We Bought a House Together. We Broke Up. Now What?
Although most attorneys would advise against an unmarried couple purchasing real property together, a common issue we see is how to deal with a property purchased by an unmarried couple.
Ohio property law recognizes two groups of people: married people and unmarried people. With no laws protecting unmarried, cohabitating individuals, going through a split with your partner may become an extremely complex, confusing, and frustrating situation.
When faced with this situation, there are essentially three options:
One Party Purchases the Other Party’s Interest
One party can transfer their interest in the property to the other party via a quitclaim deed. If there is no mortgage, this process is relatively easy and potentially only costs the amount for the preparation of documents and recording fees. However, even without a mortgage, things can get complicated when the party leaving feels they are entitled to something for handing over the property- either from the time spent to care for or improve the home or actual monetary contributions made to the home. The parties may have to agree to an amount to be paid to the party leaving in exchange for signing the deed to the staying party.
If both parties are responsible for the mortgage, the party who plans to remain in the property can refinance the loan solely into his/her own name, releasing the other party from any obligation. The party leaving the property would then sign the deed, transferring his/her interest to the other party. You should always contact your mortgage company before prior to taking this action to make sure that you can refinance adequately and also to get their approval for the quitclaim deed. Many mortgages have clauses in them that can bring the entire amount due and owing if a party quitclaims their interest without approval.
The setback we often see with this option is that the party that intends to stay does not qualify for the mortgage amount on their own and thus cannot refinance the loan into his/her name as the sole borrower. Furthermore, we are now seeing parties that want to keep and remain in the property, but do not want to refinance because of the increase of interest rates in the past few years. Those that purchased property while the interest rates were historically low do not want to now refinance at a much higher rate.
Sell the Property
If neither of you wants to stay in the house, or neither qualify for a mortgage on your own (eliminating refinancing as an option), you can agree to jointly sell the property. This is often the least complicated solution. If there is equity in the house, there can be contention on how to split this equity. We often see this issue arise when there were improvements made to the property and one party has put much of their own time or money into making the improvements. This often leads to one party wanting a bigger percentage of the equity. So long as you can agree on a percentage split of the proceeds after the sale of the house, this can allow you to have an easy split not only from the property, but also from your partner.
Partition
The only other option is to petition a court to partition the property. Partitioning a property is the process of determining which owner owes how much of a property, and then either forcing one owner to buy the other out, or selling the property and splitting the proceeds based on ownership.
This option is often considered the last resort because it can be costly, complicated, and time consuming as the courts sort out the facts and make determinations. The property will ultimately be sold judicially, and the court will determine how any proceeds will be split between the parties.
Because of the lack of protections for unmarried people purchasing property together, we highly advise against the purchasing of property between unmarried people, with both being on the deed and mortgage. However, if you do find yourself in this situation, and the relationship has ended, please reach out to our firm to discuss your situation and the options. You have options and we are here to help.
- Published in Real Estate, Real Property
Are Community Associations Reporting Companies Pursuant to the Corporate Transparency Act?
The Corporate Transparency Act (CTA) is a federal law that requires certain businesses to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The CTA was enacted in 2021 as part of the National Defense Authorization Act with the purpose of preventing and combatting financial crimes.
The CTA requires certain business entities to file a Beneficial Ownership Information (BOI) report with FinCEN. You can learn more about the BOI reporting requirements here.
Much effort has been made to change the CTA to provide an exemption for community associations from the BOI reporting requirements, however, nothing has changed. Most homeowners associations and condominium owners associations will be required to file a BOI report by January 1, 2025. The exceptions to the reporting requirement are associations that 1) are actively held as a 501(C)(4) organization with an IRS exemption or 2) are operating within the United States, have an annual revenue of $5,000,000.00 or more, and have 20 or more employees. Most community associations will not meet the requirements of these exemptions.
The information that will be required for the community association is: 1) legal name, 2) any other identifiers such as “doing business as” or “trading as,” 3) current street address of principal place of business, 4) jurisdiction of formation or registration, and 5) tax payer identification number.
The information that must be provided by the Board Members is: 1) Individual’s name, 2) date of birth, 3) residential address, and 4) identifying number, such as a license or passport, and the state which issued the identification. Beneficial owners must also provide an image of the identification.
