Ohio’s New Notary Law Definitely Worth Noting


By: Stephen D. Richman, Esq., Senior Counsel-Kohrman, Jackson & Krantz
Effective last Friday, September 20, 2019, a new law (Ohio Senate Bill 263, the Notary Public Modernization Act) went into effect which makes significant changes for Ohio Notaries Public and those who wish to become Notaries. While some may not assign preeminent importance to “notary law”, the Ohio State Bar Association adds notable perspective by stating, “the bill ensures consistent standards across the state and provides for the training and support they need to confidently and accurately witness and authenticate all the affidavits and oaths, property titles, grants, deeds, contracts, adoptions, advanced directives and powers of attorney — the documents, which represent the most important transactions in our lives and for our economy.”  
Key provisions of SB 263 include the following changes to Ohio Notary law:
1.      Who is in Charge? The Ohio Secretary of State’s office is now in charge and the place to go for anyone applying for a new Notary commission or seeking to renew their commission. Previously, Ohio’s county courts of common pleas governed the process. 
2.      Non-attorney applicants for new Ohio Notary commissions will be required to obtain a criminal records check, complete a three hour education program and take/pass a test. Those seeking to renew will need a new (not more than six months old) criminal records check and need to complete a one hour “refresher” educational program.

3.      New attorney applicants will be required to complete a three hour training program, but will not be required to obtain a criminal records check or take a test.

4.       New Fees. Ohio Notaries may now charge up to: (i) $5 for an in-person, paper notarization; (ii) $10 for electronic notarizations that are not performed online; and (iii) $25 for a remote, online notarization.

5.      “New” Forms/Rules.

a)      Jurats. (where one swears to or affirms the truthfulness of the contents of a document). For jurats, the new law includes a new statutory jurat form; or, you can still draft your own, provided, however that it clearly states that an oath or affirmation was administered.

b)      Acknowledgements. (verify the identity of the signer and confirm that the signer signed a document). For acknowledgements, you can use the “statutory short forms of acknowledgment” in the existing statute, or, you can create your own, but the new law requires that the acknowledgement: 1) contain the words “acknowledged before me” or their substantial equivalent; and 2) clearly state that an oath or affirmation was not administered.

6.      Online Notaries. Anyone who is a commissioned Ohio Notary may apply to be an online Notary. To become authorized you must: 1) Successfully complete a two hour education program; 2) pass a test; 3) pay an authorized provider a fee of $250; and 4) submit an application to the Secretary of State and pay an application fee of $20.

The Ohio Society of Notaries (http://ohionotaries.org/) has been approved by the Secretary of State as an Authorized Provider of Training & Testing under the new law. To find out more about their training offerings, or to get answers to your questions about notary procedures, signing situations, or best practices; you can call their free helplines at (614) 336-7878, (614) 348-3305, or Email them.




Boilerplate Language Upheld in Ohio Storage Lease


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


boil•er•plate (boi l r-pl t ) n.

1. A steel plate used in making the shells of steam boilers.
2. Inconsequential, formulaic, or stereotypical language: The new provisions of the lease renewal were merely boilerplate.

The American Heritage® Dictionary of the English Language, Fourth Edition copyright ©2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved

The first type of “boilerplate” defined above is pretty tough stuff. It can be up to twelve (12) inches thick and stop arrows, Greek fire and low caliber ammunition. Tough, one-sided contract and lease language is also referred to by many as “boilerplate”. What is amazing to me is how many tenants, landlords, brokers and dictionary writers believe such language is inconsequential or unenforceable, and how many do not worry about such language because they deem it “merely boilerplate.”

Notwithstanding the above definition, this author would like to caution you to worry, if you ever find yourself on the “wrong side of the boilerplate.” Contrary to “Mr. Heritage’s” beliefs, odds are that boilerplate (at least in a commercial lease/contract) will most likely be enforceable unless it is contrary to statutory law or public policy. Judges assume (rightly or wrongly) that commercial tenants and landlords are on equal footing with equal sophistication in business and lease matters. They believe commercial parties say what they mean and mean what they say in their contracts. Ohio court decisions regarding commercial leases are replete with language like the following: “when reviewing lease provisions, a court is to presume that the intent of the parties is in the language they used, and if the contract is clear and unambiguous, then we must follow the contract’s expressed terms and must not go beyond the plain language of the contract.” Langfan v. Carlton Gardens, 2009 Ohio App. LEXIS 2863. Accordingly, self-help provisions, landlord disclaimers of the duty to mitigate damages, warrants of attorney to confess judgement and disclaimers of warranties are just a few examples of boilerplate language upheld in commercial leases in Ohio.

