Ohio Supreme Court Confirms Reversion Language No Longer Necessary to Create Fee Simple Determinable Estate


(Plain language within the four corners of the deed is key-pursuant to Koprivec v. Rails-to-Trails of Wayne County, Slip Opinion No. 2018-Ohio-465)

By: Stephen D. Richman, Esq. - Senior Counsel-Kohrman, Jackson & Krantz
-A Watch Your Language Series Article-


As established in other “Watch Your Language” articles for this Blog, as a general rule, courts will typically uphold commercial document provisions unless they are contrary to public policy or statutory law, or the subject of a mutual mistake. Courts traditionally presume that commercial parties are on more of an equal playing field and are more sophisticated concerning commercial transactions, since both parties will usually have attorneys to review their documents. More and more, parties to residential real estate contracts are being held to the same standard governing commercial transactions. Because courts often defer to the specific language of commercial (and other) real estate documents, unintended results are often the norm for parties who do not seek professional advice, and for professionals who do not closely review their documents. Even the failure to follow a seemingly trivial grammar rule (the use of i.e. vs. e.g.) can result in unintended consequences. In a 1995 Connecticut case, despite the tenant’s verbalized intent to the contrary, the court held that the use of “i.e.” [meaning, that is] vs. “e.g.” [meaning, for example] preceding a short list of repair items in a lease served to limit landlord’s structural responsibility to only those items listed in the lease vs. merely providing examples of the same.

 Because of this judicial deference to “plain language” within real estate and other documents, and the fact that courts, as a general rule will not look outside the four corners of a document (to consider extrinsic evidence of intent) if the language is unambiguous, you must “watch your language, and say what you mean, precisely, or a judge will decide what you meant.”

The Ohio Supreme Court in Koprivec v. Rails-to-Trails of Wayne County recently espoused this basic tenet of Ohio law with regard to deeds, specifically, deeds creating “fee simple determinable”, or conditional estates in land.

A Deeds/Estates in Land/Fee Simple Determinable Primer

Like a certificate of title for an automobile, the deed is the document that actually transfers the title of real property from one to another. Unlike a certificate of title for an automobile, however, the deed contains a specific legal description of the property; and may also contain warranties of title; reservations (e.g., right to reserve an easement over the property); and restrictive covenants (e.g., “this property may only be used for residential purposes”).

Also unique to deeds vs. certificates of title (and bills of sale to transfer other personal property) is the nature of the underlying property and the varied rights transferable thereto. While both cars and land can be leased for a specific period of time, a transfer of a “life estate” in land, for example, can transfer real property for a person’s lifetime.  (Note: a “fee simple” estate in land, on the other hand gives the grantee the right to own and possess real property forever).

Ownership of real estate can be further, uniquely limited, if a “defeasible” or “conditional” estate is transferred by deed. A defeasible fee or estate in real property is a fee simple interest that can be taken away from the grantee/holder upon the occurrence or non-occurrence of a specified event. For example, when grantor transfers to grantee a parcel of land “for so long as that land is used for summer camp purposes.”

The two main types of defeasible fees are “fee simple determinable” and “fee simple subject to a condition subsequent.” The difference between the two is that a fee simple determinable interest terminates automatically upon the occurrence or non-occurrence of the event (our example above), while the fee simple subject to a condition subsequent estate is not terminated automatically, but can be terminated at the will of a future interest holder upon the occurrence or non-occurrence of the specified event (the magic words for this type of defeasible fee would be “grantor transfers x to grantee, but if …., then grantor retains a right of re-entry”).

After a grantor transfers a fee simple determinable estate, said grantor is deemed to retain a “possibility of reverter,” as the property would revert to the grantor, automatically upon the occurrence or non-occurrence of the condition stated in the deed.

Are there recognized, “magic words” to create a fee simple determinable estate? Dating back to English common law, many courts recognized the establishment of a fee simple determinable estate by use of the words “so long as”, “as long as”, “until”, “during” and “on condition that.”