Any reporting company and/or beneficial owner who willfully violates this requirement may face civil penalties of fines up to $500 per day that the violation continues and criminal penalties of up to 2 years imprisonment and up to $10,000 in fines. Penalties may be issued for willfully failing to file, filing false information, or failing to correct or update a previously filed report.
Here are some helpful links:
If you have questions regarding the BOI reporting requirements and/or the CTA, or your association needs help filing the report, please contact us at (513) 643-3554 or info@richterlaw.us
Corporate Transparency Act and Beneficial Ownership Information Reporting Requirements
The Corporate Transparency Act (CTA) is a federal law that requires certain businesses to disclose information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The CTA was enacted in 2021 as part of the National Defense Authorization Act with the purpose of preventing and combatting financial crimes.
The CTA requires certain business entities to file a Beneficial Ownership Information (BOI) report with FinCEN.
Who Is Required to File a BOI Report?
Companies required to report are called reporting companies. Reporting companies are 1) corporations, limited liability companies, and any other entities created by the filing of a document with a secretary of state or any similar office in the United States (called “domestic reporting companies”), or 2) entities (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office (called “foreign reporting companies”).
Exempt Entities
There are 23 types of entities are exempt from the beneficial ownership information reporting requirements, including publicly traded companies meeting specified requirements, many nonprofits, and certain large operating companies. Companies actively held as a 501(C)(4) organization with an IRS exemption are also exempt.
Deadlines For Filing BOI Reports
Any reporting company registered or created prior to January 1, 2024 must file a BOI Report by January 1, 2025.
Reporting companies created or registered on or after January 1, 2024 have 90 days after actual or public notice of creation or registration to file a BOI Report.
Reporting companies that are created after January 1, 2025 will have 30 days after actual or public notice of creation or registration to file a BOI Report.
Beneficial Owners Information
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
Who Is a Beneficial Owner of a Reporting Company?
A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over a reporting company, or (2) owns or controls at least 25 percent of a reporting company’s ownership interests.
An individual can exercise substantial control over a reporting company if the individual 1) is a senior officer, 2) has authority to appoint or remove certain officers or a majority of directors, 3) is an important decision-maker for the reporting company, OR 4) has any other form of substantial control over the reporting company.
Information Requirements of BOI Report
The following information about the reporting company is required 1) legal name, 2) any other identifiers such as “doing business as” or “trading as,” 3) current street address of principal place of business, 4) jurisdiction of formation or registration, and 5) tax payer identification number. The reporting company must also indicate whether this is a new report, a correction, or an update to a previously filed report.
The following information must be provided by the beneficial owners: 1) Individual’s name, 2) date of birth, 3) residential address, and 4) identifying number, such as a license or passport, and the state which issued the identification. Beneficial owners must also provide an image of the identification.
What If My Reporting Company Already Missed the Deadline?
FinCEN understands that this a newer requirement and is working to ensure reporting companies are aware of the law and reporting obligations. If a reporting company corrects a mistake or omission within 90 days of the deadline for the original report, it may avoid being penalized.
Penalties for Failure to Report
Any reporting company and/or beneficial owner who willfully violates this requirement may face civil penalties of fines up to $500 per day that the violation continues and criminal penalties of up to 2 years imprisonment and up to $10,000 in fines. Penalties may be issued for willfully failing to file, filing false information, or failing to correct or update a previously filed report.
- Published in Business
Security Camera Usage and Community Associations
As technology as has advanced, and home security cameras have become more accessible to people, the issue has provoked many questions for community associations. Some of these include whether a homeowners’ association (HOA) or condominium owners’ association (COA) can or should prohibit owners from installing cameras, what type of guidelines should be implemented for the use of security cameras by owners, and whether the HOA/COA can install security cameras in common areas.
Use of Security Cameras by Individual Owners
While there is mixed evidence, some studies suggest that home security cameras and systems deter crime up to 50%. Thus, allowing owners to install and utilize home security cameras allows a sense of safety, and may in fact actually deter crime throughout the community.
However, privacy concerns should also be considered and weighed against safety concerns. Cameras should point away from neighbors’ windows and backyards. They should never be able to capture another’s private space.
Furthermore, the installation of cameras is typically considered an architectural change and should comply with the architectural guidelines and standards of the community association. If HOA/COA approval is required for architectural changes, owners should follow the procedures of the community association for approval before installing cameras.
