Revision, 2020-Ohio-3080.  The property in Feltner had been the subject of a board of revision foreclosure case.  In Feltner, the owner contended that the board of revision lacked authority to preside over the foreclosure of his property, arguing that the statute was and is unconstitutional.  The Supreme Court of Ohio disagreed, reasoning that the Ohio General Assembly clearly gave the BOR statutory authority to proceed, and that grant of authority was constitutional.

Feltner is a good reminder of an increasingly used method of foreclosure and how a prior transfer (and arguments over the legitimacy of a prior transfer) could affect your deal, your title, and your development.