An Ohio landlord lost the right to enforce a disputed office lease in the recent case of Chen v Hwang, because the landlord’s signature wasn’t notarized.
Dr. Hwang thought he had a tenant for three years, with an option to renew for an additional three-year term. The tenant canceled the lease when Dr. Hwang couldn’t get the necessary remodeling permits and failed to deliver the office space on the agreed date. The tenant sued to declare the lease invalid and to recover damages for additional rent at his old location and for disruption of his medical practice. The trial court ruled that the lease was defectively executed and could not be enforced.
Commercial leases in Ohio must be signed by the lessor, and the lessor’s signature must be acknowledged before a notary or other official, according to Revised Code 5301.01. In addition, per Revised Code 5301.08, the acknowledgment is unnecessary if the lease term is three years or less.
Dr. Hwang appealed, relying on the exception for short-term leases. The Franklin County Court of Appeals ruled that the exception did not apply. When an Ohio court determines whether the term is more than three years, the court must add the option periods to the initial term of the lease. Adding the three-year option to the three-year initial term resulted in a potential term of six years. As a result, the trial court was correct. Because the lessor’s signature was not acknowledged, the landlord could not enforce the lease.
KEEPING IT REAL... To be safe, both parties should insist that the lessor’s signature is acknowledged. But in some cases, a tenant may be able to enforce the lease even if the lessor’s signature was acknowledged. A future post at Keeping it Real will discuss a Summit County Court of Appeals case that allowed the tenant to enforce a five-year lease, even without the acknowledgment.
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