JobsOhio Issues Initial OSIP Awards

JobsOhio issued its initial awards under its new Ohio Site Inventory Program (commonly referred to as OSIP).  The OSIP Program provides grants and low interest loans to support speculative warehouse/industrial and office development projects throughout Ohio.  The initial round of awards ended-up being extremely competitive – with only approximately 10% of applicants receiving any form of award.  The vast majority of the development projects that received awards were warehouse/industrial projects.  JobsOhio is currently slated to re-open the application process for the next round of awards beginning July 2021.





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Ohio Opportunity Zone Law Amendments Being Considered

NAIOP Ohio’s Board hosted the Ohio Development Services Agency Director, Lydia Mihalik, for a Zoom session.  The Ohio Development Services Agency administers several programs that are of critical importance to the commercial real estate industry in Ohio, including Ohio’s Opportunity Zone Program and Ohio’s Historic Tax Credit Program.  Mike Sikora led a discussion with Director Mihalik on several proposed enhancements to Ohio’s Opportunity Zone Program that are being considered.

Our firm obtained for our Clients approximately 20% of all Ohio Opportunity Zone tax credits awarded during Ohio’s inaugural round of OZ awards.  We are now working on many Opportunity Zone Applications for Round 2 for our Clients, based upon their 2020 Opportunity Zone development activity.




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Transformational Mixed-use Development Bill Nears Passage

Last week, Senate Bill 39 – the Transformational Mixed-use Development Tax Credit Bill – was favorably voted out of the Ohio House Economic and Workforce Development Committee by a vote of 10-1. Yesterday, that Bill passed on the House floor by a vote of 82-1.  This extremely important Bill for the commercial real estate industry is now poised to move to the Ohio Senate for concurrence with the House amendments and then to the Governor’s desk for signature.

This Bill would incentivize mixed-use developments with $50,000,000 or more in total project costs (and 15 stories or 350,000 square feet) for developments in or around cities with a population of 100,000 or more, or smaller scale but still transformational mixed-use developments that are located more than 10 miles outside of a major city.

Our firm drafted portions of Senate Bill 39. Unlike any other commercial real estate economic development law – it includes a first of its kind, built-in return on investment calculation and methodology to ensure that additional state and local taxes generated by the development will exceed the amount of the tax credits awarded to the developer.

If this Bill becomes law, it will be help stimulate the economy and the commercial real estate business, in particular, by promoting additional commercial real estate development activity of significance – that is, by definition, transformative.

Landlord Evicts Tenant Following Expiration of Term, Despite Renewal Communications

Ohio’s Eighth District Court of Appeals recently decided a landlord-tenant case addressing the requirements for parties to reach an enforceable contract when discussing a lease renewal.  In Realty Trust Servs., L.L.C. v. Mohammad, 2020-Ohio-3736, the Plaintiff sought eviction of the tenant from property following the expiration of the lease term after the parties attempted but failed to reach a definitive agreement on renewal.  The parties then exchanged emails about renewal, but the parties never finalized definitive renewal terms.

Once the term expired, the landlord served a statutory three-day notice, and the tenant tendered rent payments, which the landlord refused.  The landlord then filed an eviction action.

On appeal, the Eighth District Court of Appeals ruled that the landlord never extended an offer of definitive terms to the tenant, that the parties’ email exchange was a mere “invitation to negotiate,” and that the parties never reached a “meeting of the minds” on terms of renewal.  The Court of Appeals noted that there was no holdover tenancy because the landlord refused to accept rent following the expiration of the term.

This case serves as a useful reminder to landlords to be as clear as you possibly can in communications about renewals, and don’t accept rent following the expiration of a term if you want to immediately regain possession of the property.

ALTA’s Title Insurance Law Newsletter Features Sikora Law Case

Another well-respected title industry publication has picked up our firm’s most recent case law appellate victory on title coverage and closing protection coverage.  That case law victory was covered well in the October 2020 issue of the American Land Title Association’s Title Insurance Law Newsletter.  That article recognized our firm and our lead attorney on that case, Alex Goetsch, for the outstanding result.   Check out that article “Loan Closer Owed No Duty to Borrower” in the October issue of ALTA’s Title Insurance Law Newsletter by clicking here.