Cameras and Common Areas
When a Board of Directors of an HOA or COA is considering installing cameras in common areas, they should first consult the governing documents. These documents often contain rules and guidelines regarding the use of cameras. Typically, cameras are used in common areas such as fitness centers, clubhouses, event spaces, and elevators. Again, privacy concerns must be considered. Cameras should not be used in areas such as bathrooms or changing rooms or point towards anywhere that captures private property.
Another consideration when deciding whether to utilize cameras in common spaces is cost. There is equipment, installation and maintenance costs but also the potential cost of having someone monitor and store the footage. A Board implementing camera usage must also decide who will access to the footage and what circumstances allow that person(s) to review footage.
If an HOA/COA Board is thinking about implementing security cameras in common areas, it should create and adopt a policy addressing all of these things. Moreover, if there are concerns over individual owners’ security cameras, a Board should consider amending the association’s community documents to include specific restrictions, guidelines, and/or standards with regards to cameras.
Solar Panels and Community Associations
As energy costs increase, technology advances, and people become more concerned about environmental conservation, more people are considering installing solar panels. This is becoming a bigger issue within communities which are part of a condominium owners’ associations or homeowners’ associations. New legislation addressing solar panels in community associates was enacted fairly recently (September 2022).
Solar Panels in Condominium Communities
Condominium declarations may continue to completely prohibit solar panels. If a condominium declaration does not prohibit solar panels, Section 5311.192 of the Ohio Revised Code permits unit owners to install them on the roof of their units if there is not another condominium unit above or below them, and one of the following is applicable:
- The unit includes the roof and the cost of insuring, maintaining, repairing and replacing is the responsibility of the owner and is not a common expense; OR
- The condominium declaration specifically allows for and regulates the types and installation of solar energy collection devices in the common or limited common elements and determines who is responsible for the cost to insure, maintain, repair, and replace such devices.
In communities where solar panels are permitted, the board can establish reasonable restrictions concerning the size, place, and manner of placement of soler panels.
Solar Panels in HOA Communities
Similar to the law on condominiums, solar panels may be prohibited by the Declaration of Covenants, Conditions and Restrictions of a homeowners’ association. If the declaration does not prohibit solar panels, owners may install solar panels on their lots as long as they are responsible for the maintenance and repairs of the areas on which the solar panels are installed. In communities with HOAs, is likely that an owner is responsible for the roof of the structure and all parts of the lot. HOA boards also have the right to establish reasonable restrictions concerning the size, place, and manner of placement of solar energy panels.
It is important for HOA and COA boards to determine whether they would like solar panels to be permitted or not, and if they will be permitted, the restrictions that may need to be established. The association’s documents may need to be amended to establish and protect the desire of the community regarding solar panels.
Richter Law can help answer questions and address concerns you may have about solar energy collection devices in your community and assist with any document amendments.
Easements In Ohio
An easement is a right to cross or otherwise use someone else’s land for a specified purpose. It is a non-possessory interest in land that allows the holder of the easement to have access to or use the property belonging to someone else. In Ohio, easements can be granted in writing by agreement between the parties. The easement is then recorded with the county recorder. The dominant estate is the parcel of real property that has an easement over another piece of property (known as the servient estate).
When certain requirements are met, there are other ways an easement can be created. In Ohio, there are 3 types of these easements: an easement implied by prior use, an easement implied by necessity, and a prescriptive easement.
Easement Implied by Prior Use
An easement implied by prior use is established by satisfying 4 elements.
- A severance of the unity of ownership in an estate. This occurs when one owner sells only part of his whole property to another resulting in property that was once owned by one owner, now has part of it owned by another.
- Before the severance, the use giving rise to the easement shall have been so continuous and obvious that it appeared to be permanent.
- The easement must be reasonably necessary to the beneficial enjoyment of the land granted or retained.
- The use of the property that is the subject of the easement is continuous, rather than temporary or occasional use. *
Easement Implied by Necessity
An easement implied by necessity requires proof that there is no other way to get to and from the property, even if the way of getting to and from is less convenient and would require great expense and work to make it serviceable.
Prescriptive Easement
In order to obtain a prescriptive easement, a landowner using adjacent property must prove, by clear and convincing evidence, that such use was open, notorious, adverse to the neighbor’s property rights, continuous, and in place for at least twenty-one years. A prescriptive easement cannot exist if the landowner gave permission to use the property in question because it is not adverse to the landowner’s rights. (See more about adverse possession here).