In Ohio, however, the Supreme Court in In re Petition of Copps Chapel Methodist Episcopal Church, 120 Ohio St. 309, 166 N.E. 218 (1929) held that a deed could not create a fee simple determinable estate without “reverter language” (specific words stating the property would revert back to the grantor, if the applicable condition in the deed is satisfied).

In fact, the trial court, and the court of appeals in Koprive relied on the Copps Chapel case to deny the plaintiffs’ claim of ownership.  The main issue for the court in Koprivec would be: 1) whether or not Copps Chapel was still good law in Ohio; and 2) if not, what new “magic words” in Ohio would be required to create a fee simple determinable.

Background/Facts of Koprivec v. Rails to Trails of Wayne Cty.

As well summarized by the court in Koprivec, “[t]his case involves a dispute about ownership of an abandoned rail corridor. It pits a nonprofit organization, Rails-to-Trails of Wayne County (“Rails to-Trails”), which seeks to develop the corridor into a bike trail, against three landowners, who claim ownership of the sections of the corridor adjacent to their properties. We have before us issues of deed construction and adverse possession.” [AUTHOR NOTE: This article only addresses the deed construction issues].

The specific facts of the case are as follows:

In 2009, Rails-to-Trails purchased an old railroad corridor with the intention of converting the land into a public, multi-purpose trail. In 2011, however, three owners of adjacent properties (the “landowners”) filed suit to establish their ownership of the sections of the corridor next to their respective properties. The landowners claimed title (ownership) based upon: 1) an 1882 deed, that they claim served to revert the corridor land to them when the corridor stopped being used as a railroad; and 2) all three claimed adverse possession of those sections of the corridor.

The granting clause (“[t]he words that transfer an interest in a deed,”) of the 1882 deed granted the property to the railroad company “and to its assigns forever.” The habendum clause (“the part of a… deed … that defines the extent of the interest being granted and any conditions affecting the grant”) provided that the grant was “forever for the purpose of constructing and using thereon a Rail Road.”

The plaintiffs in Koprivec construed the deed as creating a fee simple determinable.  They argued that when the land stopped being used as a railroad (which was the only purpose of the transfer), the part of the property adjacent to the properties they already owned reverted back to them as the successors-in-interest of the original grantors. Rails-to-Trails sought to establish that it was the valid property owner, based upon a valid, 2009 deed.

The trial court entered summary judgment in favor of Rails-to-Trails on all the landowners’ claims. It easily determined that under Copps Chapel, the 1882 deed did not create a determinable fee because it did not contain the “magic words”; that is, it did not explicitly state that the property would revert to the grantors when it ceased being used for railroad purposes. The Ohio Ninth District Court of Appeals affirmed the trial court’s judgment on the deed issue, holding that the 1882 deed created a fee simple absolute estate because the deed did not contain the magic reversionary language.

Analysis of Koprivec v. Rails to Trails of Wayne Cty.

It would have been easy for the Ohio Supreme Court to have affirmed the Ninth District’s decision on the basis of the Copps Chapel case. No magic reversion language, no fee simple determinable. That is why the Supreme Court of Ohio deemed the appellate court’s holding, “understandable.”

Instead, recognizing lower court decisions “have taken bites out of the Copps Chapel holding” and that the Ohio Supreme Court’s later decision in Hinman v. Barnes acknowledged/applied ‘the modern and prevalent rule for determining estates conveyed by a deed,” the Supreme Court in Koprivec admitted that “there is no longer reason to rely on Copps Chapel, and to do so would be inappropriate.”

The Ohio Supreme Court still affirmed the Ninth Appellate District’s decision (on the issue of deed construction), but not on the basis of Copps Chapel. According to the Ohio Supreme Court in Koprivec, case law of the past seven decades dictates the need to utilize the “‘modern and prevalent rule for determining the estate conveyed by a deed,’ which rule is, ‘that if the intention of the parties is apparent from an examination of the deed ‘from its four corners,’ it will be given effect regardless of technical rules of construction.’” Citing Hinman v. Barnes, 146 Ohio St. 497, 66 N.E.2d 911 (1946). In other words, according to the court in Koprivec,” it is the plain language of the deed that matters.”