The primary exception to the general enforceability of boilerplate language in Ohio is Ohio’s Landlord-Tenant Act (ORC Chapter 5301 et. seq.), which governs Ohio residential leases. Specifically, Section 5321.13 (d) of such Act provides that
 “No agreement by a tenant to the exculpation or limitation of any liability of the landlord arising under law or to indemnify the landlord for that liability or its related costs shall be recognized in any rental agreement or in any other agreement between a landlord and tenant.” Awards of attorney fees and warrants of attorney to confess judgment are also prohibited in residential leases. The Ohio Landlord-Tenant Act was enacted to protect residential tenants who are often in an unequal bargaining position from their landlords, and have a lot more to lose (e.g., their homes).

What about boilerplate language in storage unit leases? Often, such units are utilized to store beds, refrigerators and other furniture and appliances typically found in a residence. Do storage unit tenants have the same protection residential tenants have?

What if such boilerplate language in a storage unit lease goes so far as 1) disclaiming landlord liability (for patent and latent defects, failure  to repair and express and implied warranties); 2) imposing minimal, liquidated damages; and 3) requiring the tenant to indemnify landlord? That’s just inconsequential boilerplate, right Mr. Heritage? 


Not according to the Tenth District Court of Appeals in the recent case of Hopkins v. Car Go Self Storage,2019-Ohio-1793.

In Hopkins, the tenant-appellant entered into a lease agreement with appellee, “Car Go Self Storage” to store her personal belongings, including furniture, in appellee’s storage facility. Appellant testified in court that the facility was dry when the items were moved in, but when such items were retrieved, they were damp and covered with mold. Apparently there was a water leak that allowed water into the unit, causing the mold. Appellant sued appellee for breach of contract, negligence and conversion. The trial court held for appellee on all counts, and appellant appealed.

The court of appeals in Hopkins affirmed the decision of the trial court. The appellate court held that the negligence claim was properly dismissed because it was barred by the two-year statute of limitations. The conversion claim was properly dismissed because appellant admitted she was not prevented from recovering her property.

Regarding the contract claim, appellant claimed that her contract contained an implied warranty that the unit was fit and habitable for storage of property, and that such warranty was breached by the landlord. The 10th District Court of Appeals apparently agreed with appellant that the elements establishing an implied warranty had been met. However, according to the court, such warranty was disclaimed by the landlord’s exculpatory clause that included a broad, but unambiguous release of liability for damage to property; and a clear, express waiver of implied warranties. Citing precedent (similar cases on point), the court in Hopkins simply applied the “general rule,” namely, that “exculpatory causes in lease agreements are generally valid absent a showing of ambiguity or unconscionability” and “if the court can determine intent from the plain [albeit exculpatory] language of the contract, then the court must apply that language as written and refrain from further contract interpretation.”

It is important to note that the Hopkins court did not preclude future challenges to a  storage lease, as unconscionable. Since appellant did not challenge her lease as unconscionability, however, the court in Hopkins simply concluded that “the court cannot address an argument that was not raised.”

So, what is the moral of this story? All language in a  lease is of consequence; boilerplate or not. The best weapon against boilerplate language is the delete key. Negotiate away boilerplate language before signing the lease. Afterwards, odds are you will be no more successful shooting holes through boilerplate language in court, as you would be shooting holes through the 12- inch- thick steel kind of boilerplate.


Recent Real Estate Legislation Introduced in the Ohio Legislature (133rd General Assembly)



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


Recent bills of the 133rd General Assembly (See https://www.legislature.ohio.gov/) pending in the Ohio House and Ohio Senate related to real property include the following:
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Senate Bill 8

General Assembly: 133

Short Title: Authorize tax credit for investment in opportunity zone.  

Long Title: To amend Sections 107.036, 122.86, 5747.02, and 5747.98 and to enact Section 122.84 of the Revised Code to authorize a tax credit for investments in an Ohio Opportunity Zone.

Primary Sponsor: Senator Kirk Schuring-District 29 

Version/Status: Passed by Senate-4-3-19; Referred to House Workforce and Economic Development Committee-4-16-19

Legislation Text: View Current Version

 

House Bill 20

General Assembly: 133

Short Title: Prohibit homeowner associations placing limits on solar panels.  

Long Title: To enact Sections 5301.073 and 5311.192 of the Revised Code to prohibit condominium, homeowners, and neighborhood associations from imposing unreasonable limitations on the installation of solar collector systems on the roof or exterior walls of improvements.

Primary Sponsor: Rep. Louis W. Blessing III-District 29

Version/Status: Referred to State and Local Government Committee-2-13-19

Legislation Text: View Current Version


Senate Bill 36

General Assembly: 133

Short Title: Prescribe valuation of certain rental property for tax purposes.  

