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2018-05-02 Attorney Derrick Strahorn on the Law: “It Depends” | By: Larry D. Hudson

Attorney Derrick Strahorn on the Law: “It Depends”
By Larry D. Hudson
 
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There is a lot to know about contracts involving tenants and buyers of real estate – as attendees at Greater Dayton REIA’s First Wednesday meeting for May (5/2/2018) found out during an informative evening of questions and answers.
 
Attorney Derrick Strahorn, a longtime commercial member of Greater Dayton REIA, led the audience through a discussion of leases, lease options and land contracts. Strahorn, whose practice includes real estate and landlord-tenant law, recommended that owners selling property using lease-option agreements create separate documents for the lease and option.
One important reason: to make clear what happens to option consideration money or portions of rent credited to the tenant-buyer in the event of default. The option document can also specify terms of agreement  between buyer and seller that cannot be enforced in a lease: for example, a pledge by the buyer to be responsible maintenance of the property during the term of the option period.
 
Strahorn also had good advice for owners selling property via land installment contract. He advised that all documents regarding the installment sale be recorded and copies held in escrow by the closing attorney or title company. Crucially, this includes the cancellation of land contract – which should be signed and executed when the land contract is signed. Many a regretful land contract seller has wished he or she had done this when a buyer defaults and moves out without a word.
 
Strahorn noted that land installment contracts were made illegal by a bill passed in the Ohio Legislature five years ago – but he also pointed out that the prohibition is being roundly ignored around the state.
 
County recorders are still taking them,” Strahorn said. When closing officers and county recorders stop closing and recording the contracts, Strahorn said, it will be a different story.
Until then, he said, land contracts continue to meet the needs of an important segment of the market: owners who cannot sell by conventional means and credit-challenged buyers who need installment terms to buy.
 
Were there clear-cut answers to every question posed at the meeting? More than once, Strahorn told his audience answers could go either way.
 
It depends,” he said. “Here’s the thing -- when I got into the law, I thought everything was ‘black and white’. But then, he said, he learned that facts and circumstances can lead to different answers. “I learned everything depends – it depends on the situation.”
 
 
 
 

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