The court in Koprivec reconciled the Copps Chanel and Koprivec cases by reasoning that the words of reversion in the Copps Chapel deed were simply the plain language words of the deed that established a fee simple determinable estate.

The court in Koprivec, however, recognized that the prime example of creating a fee simple determinable estate is when a grantor conveys a property to another “for so long as it is used for X;” the magic words being conditional language, not reversion language.  The court reasoned that when a grantor uses those [conditional] words, “she means exactly that—that she intends for the property to be held by the grantee for so long as it is used for X; [and] when the property stops being used for X, it reverts to the grantor.”  Recognizing this tenet was far from new law, the Koprivec court (citing prior law review articles) admitted that “the phrase so long or as long as ha[d] been recognized as sufficient to create a determinable interest ‘since before the days of [the 16th-century legal commentator Edmund] Plowden.’ “

Applying the “modern law” to the facts of the case, the court in Koprivec found no use of the words “so long as”, or similar conditional phrases. Nor was there any reversion language. Instead, classic fee simple absolute language was utilized; namely, “to grantee and to its assigns forever.”   True, the deed also contained the language: “forever for the purpose of constructing and using thereon a Railroad.” However, focusing more on the purpose than the forever language of this clause, this kind of language, according to the court, “simply describes the reason for the conveyance,” and “does not condition the railroad company’s right to hold the estate on its use as a railroad.” Citing classic, “black letter treatise law”, the court in Koprivec concluded that, “Unless a conditional estate is created by the express language of a deed or will, the grantor or testator will be conclusively presumed to have intended a fee simple [estate].”

What is the moral of this story? Watch your language, and say what you mean precisely, or a judge will tell you what you meant. While reversionary language is no longer necessary to establish a fee simple determinable estate in Ohio, “it couldn’t hoit.” Why not use all the magic words-the requisite conditional language (so long as, as long as…) and the reversion language? That way, there is nothing left open to interpretation. Make the plain language, plain as day, and you won’t need your day…in court.

Recent Real Estate Legislation Introduced in the Ohio Legislature


By: Stephen D. Richman, Esq.- Senior Counsel-Kohrman, Jackson & Krantz


Recent bills of the 132nd General Assembly (See https://www.legislature.ohio.gov/) pending in the Ohio House and Ohio Senate related to real property are as follows:
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House Bill 39

General Assembly: 132

Short Title: Require removal of snow and ice from abutting sidewalks.  

Long Title: To enact section 505.872 of the Revised Code to authorize certain townships to require the removal of snow and ice from sidewalks abutting property.

Primary Sponsor: Representative ArndtRepresentative Gavarone

Version/Status: As Reported by the State and Local Government Committee

Legislation Text: View Current Version


Senate Bill 50

General Assembly: 132

Short Title: Prohibit deep well injection of brine and conversion of wells.  

Long Title: To amend sections 1509.01, 1509.02, 1509.03, 1509.05, 1509.06, 1509.08, 1509.21, 1509.22, 1509.222, 1509.223, 1509.224, and 1509.99, to enact section 1509.051, and to repeal section 1509.226 of the Revised Code to prohibit land application and deep well injection of brine, to prohibit the conversion of wells, and to eliminate the injection fee that is levied under the Oil and Gas Law.

Primary Sponsor: Senator Skindell

Version/Status: As Introduced/Referred to the Energy and Natural Resources Committee

Legislation Text: View Current Version


House Bill 52

General Assembly: 132

Short Title: Regulate solicitation of certain deeds.  

Long Title: To amend section 1345.99 and to enact section 1345.032 of the Revised Code to regulate the solicitation of certain deeds.

Primary Sponsor: Representative Rezabek

Version/Status: As Enrolled-Effective Date- May 11, 2018

Legislation Text: View Current Version

  
House Bill 118

General Assembly: 132

Short Title: Prohibit dismissing tax complaint if fails to identify owner.  

Long Title: To amend section 5715.19 of the Revised Code to expressly prohibit the dismissal of a property tax complaint for failure to correctly identify the property owner.