Long Title: To amend Sections 5713.03 and 5715.01 of the Revised Code to prescribe how federally subsidized residential rental property must be valued for property tax purposes.

Primary Sponsor: Senator Matt Huffman-District 12 

Version/Status: Referred to Ways and Means Committee-2-20-19

Legislation Text: View Current Version


House Bill 47

General Assembly: 133

Short Title: Revise time to decide property tax complaint; rename Legal Assistance. 

Long Title: To amend Section 5715.19 of the Revised Code to increase the time within which property tax complaints must be decided.                                                                                                               Primary Sponsor: Rep. Dave Greenspan-District 16

Version/Status: Referred to Ways and Means Comm.-2-13-2019; reported/amended-5-1-19                                            

Legislation Text: View Current Version


Senate Bill 96

General Assembly: 133

Short Title: Grant Cleveland Housing Ct-review of health/safety code cases.

Long Title: To amend Section 1901.181 of the Revised Code to grant the

Cleveland Housing Court jurisdiction in any review or appeal of a final order of an

administrative body that relates to a local building, health, or safety code

Primary Sponsors: Senator Matt Dolan-District 24 and Senator Kenny Yuko-District 25

Version/Status:  Referred to Local Govt., Public Safety and Veteran’s Affairs Committee-3-12-19

Legislation Text: View Current Version

 

House Bill 99

General Assembly: 133

Short Title: Revise homestead exemption income eligibility and tax reduction.

Long Title: To amend Sections 323.152 and 4503.065 of the Revised Code to raise the homestead exemption income eligibility to $60,000 and increase the tax reduction.

Primary Sponsors: Rep. Jack Cera-District 96 and Rep. John M. Rogers-District 60

Version/Status: Referred to Ways and Means Committee-3-5-2019

Legislation Text: View Current Version

 

House Bill 103

General Assembly: 133

Short Title: Change law relating to land installment contracts.

Long Title: To amend Sections 1343.01, 3781.10, 5313.02, and 5313.04 and to enact Sections 5313.021, 5313.022, 5313.031, and 5313.12 of the Revised Code to make changes to the law relating to land installment contracts.

Primary Sponsors: Rep. Michele Lepore-Hagan-District 58 and Rep. Don Manning-District 59

Version/Status:  Referred to Civil Justice Committee-3-5-19

Legislation Text: View Current Version


Senate Bill 139

General Assembly: 133

Short Title: Enact First-time Home Buyer Savings Act-allow tax deductions

Long Title: To amend Section 5747.01 and to enact Sections 193.01, 193.02, 193.03, 193.04, 193.05, 193.06, and 193.07 of the Revised Code to enact the First-time Home Buyer Savings Act, authorizing income tax deductions for contributions to and earnings on savings accounts designated for the purchase of a home.

Primary Sponsors: Senator Theresa Gavarone-District 2 and Senator Bob Peterson-District 19

Version/Status: Introduced 4-30-19

Legislation Text: View Current Version.                                          


House Bill 149

General Assembly: 133

Short Title: Enact Affordable Homebuilding and Housing Act.

Long Title: To enact Section 5709.51 of the Revised Code to enact the "Affordable Homebuilding and Housing Act" to temporarily exempt from property tax the increased value of land subdivided for residential development.

Primary Sponsor: Rep. Derek Merrin-District 47

Version/Status:  Referred to Economic and Workforce Development Committee-3-26-19

Legislation Text: View Current Version

  
House Bill 199

General Assembly: 133

Short Title: Licenses commercial roofing contractors.

Long Title: To amend Sections 715.27, 3781.102, 4740.01, 4740.02, 4740.04, 4740.12, and 4764.03 of the Revised Code to require commercial roofing contractors to have a license.

Primary Sponsor: Rep.Thomas F. Patton-District 7

Version/Status:  Referred to Commerce and Labor Committee-4-30-19

Legislation Text: View Current Version

House Bill 209

General Assembly: 133

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 Sponsors: Rep. Sara Carruthers-District 50 and Rep. Darrell Kick-District 70

Version/Status: Referred to Civil Justice Committee-4-30-2019

Legislation Text: View Current Version


House Bill 229

General Assembly: 133

Short Title: Prohibit discrimination in rental housing based on income.

Long Title: To amend Sections 4112.01 and 4112.02 of the Revised

Code to prohibit discrimination in rental housing based on lawful source of income. 