Statute of Frauds Applies to Easement Modifications

Recorded easements are subject to the statute of frauds and cannot be modified without a subsequent writing, proclaimed Ohio’s Tenth District Court of Appeals in a recent Decision in a hotly contested commercial real estate dispute.  Tower 10 LLC v. 10 W Broad Owner LLC, 2020-Ohio-3554.  In Tower 10, the owners of adjacent Downtown Columbus high-rise buildings entered into a written Declaration that granted “easements and cross easements” through pedestrian skywalks and internal passageways, to facilitate access by tenants and guests of both buildings to an attached parking complex.  The written Declaration specified that the pedestrian pathways would “be maintained open at all times during normal business hours … or at such other times as agreed to by the parties.”  The building owners also verbally agreed to create a keycard system that allowed certain individuals to access the pedestrian pathways on a 24/7 basis, and that understanding was in place for over 30 years.  But in 2011, one of those buildings was sold, and the new owner limited the keycard holder access to “normal business hours” only.  The owner of the adjoining building sued to restore 24/7 access for its keycard holders, and obtained temporary and preliminary injunctive relief and summary judgment in its favor.  The trial court concluded that keycard holders had “an express easement” to 24/7 access, even though that was not specifically stated in the written Declaration.

The Court of Appeals reversed, instead deciding that the parties’ agreement on the keycard system only amounted to a license, and did not grant a permanent easement for 24/7 access.  Because the building owners’ agreement had never been reduced to writing or recorded as a modification to the written Declaration, it “could not modify the rights granted in the Declaration.”

The Tower 10 Decision serves as a reminder that any modification of real property rights and interests should be memorialized in writing, preferably with the help of legal counsel.  Even decades of joint performance under a verbal agreement might not be enough to satisfy Ohio’s legal standard for creating or modifying an easement or changing real property rights that are stated in some instrument in the public records.

Click here to learn how Sikora Law can help CRE Developers & Owners streamline their legal needs.

Commercial Real Estate Breach of Fiduciary Duty Case Dismissal Affirmed by Court of Appeals

The Eighth District Court of Appeals affirmed a Trial Court decision that dismissed breach of fiduciary duty claims brought against multiple local commercial real estate professionals, and now the Plaintiffs have asked the Ohio Supreme Court to hear the case.  See Tuttle v. Collins, 2020-Ohio-4062.

The facts of Tuttle begin in 2012, when the Dunhum Tavern Museum (“DTM”) acquired 2.28 acres of land (“Midtown Land”) in furtherance of DTM’s mission.  DTM is a non-for-profit corporation whose mission is to maintain, develop, and share the DTM campus for educational and cultural purposes; provide urban green space in Midtown Cleveland; and return the DTM to its roots by serving as a place for urban history, education, nature, and community.  Thereafter, DTM raised over $700,000 to be invested into the the Midtown Land.

In 2018, the Cleveland Foundation expressed an interest in purchasing 1.2 acres of the Midtown Land for its new headquarters.  David Wagner (“Wagner”) and the husband of another board member obtained an appraisal and attempted to have DTM move forward with the sale, which was opposed by 26 members of DTM.  Nonetheless, two separate votes by DTM’s Board went forward, and both votes resulted in the approval of the sale of a portion of the Midtown Land to the Cleveland Foundation.

In May of 2019, Appellants filed a lawsuit naming Tim Collins (“Collins”) and Wagner as Defendants, asserting claims of breach of fiduciary duty, violating bylaws relating to conflicts of interest, and violating bylaws relating to voting procedures.

The Trial Court found that the Appellants’ allegations were merely conjecture and supposition, and that they lacked any factual basis.  Ohio’s Eighth District Court of Appeals concluded that the Complaint failed to provide sufficient facts to support the elements of the claims, and affirmed the Trial Court’s dismissal of the case.  To review the Court of Appeals’ Decision, click here.

Had that case gone the other way, it really could have created a slippery slope and dangerous precedent for all sorts of claims to be brought against commercial real estate professionals – especially those who serve on boards.  Thankfully, the Trial Court and the Court of Appeals reached the correct conclusion.