Primary Sponsor: Representative Merrin

Version/Status: As Enrolled-Effective Date-February 5, 2018

Legislation Text: View Current Version


Senate Bill 123

General Assembly: 132

Short Title: Limit right to initiate property tax complaints.  

Long Title: To amend sections 307.699, 3735.67, 5715.19, 5715.27, and 5717.01 of the Revised Code to limit the right to initiate most types of property tax complaints to the property owner and the county recorder of the county in which the property is located.

Primary Sponsor: Senator Coley

Version/Status: As Introduced/Referred to Ways and Means Committee

Legislation Text: View Current Version


House Bill 123

General Assembly: 132

Short Title: Modify short-term, small, and mortgage loan laws.

Long Title: To amend sections 1321.35, 1321.36, 1321.39, 1321.40, 1321.41, 1321.422, 1321.99, and 4712.99, to enact new section 1321.46 and sections 1321.141, 1321.401, 1321.402, 1321.403, 1321.411, 1321.595, and 4712.071, and to repeal sections 1321.46 and 1321.461 of the Revised Code to modify the Short-Term Loan Act, to specify a minimum duration requirement for loans made under the Small Loan Law and Mortgage Loan Law, and to limit the authority of credit services organizations to broker extensions of credit for buyers.

Primary Sponsor: Representative KoehlerRepresentative Ashford

Version/Status: As Reported by the House Government Accountability and Oversight Committee

Legislation Text: View Current Version


House Bill 148

General Assembly: 132

Short Title: Register home improvement contractors.

Long Title: To amend sections 109.572, 715.27, 3781.102, 4740.01, 4776.01, and 4776.20 and to enact sections 4785.01, 4785.02, 4785.021, 4785.03, 4785.04, 4785.05, 4785.06, 4785.07, 4785.08, 4785.09, 4785.11, 4785.12, 4785.13, 4785.14, 4785.15, 4785.16, 4785.17, 4785.18, 4785.19, 4785.20, 4785.21, and 4785.99 of the Revised Code to require statewide registration of home improvement contractors, to create the Home Improvement Board, and to make an appropriation.

Primary Sponsor: Representative Patmon

Version/Status: As Introduced/Referred to Finance Committee

Legislation Text: View Current Version


House Bill 175                                                              General Assembly: 132

Short Title: Allow residence owners to keep small livestock on property.

Long Title: To amend sections 303.21 and 519.21 and to enact section 901.60 of the Revised Code to allow an owner of residential property to keep, harbor, breed, or maintain small livestock on the property, and to prohibit zoning authorities from regulating certain agricultural activities conducted on residential property for noncommercial purposes.

Primary Sponsor: Representative Brinkman

Version/Status: As Introduced/Referred to Agricultural and Rural Development Committee

Legislation Text : View Current Version


House Bill 199

General Assembly: 132

Short Title: Enact Ohio Residential Mortgage Lending Act.

Long Title: To… create the Ohio Residential Mortgage Lending Act for the purpose of regulating all non-depository lending secured by residential real estate, to limit the application of the current Mortgage Loan Law to unsecured loans and loans secured by other than residential real estate, and to modify an exemption to the Ohio Consumer Installment Loan Act.

Primary Sponsor: Representative Blessing

Version: As Enrolled-Effective Date-March 23, 2018

Legislation Text : View Current Version


House Bill 343

General Assembly: 132

Short Title: Regards how local governments are to contest property values.

Long Title: To amend section 5715.19 of the Revised Code to require local governments that contest property values to formally pass an authorizing resolution for each contest and to notify property owners.

Primary Sponsor: Representative Merrin

Version: As Passed by the House/Referred to Senate Ways and Means Committee

Legislation Text: View Current Version

House Bill 361

General Assembly: 132

Short Title: Increase time for deciding property tax complaints.

Long Title: To amend section 5715.19 of the Revised Code to increase the time within which boards of revision must decide property tax complaints.

Primary Sponsor: Representative Greenspan

Version/Status: As Reported/Amended by the House Government Accountability and Oversight Committee

Legislation Text: View Current Version


House Bill 390

General Assembly: 132

Short Title: Clarify computation of timelines for forcible entry and detainer.