Primary Sponsors: Rep. Terrence Upchurch-District 10 and Rep. Adam Miller-District 17

Version/Status: Introduced in House-4-30-2019

Legislation Text: View Current Version

U.S. Supreme Court holds that Enforcers of Security Interests in Nonjudicial Foreclosures are not “Debt Collectors” under Federal Fair Debt Collection Practices Act

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 uphold language in commercial agreements, unless it is contrary to statutory law or public policy. Because of this judicial deference to commercial language, you must “say what you mean, precisely, or a judge will decide what you meant.”

Saying what you mean, precisely, is as important in drafting statutes and ordinances as it is in commercial agreements. As a general rule, courts will also uphold clear and unambiguous statutory language. “Statutes clear in their terms need no interpretation; they simply need application. If the …language of a statute reveals … a meaning which is clear, unequivocal and definite… the statute must be applied accordingly." Provident Bank v. Wood (1973). Alternatively, ambiguous statutes will be interpreted by judges who may or may not uphold the meaning intended by the legislative authority who drafted such statutes.

In the recent case of Obduskey v. McCarthy & Holthus LLP, 138 S. Ct. 2710 (2018), the United States Supreme Court determined that the Fair Debt Collection Practices Act (“FDCPA” or the “Act”) was not clear and unequivocal, and accordingly, the court decided what Congress meant by the term “debt collector.”

The facts of the case are simple enough; the law, not so much.

Facts of the Case
In 2007, Dennis Obduskey (the petitioner) bought a home in Colorado with a $329,940 loan secured by a mortgage on the property. Approximately two years later, Mr. Obduskey defaulted on the loan. In 2014, Wells Fargo Bank, N. A., the servicer for the lender hired a law firm, McCarthy & Holthus LLP (the respondent) to act as its agent in carrying out a nonjudicial foreclosure.

McCarthy first mailed Mr. Obduskey a letter that stated McCarthy had been instructed to commence foreclosure against the property, disclosed the amount past due and outstanding on the loan and identified the creditor. Mr. Obduskey responded with a letter disputing the amount of the debt, and requesting written verification of the debt in accordance with §1692g(b) of the FDCPA. McCarthy did not provide any such verification. Instead, the law firm initiated a nonjudicial foreclosure action in accordance with Colorado state law.  

Mr. Obduskey then filed a lawsuit in federal court alleging that the McCarthy law firm had violated the FDCPA by failing to comply with the verification procedure and other provisions and procedures required by the Act. The federal district court dismissed the suit on the ground that the law firm was not a “debt collector” within the meaning of the Act, so the verification procedure and other relevant Act requirements did not apply. On appeal, the Court of Appeals for the Tenth Circuit affirmed the dismissal. Mr. Obduskey then petitioned the United States Supreme Court for certiorari (an order by which a higher court reviews a decision of a lower court).

Applicable Law
To better understand the Obduskey decision, a quick primer on nonjudicial foreclosures and the Act is in order.

Nonjudicial foreclosure. As well explained by the court in Obduskey: “When a person buys a home, he or she usually borrows money from a lending institution, such as a bank. The resulting debt is backed up by a ‘mortgage’—a security interest in the property designed to protect the creditor’s investment… The loan likely requires the homeowner to make monthly payments. And if the homeowner defaults, the mortgage entitles the creditor to pursue foreclosure, which is ‘the process in which property securing a mortgage is sold to pay off the loan balance due’… Every state provides some form of judicial foreclosure: a legal action initiated by a creditor in which a court supervises the sale of the property and distribution of the proceeds. These procedures offer various protections for homeowners, such as the right to notice and to protest the amount a creditor says is owed...About half the States also provide for what is known as nonjudicial foreclosure, where notice to the parties and sale of the property occur outside court supervision.” Ohio is not one of the states that permits nonjudicial foreclosures.

The FDCPA- The Fair Debt Collection Practices Act is the main federal law that governs debt collection practices. Generally, the FDCPA prohibits debt collectors from using abusive, unfair or deceptive practices to collect debts. Specifically, the Act imposes a multitude of requirements on “debt collectors.” For example, pursuant to §1692d of the Act, debt collectors may not use or threaten violence, or make repetitive phone calls. Nor (pursuant to §1692e of the Act) can debt collectors make false, deceptive or misleading representations in connection with a debt, like misstating a debt’s “character, amount, or legal status.” And, pursuant to §1692g(b) of the Act, if a consumer disputes the amount of a debt, a debt collector must cease collection until it “obtains verification of the debt” and mails a copy of such verification to the debtor.

There is also a separate subsection of the Act (§1692f(6)), that prohibits a debt collector from: “Taking or threatening to take any nonjudicial action to effect dispossession or disablement of property if— (A) there is no present right to possession of the property . . . ; (B) there is no present intention to take possession of the property; or (C) the property is exempt by law from such dispossession or disablement.”

