Summary of a Recent
Judicial
Development in
Commercial Transactions
Lease Invalidated by Failure to Notarize
Walt McCarterNational AgLaw Center Research Associate
Summary of Decision
In Burger v. Buck, No. 2008-P-0041, 2008 WL 4964670 (Ohio Ct. App. Nov. 21, 2008), the Ohio Court of Appeals held that because the parties' lease agreement was not notarized as required by the Statute of Conveyances, the lease was invalid and a month-to-month tenancy was created.
Background
The Bucks leased property from their neighbor Mr. Glenny to keep and graze horses for $1 per month. Id. at *1. The Bucks paid Mr. Glenny for 15 years (amounting to $180) up front. Id. When Mr. Glenny died three years later, his estate requested that the Bucks evacuate the property, listed the property for sale, and filed a declaratory judgment action to invalidate the lease. Id. The Bucks counterclaimed for breach of contract. Id. The trial court held that the lack of compliance with the statutory notary requirement rendered the lease agreement invalid and created a month-to-month tenancy, and granted summary judgment to the estate. Id. at *2. The Bucks appealed. Id.
Arguments
The Bucks argued that the lack of notarization required by R.C. 5301.01 did not invalidate the lease and, alternatively, partial performance of a lease agreement defectively executed under the Statute of Conveyances removed it from the operation of the statute. Id.
Analysis and Holdings
Ohio Revised Code 5301.01(the Statute of Conveyances) sets forth the legal requisites necessary to create a valid lease and requires leases for terms longer than three years to be notarized. Id. at *3. The court rejected the Bucks' arguments and held that to apply such a broad interpretation of the statute would undermine its purpose and would mean that "any scrap of paper, no matter how informal, would constitute a deed or lease." Id. However, the court explained that the general rule in this situation is that when a lessee enters into possession of the demised premises under a lease for a term of years at an annual rent, if the lease for any cause becomes void, he becomes a tenant for a year at the rent reserved in the lease and is subject to all of its provisions, except for its duration. Id. at *5. The court further explained that the duration of the term is determinable by the provision for payment of rent, so a defective lease providing for monthly rent creates a tenancy from month to month. Id. Therefore, the court concluded that because the lease agreement between the Bucks and Mr. Glenny was not notarized as mandated by the Statute of Conveyances, the lease was invalid and a month-to-month tenancy was created. Id. at *7.
The case was decided on November 21, 2008.