No Stay + No Bond = No Lis Pendens Says Ohio’s First District Court of Appeals

Sikora Law obtained its 32nd appellate victory (now on 25 different real estate title and escrow subjects) in an Opinion focused on lis pendens.  Clinton v. Home Investment Fund V, LP, 2020-Ohio-4555 (1st Dist.).  Plaintiffs filed a quiet title action, seeking to confirm that a mortgage originally granted in favor of Huntington National Bank and its nominee MERS, and later assigned to Home Investment Fund, had been extinguished in a prior foreclosure case.  The trial court granted summary judgment in Plaintiffs’ favor, and rejected the mortgagee’s primary argument that MERS should have been named in the prior foreclosure case, in addition to Huntington.  After final judgment by the trial court, the mortgagee filed an appeal, but did not seek a stay of the trial court’s judgment or post a supersedeas bond.

After the mortgagee filed its appeal, the Plaintiffs sold the property, and our firm filed a Motion to Dismiss the Appeal as Moot.  The mortgagee vigorously opposed dismissal, arguing that the validity of the Huntington/MERS mortgage had not been finally determined, and that lis pendens continued during the appeal, preventing the parties’ dispute from becoming moot.  The Court of Appeals unanimously rejected the mortgagee’s arguments and dismissed the appeal.

To review the Clinton Opinion issued by Ohio’s First District Court of Appeals, click here.

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Marketable Title Act and Dormant Minerals Act Afford Separate Paths to Extinguish Mineral Rights

A recent decision by Ohio’s Fifth District Court of Appeals upheld a Trial Court decision, finding that the Marketable Title Act (“MTA”) was applicable to severed oil and gas rights and that the Appellants’ interests had been extinguished by operation of law based upon the MTA.  See Cain v. Horn, 2020-Ohio-3171.

The dispute in Cain arose from disputed ownership of oil and gas rights related to approximately 110 acres of real property.   On December 27, 1926, Clara Burrett and Claude Burrett transferred their interest in fifty (50) acres of the property at issue to Viola Romans via a Warranty Deed (the “Warranty Deed”), which was recorded on February 24, 1927.   The Warranty Deed specifically reserved a one-half interest in the Burretts in all of the oil and gas underlying the fifty acre tract (“Burrett Reservation”).

Appellees obtained ownership of the property by virtue of two survivorship warranty deeds, recorded in 2002 and 2003.  Appellees initially filed an action to quiet title under the DMA and were unsuccessful upon the Appellants’ filing of a Claim to Preserve Mineral Interests pursuant to R.C. 5301.56.   Subsequently, Appellees filed a new action against Appellants seeking to quiet title to the oil and gas rights under the MTA.

The Trial Court found in favor of the Appellees and ruled that the Burrett Reservation was automatically extinguished by the MTA because that interest was not reflected in an instrument after the root of title under the MTA.  The Fifth District upheld the Trial Court’s decision and further held that the MTA and DMA are separate and distinct statutes, and that a determination under one is not dispositive of the other.

Cain provides a useful reminder of two of the separate and distinct ways in which mineral interests can be extinguished and the differences between them.

Click here to learn how Sikora Law can help Title Insurance Companies streamline their legal needs.

Failure to Strictly Comply with Cognovit Note Language Renders Provision Useless

Ohio’s Eighth District Court of Appeals recently mandated strict compliance with cognovit judgment language in order to enforce a cognovit note.  In 2017, L&M Estates, L.L.C. (“L&M”) executed a Cognovit Note in favor of Ace Property Group of Ohio, L.L.C. (“Ace Property”).  The Note stemmed from a commercial loan that L&M received from Ace Property (the “Note”).  As part of the commercial loan transaction, a principal of L&M, Lisa Cochran (“Cochran”), executed a personal guaranty (the “Guaranty”). After the borrower failed to timely make required payments on the Note, Ace Property obtained cognovit judgments against L&M under the Note and against Cochran under the Guaranty.  Cochran appealed on the basis that the Guaranty did not contain the required language under Ohio law to obtain a cognovit judgment.

On appeal, the Eighth District Court of Appeals overturned the trial court’s decision.  The Court of Appeals held that cognovit provisions must strictly comply with Ohio law in order to be enforceable.

The Ace Property case is a helpful reminder to commercial real estate professionals to make sure cognovits provisions strictly comply with the requirements of Ohio law if enforcing it is important to you.

Click here to learn how Sikora Law can help CRE Developers & Owners streamline their legal needs.