What is a “debt collector” for purposes of the Act?  Pursuant to §1692a(6) of the Act , a “debt collector” is “any person . . . in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts.” This definition, however, goes on to say that “[f]or the purpose of section 1692f(6)…the term [debt collector] also includes any person . . . in any business the principal purpose of which is the enforcement of security interests.”

The Issue before the Court: The issue faced by the court in Obduskey was essentially; what did Congress mean by enacting, in effect, a two-part definition of “debt collector” in the Act. In other words, does the “2nd part of the definition” (the last sentence) mean that one principally involved in the enforcement of security interests is not a debt collector (except regarding section 1692f(6) of the Act)? If so, numerous other provisions of the Act, like the verification requirement would not apply to the McCarthy law firm. Or, does the 2nd part of the definition simply reinforce the fact that those principally involved in the enforcement of security interests are subject to §1692f(6), in addition to the Act’s other provisions?

Holding/Court Analysis of ObduskeyThe United States Supreme Court in Obduskey held that a security interest enforcer engaged in no more than nonjudicial foreclosure proceedings is not a “debt collector” under the FDCPA, except for the limited purpose of §1692f(6) of the Act. In other words, the vast majority of the Act does not apply to nonjudicial foreclosures.
Most decisive and important to the court was the text of the Act itself. The court interpreted the first part of the Act’s definition of debt collector as the Act’s “primary definition,” and the last sentence of the definition as the “limited purpose” part of the definition. The court in Obduskey then reasoned that if security interest enforcers were meant to be included in the primary definition, there would have been no need for the addition of a limited purpose definition that specifically addresses security interest enforcers (in nonjudicial foreclosures).

As explained in the case syllabus, “The limited purpose definition says that “[f]or the purpose of Section 1692f(6)” a debt collector ‘also includes’ a business, like McCarthy, ‘the principal purpose of which is the enforcement of security interests.’ §1692a(6) (emphasis added). This phrase, particularly the word ‘also,’ strongly suggests that security interest enforcers do not fall within the scope of the primary definition. If they did, the limited purpose definition would be superfluous.”

The court also pointed out that its interpretation is supported by legislative history, which suggests that “the Act’s present language was the product of a compromise between competing versions of the bill, one which would have totally excluded security-interest enforcement from the Act, and another which would have treated it like ordinary debt collection.”

Mr. Obduskey made a number of legal arguments which were summarily dismissed by the court. He also expressed a “floodgates argument” claiming that the court’s decision will open a loophole, permitting creditors and their agents to engage in a host of abusive practices. The court seemed concerned enough about this argument to issue a warning, by stating, “This is not to suggest that pursuing nonjudicial foreclosure is a license to engage in abusive debt collection practices.” However, the Court was not swayed enough to change its decision. In fact, the court countered that it would not be the role of the Supreme Court of the United’s States to curtail any collateral damage from its decision. Rather, “states can…guard against such practices”, and “Congress may choose to expand the reach of the FDCPA.”  According to the court, the United States Supreme Court’s only job is to “enforce the statute that Congress enacted.”

Moral of the Story
For legislators, “say what you mean, precisely, or a judge will decide what you meant.” And, remember that judges do not always get it right.  Even Justice Sotomayor, in her concurring opinion in Obduskey recognized this adage by stating: “this is a close case, and today’s opinion does not prevent Congress from clarifying this statute if we have gotten it wrong.”

For debt collectors, heed the court’s warning (“enforcing a security interest does not grant an actor blanket immunity from the mandates of the Act”), rather than focus on its holding. Also keep in mind that there is no penalty for adhering to consumer protection statutes that may not be applicable, even if you are an attorney or other security interest enforcer involved in a nonjudicial foreclosure. What would be the harm, for example in using the “verification of the debt language” called for in the Act, when there is no requirement to do so? Remember that debt collection protections are also governed at the state and local level, in spite of a limited loophole in the FDCPA.

If you are an enforcer of a security interest in a judicial foreclosure (required in Ohio and other states), note that the holding of Obduskey v. McCarthy & Holthus LLP does not apply to you. As clearly stated by the court in Obduskey, “Whether those who judicially enforce mortgages fall within the scope of the primary definition [of “debt collector”] is a question we can leave for another day…for here we consider nonjudicial foreclosure.” In other words, since enforcers of security interests in judicial foreclosures were not deemed excluded from the Act’s definition of “debt collector”, to be prudent, you should consider yourself included in the definition, and consequently, subject to all provisions of the Act.