The laws pertaining to easements are complex. Easement agreements can be difficult to understand and disagreements over easements can be difficult and costly to resolve. At Richter Law, we can help you review easement agreements and assert and protect your rights in easement disputes.
*See Kiko v. King Mountain LLC, 7th Dist. Monroe No. 14 MO 9, 2015-Ohio-2688
- Published in Real Estate, Real Property
Handling Hoarders and Hoarding in the Community
Hoarding by a member of the community has become an often-discussed topic in recent years, especially after the addition of hoarding to the Diagnostic and Statistical Manual of Mental Disorders (DSM-5). When a community member is hoarding, or suspected of hoarding, the community association board (HOA or COA) must address the concerns of the residents while also respecting the rights of the suspected hoarder.
Signs of hoarding may include: foul odors, insect or rodent infestation, dirty or constantly closed window coverings, visible blockage of windows, dirty windows, and noticeable stacks of clutter. It is important for the Board to take action if there is suspecting hoarding in the community to protect the health and safety of the residents within the community.
Condominium Owner Associations and Homeowners’ Associations have governing documents that prohibit residents from creating safety hazards and nuisances. Most association documents require residents to maintain their homes in safe and sanitary conditions. HOA and COA Boards should create rules that discourage residents from creating and maintaining unsafe conditions and allowing unsanitary and potentially hazardous situations in their homes. Having these rules in place allows Boards to enforce the rules and handle a hoarding situation in the same way any other rules would be enforced. However, while a Board has a duty to address the hoarding situation and try to come to some resolution, it must also be sensitive to and balance the rights of the owner suspected of hoarding.
Since hoarding is a medically recognized mental disability, there are both federal and state legal protections for the owner suspected of hoarding. Therefore, a person who suffers from hoarding may be entitled under the Fair Housing Act and Ohio Revised Code §4112.02 to reasonable accommodations to afford the owner equal opportunity to use and enjoyment of their home. A successful reasonable accommodation plan often involves collaboration between the owner, the HOA/COA Board, mental health professionals, social workers, and/or other advocates. Family members and friends may also play an important role in assisting the owner with compliance of rules.
When facing a hoarding situation, a board must balance its duty to maintain safety and sanitation standards for the entire community with the rights of the owner. Creating rules that aid in prevention of hoarding conditions and enforcing them fairly and uniformly and allowing a reasonable accommodation request will help the Board minimize any liability.
If you suspect there is a hoarding situation in your community, please reach out to Richter Law for assistance and guidance on how to navigate the issue.
- Published in Community Associations, Real Estate, Real Property
What to Know When Purchasing Property In An HOA/COA Community
Many communities, especially in suburban areas, have a homeowners’ association (HOA) or condominium owners’ association (COA). Often times, buyers begin their quest towards home ownership in HOA or COA communities without knowing what being a part of the association entails. Here are some practical tips when considering purchasing an HOA or COA community.
Inform Your Realtor of Your Expectations
Some are strongly opposed to purchasing a home that is part of a homeowners’ association or condominium owners’ association. In that case, the realtor representing the potential buyer should be made aware of that so time is not wasted showing the potential buyer homes in an HOA/COA community. Other potential buyers have no problems with living an HOA/COA community but have a certain dollar amount range they are willing to pay for assessments. Again, discussing this initially with the realtor is helpful because a realtor should have the HOA/COA assessment amount information and can limit the home search to communities with assessments in the buyer’s budget range.
Review the HOA/COA Governing Documents
Many Purchase Agreements contain a Homeowners’ Association/Condominium Owners’ Association Provision clause, which requires a seller to deliver the association’s governing documents to the buyer within a specified amount of time. Moreover, it allows the buyer a specified amount of time to review those documents and to rescind the contract if the buyer is not satisfied with any of those documents. If a Purchase Agreement does not contain one of these clauses, it is important to have an attorney or realtor include one before submitting a formal offer. Once the seller provides the association’s governing documents, they should be thoroughly reviewed. Look at the monthly or annual assessment amount, the common areas and amenities, the rules, regulations and restrictions, and also any design guidelines. For example, if it is important to you to place a perimeter fence around your yard, make sure fences are allowed in the community.