Long Title: To amend sections 1923.04 and 1923.14 of the Revised Code to clarify how to calculate certain timelines under which a forcible entry and detainer action must occur.

Primary Sponsor: Representative Merrin

Version/Status: As Introduced/Referred to Financial Institution, Housing and Development Committee

Legislation Text: View Current Version


House Bill 407

General Assembly: 132

Short Title: Abolish estate by dower.

Long Title: To amend sections 2103.02, 2103.09, and 2106.24 of the Revised Code to abolish the estate by dower.

Primary Sponsor: Representative DeverRepresentative Seitz

Version/Status: As Reported by the House Civil Justice Committee

Legislation Text: View Current Version


House Bill 412

General Assembly: 132

Short Title: Authorize redacting discriminatory covenants from land records.

Long Title: To amend section 109.15 and to enact section 317.115 of the Revised Code to authorize county recorders, at the request of certain persons, to redact discriminatory covenants from real property instruments displayed on the internet, or to record modifications of those instruments.

Primary Sponsor: Representative Craig

Version/Status: As Introduced/Referred to Civil Justice Committee

Legislation Text: View Current Version


House Bill 460

General Assembly: 132

Short Title: Assist creation of riparian buffers and exempt some from taxation.

Long Title: To amend sections 321.24, 5715.27, and 5717.02 and to enact sections 1515.12 and 5709.30 of the Revised Code to exempt qualifying riparian buffers in the Western Basin of Lake Erie from property taxation, to reimburse local taxing units for resulting revenue losses, and to require soil and water conservation districts to assist landowners with the creation and maintenance of riparian buffers.

Primary Sponsor: Representative PattersonRepresentative Sheehy

Version/Status: As Introduced/Referred to Energy and Natural Resources Committee

Legislation Text: View Current Version


House Bill 480

General Assembly: 132

Short Title: Establish requirements for multi-parcel auctions.                                                               Long Title: To amend sections 4707.01, 4707.023, 4707.15, 4707.20, and 4707.22 of the Revised Code to establish requirements governing multi-parcel auctions.

Primary Sponsor: Representative Hill

Version/Status: As Introduced/Referred to Civil Justice Committee

Legislation Text: View Current Version

 

House Bill 487

General Assembly: 132

Short Title: Eliminate special school right to school district real property.

Long Title: To amend sections 3313.41, 3318.08, and 5705.10, to enact new section 3313.411, and to repeal sections 3313.411, 3313.412, and 3313.413 of the Revised Code to eliminate the right of first refusal for community schools, college-preparatory boarding schools, and science, technology, engineering, and mathematics schools in the acquisition of school district real property.

Primary Sponsor: Representative Ingram

Version/Status: As Introduced/Referred to Education and Career Readiness Committee

LegislationText: View Current Version


House Bill 513

General Assembly: 132

Short Title: Enhance homestead exemption for spouse of killed first responder.

Long Title: To amend sections 323.151, 323.152, 323.153, 4503.064, 4503.065, and 4503.066 of the Revised Code to enhance the homestead exemption for surviving spouses of peace officers, firefighters, and emergency medical personnel killed in the line of duty.

Primary Sponsor: Representative BrennerRepresentative Ginter

Version/Status: As Introduced/Referred to Ways and Means Committee

Legislation Text: View Current Version


House Bill 562

General Assembly: 132

Short Title: Prohibit horizontal well drilling in state and local parks.

Long Title: To amend section 1509.06 of the Revised Code to prohibit the drilling of a horizontal well in various state and local parks.

Primary Sponsor: Representative Leland

Version/Status: As Introduced/Referred to Energy and Natural Resources Committee

Legislation Text: View Current Version


House Bill 586

General Assembly: 132

Short Title: Expand homestead exemption.

Long Title: To amend sections 323.151, 323.152, 323.153, 323.157, 4503.064, 4503.065, and 4503.066 of the Revised Code to remove the income limit that restricts eligibility for the homestead exemption and to increase the exemption amount from $25,000 to $30,000.

Primary Sponsor: Representative CeraRepresentative Rogers

Version/Status: As Introduced

Legislation Text: View Current Version