Occupants in Default on Terms of Contract for Deed - Advice on Eviction?

Question

Here are the facts:

1.       Current occupants are in default relative to terms of Contract for Deed (haven't made any payments since Feb 2013).

2.       14 day and 60 default notices have been given correctly to the occupants.

3.       In accordance with terms of Contract for deed, if occupants don’t remedy the situation by June 7, 2013, the agreement becomes terminated. I understand they may have 30 days from June 7, 2013 to vacate the home (which would be July 7, 2013).

4.       Ohio Law relative to the Landlord/Tenant relationship states that the landlord must give a written notice to leave the premises (which I have begun this process) but also states the landlord cannot force the tenant to move unless the landlord files a court eviction lawsuit and gets a court order of eviction.  Does this law still apply since this is a Contract for Deed and not just a standard tenant renting from a landlord?

5.       I intend to send them another Default Notice informing them of the following:

a.       They are in Default of Contract for Deed

b.      All Default Notices have been given to them correctly

c.       Ask them to vacate the premises by June 8, 2013, 11 am

d.      I will file for eviction if they are not out by June 8, 2013, 11 am

6.       The occupants may not fight me on the issue to move out which may prevent my having to get a court order for eviction

7.       If occupants push back and I have to run this through court, then according to Contract for Deed, Purchaser’s Default, Articles 11 and 12. I think the court would also allow them until July 7, 2013 to move out.

8.       Can this be handled as a standard eviction, or is there a difference since it was a contract for deed and payments and deposit were going toward eventual purchase of the property.

Any info or advice is appreciated!  thanks

Bill Gulley · Answer

This is not a lease, it's a CFD, the installment contract should have terminated under the default. Thier possession may become a month to month if they had paid anything after the initial default. Otherwise they are not tenants unless provided for by law.

If you go to your landlord tenant judge and he sees a CFD, he may likely say you're in the wrong place, go file a foreclosure!

You need to go see your attorney!  Good luck :)

Bill Gulley · Answer

Ijust didn't want to get into such detailsas he needs to go see his attorney, Brian.

Note that it doesn't say an occupant for three years with 12% paid on the contract couldn't be required to go to foreclosure but that later and more must go to foreclosure. The equity amount may also be viewed at todays value rather than the contract price, the buyer is entitled to equity through apprciation as well and any improvements which may have been made.

It's not always a cut and dry issue, so best to go to your attorney.

PS. In my case, now, in my location, I'd simply make a notice of demand as with a note and deed of trust and proceed to foreclosure if I couldn't get them to pack thier bags and provide a DIL under acceptable terms. But, I'm not the OP, or the OP isn't me. :)

Brian Gibbons · Answer

OMG I might be able to help here wher Bill might not know Ohio Land Contracts.

And I hope I am right, cuz I am really tired of Bill being right 99.999 per cent of the time. lol

From an attorney in OH:

Quote:
"Faye Cox
Marysville Litigation Lawyer

You have to have your land contract reviewed by an attorney. The language of the land contract controls what is considered a default and what is not.

Generally speaking, failing to pay the monthly "rent" is considered a default.

The question then is whether you can file an eviction or whether you must file a forclosure.

Ohio law provides that if a tenant of a land contract has paid for five years or put twenty percent (20%) into the equity of the home you must foreclose.

If you do not have land contract (where the owner gets an equitable interest in the property with each payment) but have lease with an option for the tenant to purchase at the end of a period of five years then you can simply evict the tenant for non-payment of rent.

To protect your credit, you can pay your mortgage directly."

End quote

IMHO Land contracts in OH are unique, in that they have the 20% or 5 yr rule to avoid foreclosure and evict in landlord tenant court instead.

But see a OH landlord tenant attorney.

See http://www.ehow.com/info_12079010_eviction-process-land-contracts-ohio.html

Whew! :)

Joffrey Long · Answer

As much as it humbles me to have to agree with Bill  (Just kidding, Bill) I have to agree with Bill.

He's right - one, you have a contract for deed and your view, or your contractual agreement that you can elect when to turn that relationship into a mere tenancy and treat it as such, may not fly - probably won't fly.

Bill is right again, (man, this is painful)  that landlord/tenant court will smell quickly that this conflict is not for their shop, and push you down the hall to civil court.

Ok, now Bill is right again, in my opinion, in that you need to see Mr. Lawyer on this, BP is great, but the only advice you can rely on here in this matter is to go see Mr. Lawyer.

Good luck with this.  I am in California, where courts are well.....nevermind.  But the point is, that I don't do any kind of lease option or contracts for deed due to the problem you are now facing.

Best of luck with it all,

Joffrey

Bill Gulley · Answer

David is correct, initially the equity will be based on the contract, obtaining 20%, that does not keep the tenant from going to the landlord eviction judge claiming he has 25% equity based on the value today, especially after claiming repairs and improvements. Ohio does look to courts of equity, my bet is the guy in the robe says foreclose. It will also be a judicial foreclosure, there is no deed of trust arrangement for a non-judicial proceeding.

Most likely the tenant will have rights of redemption, in equity prior to foreclosure and by statute after, so, again see your attorney.

Damages may certainly be awarded, look to the costs that may be charged in a foreclosure, accrued interest to the date of notice and at that point it will likely go to a non-accrual, costs involved to protect the property, insurance, any bonds necessary, collection expenses and attorney fees are all costs usually applied. The difference to market rates may apply as well as David points out, seems the question is it depends on which way it goes, tenant/buyer. You won't be getting any deficiency judgment on an installment sale, that wasn't mentioned, but if you're thinking along those lines.

You also need to have the buyer offer a deed in lieu of foreclosure, it may not be sufficient for you to ask for it or barter for it under duress. You could do this with a form letter signed by the buyer, then send it to yourself, registered or certified mail, return receipt requested so that the buyer has proof (they will probably throw it away). Since you know what's in that letter, don't open it, it may be handy if you ever have to defend the deed, just file it. Now, you have an offer from the buyer to provide a DIL.

In issues such as these it's not sufficient really to look up statutes and run off trying to manipulate a buyer, you need to consider what they might be able to do and throw up road blocks the best you can to those alternatives so they are not sought, lawyering, not just wack a mole tactics. The old contract-for-deeds are almost a thing of the past as they use to be, today there are completly different rules being applied to secure a property.

So, again, if this is still an issue as this is the 11th and an old post, see your attorney....

David Beard · Answer

From what I've heard here in OH, if they're in default (30 days past due) and it appears beyond fixing, and they have been there 5 yrs or have 20% equity (using contract price), then your remedy is to foreclose (versus evict if they don't have the 5 yrs or 20%).

If faced with the foreclosure scenario and the 6-12 mth time period that will entail in OH, you should entice them to leave quickly and with no damage to the property.  Your "stick" is that if they do not, you will exercise your right to come after them, as prescribed in OH law, for (among other things) the total difference between the CFD payment and fair market rent during the term of the CFD (CFD payments are usually $100-200/mth  below rent).  You can also sweeten it with a little cash given that you would otherwise incur a couple thousand dollars in legal fees if you have to go through the foreclosure (not to mention all that time with no income on the property).  So hopefully they just sign a release and get on their way.

Anyway, this is the strategy that I heard from a pro with this technique.

Dustin Faeth · Answer

Thank you for all the input and knowledge...very much appreciated!  That gives me a better idea of my position, but should probably still run past an attorney to be safe, but I feel much more informed about the situation now.  Thanks again for the help!

Occupants in Default on Terms of Contract for Deed - Advice on Eviction?

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