Status Letter and Account Transfer
When a person purchases a property in an HOA/COA community, the title company that is handling the closing should request a status letter from the HOA to make sure that all of the assessments are current and there are no encumbrances on the property. There are also HOA transfer fees that are charged to cover the expenses of the necessary transitioning activities and paperwork from the seller to the buyer. The HOA transfer fee will generally cover the new documentation and paperwork involved in setting up a new homeowner. This transfer fee is typically paid by the seller. Make sure prior to closing that the title company requested and received a status letter and that it initiated the HOA/COA account transfer.
Buying a property in an HOA/COA community can be a great decision, since the primary goal of a community association is creating a desirable community and protecting property values. Knowing about the homeowners’ association or condominium owners’ association and understanding what is required of the owners can help potential buyers to avoid future issues with the HOA or COA. Richter Law is experienced with community association documents and can help you review a community association’s governing documents and answer any of your questions.
- Published in Community Associations
Adverse Possession In Ohio
If you are a property owner, you most likely have neighbors on at least one side of your property. Imagine a situation in which your neighbor could potentially gain legal title to a piece of YOUR property. This is possible under a legal concept called adverse possession. Under the legal doctrine of adverse possession, land can legally pass from the rightful owner to the trespasser under very specific conditions. When people hear the term ‘adverse possession’, they often think of trespassing squatters. However, the large majority of adverse possession cases in Ohio actually involve property line disputes.
What is Required to Prove Adverse Possession in Ohio?
If a squatter lives on and cares for your property, he may have the chance to obtain that land in court. However, that is unlikely because of the specific conditions required to prove adverse possession. Thus, the reason property line disputes are often the cause of adverse possession disputes. In Ohio, a trespasser must prove use and care for the property that belongs to the other person for a time period of at least 21 years. Additionally, the possession of the property must be:
Hostile: The trespasser does not have a legal right to the property and was never given permission to use it by the legal owner.
Open and Notorious: The use of the property cannot be hidden or secretive. It has to be noticeable by the average person. The trespasser must be using the property as the legal owner would use it.
Continuous: The property must have been used by the trespasser without interruption for a period of at least 21 years. “Tacking” is allowed in Ohio, which is when adverse use of the property passes from one owner to the next. For example, if a person lives in a house and uses and maintains a piece of the neighbor’s yard for 10 years and then sells the property and the new owner uses and maintains the same piece of the neighbor’s yard for the next 11 years, this would constitute a continuous use for 21 years.
Actual: The trespasser must have been exerting some sort of control over the property, either by building a structure or by using and maintaining the property on a regular basis.
Exclusive: The trespasser must be the only person using the property. If the land is used publicly or used equally by others, it is not exclusive.
Since this can be a difficult concept to understand, here is an example. Todd Smith lives in a house located at 4389 Serenity Avenue. He purchased the property from Jeff Berry 7 years ago. The property has a workshop in the backyard that was built by Jeff Berry 25 years ago. Todd Smith’s neighbor, Jane Green, has recently had a survey done of her property located at 4391 Serenity Avenue, and it has been discovered that Mr. Smith’s workshop encroaches onto her property line. Todd Smith has a strong claim for ownership by adverse possession because both he and Jeff Berry have used the workshop for over 21 years, as seen by all of the surrounding neighbors. They have also maintained the yard around the workshop. Jane Green has lived in her property for 30 years and knew about the workshop built by Jeff Berry and has seen both he and Todd Smith use the structure and yard space.
If you have a property line dispute and are unsure of your legal rights, please contact Richter Law today for a consultation.
- Published in Real Property
Collecting Delinquent HOA Assessments
Community Association assessments are vital for the operation of the association. These assessments are used for things like the maintenance of common areas and amenities, landscaping, insurance, management, legal and other professional fees, and reserves for future capital repairs and improvements.
When owners are not paying their fair share of the assessments, it is crucial for the association to promptly attempt collection of delinquent assessments. Delinquencies can cause delayed maintenance and repairs, thus possibly result in a reduction of property values.
There are multiple ways to attempt to collect delinquent assessments including placing a lien on the property, filing a complaint in small claims court, or filing a foreclosure action against the property. Moreover, if a judgment is obtained, it can be collected through wage or bank account garnishment.
It is important to discuss the collection of delinquencies with an attorney. At Richter Law, we can discuss your association’s delinquent assessments, the various options, and determine which option will be best for the situation.
- Published in Community Associations
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