By Debora S. Lasch, Esq.
Have you ever been in the uncomfortable position of finding that your real estate project’s recorded instruments—deeds, mortgages, etc.—are defective in some respect? While this discovery is certainly worrisome, there are instances where Ohio statutes will help fill in the gaps and rehabilitate an otherwise defective instrument. For example, even though a lease is not acknowledged before a notary, under Ohio Revised Code Section 5301.08, a missing acknowledgement will not invalidate an otherwise valid lease provided the term of the lease (including all extensions) is less than three years. In similar fashion, O.R.C. 5301.071 rehabilitates minor mistakes, such as when a notary fails to affix his or her seal when acknowledging an instrument, among others.
Ohio statutory law provides another important tool for curing significant title defects. Ohio’s title defect statute, O.R.C. 5301.07, allows some matters that would otherwise invalidate a recorded instrument to be rehabilitated by the passage of time, previously 21 years. Effective April 6, 2017, however, Ohio’s legislature decreased this time from 21 to 4 years. Thus, after 4 years, a defect in a recorded instrument is cured by operation of law.
In addition, under the prior law, only certain enumerated defects in recorded instruments could be rehabilitated. Only instruments that (a) were not properly witnessed, (b) did not contain a certificate of acknowledgment, or (c) contained a defective certificate of acknowledgement could be cured. These limitations are not included in the new version of O.R.C. 5301.07, leaving the types of defects subject to rehabilitation open to the creative minds of Ohio real estate lawyers.
Furthermore, the time limitation for an adverse party to challenge a recorded instrument is replaced by a rebuttable presumption that the instrument is valid. Previously, an adverse party had to challenge an alleged defective instrument within 21 years after it was recorded. That limitation is replaced with a presumption that the instrument is not defective in any way unless the adverse party can show clear-and-convincing evidence of fraud, undue influence, duress, forgery, incompetency, or incapacity.
As a final point, the revamped O.R.C. 5301.07 provides a welcome and much-overdue update to Ohio’s outdated title practice. Once the law is effective, it will simplify and accelerate title reviews as well as decrease the risk of title defects for property owners and parties to real estate transactions.
For more information on the changes to Ohio’s title defect statute, click here.