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Source of Title Blog

A New Curative Statute is Working its Way Through the Ohio Legislature
by Robert Franco | 2016/08/28 |

Ohio currently has a statute that cures certain defects in recorded instruments when they have been of record for more than 21 years.  Defects that can be cured include improper witnessing and missing or defective acknowledgements.  Senate Bill 257, if it passes, will broaden the application of the statute and shorten the time it takes for the cure to take effect. 

Source of Title Blog ::

The current Ohio Revised Code section 5301.07, Validating certain deeds - limitations, generally provides that when an instrument conveying real estate, or any interest therein, is of record for more than twenty-one years, the instrument and the record thereof shall be cured of the following defects:

  • such instrument was not properly witnesses;
  • such instrument contained no certificate of acknowledgement; or,
  • the certificate of acknowledgement was defective in any respect.   
After 21 years, a recorded document containing one of these defects is "effective in all respects as if such instrument had been legally made, executed, and acknowledged."  This statute dates back to 1961, and hasn't been updated since. 

Senate Bill 257 passed the Senate and moved the House in May.  It specifically defines "real property instrument," to which the bill pertains, as "a deed, mortgage, and installment contract, lease, memorandum of trust, power of attorney, or any instrument accepted by the county recorder."  Thus, the new bill expands the curative effect beyond just instruments of conveyance.  

The proposed amendment provides that "when a real property instrument is of record for more than 4 years from the date of recording... and the record shows that there is a defect in the making of the instrument, the instrument and the record thereof shall be cured of the defect and be effective in all respects as if the instrument had been legally made, executed, acknowledged, and recorded."  It further states that the defects "may include but are not limited to the following:"

  1. The instrument was not properly witnessed.
  2. The instrument contained no certificate of acknowledgement.
  3. The certificate of acknowledgement is defective in any respect.
  4. The name of the person with an interest in the real property does not appear in the granting clause of the instrument, but the person signed the instrument without limitation. 
So, the updated statute will apply to more instruments and potentially any defect in the making of the instrument can be cured, not just those specifically listed.  But the drafters did specifically add the last example of defects that capable of being cured by the passage of time - a missing name in the granting clause, so long as the person signed it.  

It also adds that a recorded document, signed an acknowledged by a person with an interest in the real property described in the instrument, raises certain rebuttable presumptions.  First, that the instrument conveys, encumbers, or is enforceable against the interest of the person who signed it.  And second, that the instrument is valid, enforceable, and effective as if in all respects the instrument was legally made, executed, acknowledged, and recorded.  These presumptions may only be rebutted by clear and convincing evidence of fraud, undue influence, duress, forgery, incompetence, or incapacity.  

As long as a document is recorded in the chain of title, it "provides constructive notice to all third parties of the instrument notwithstanding any defect in the making, execution, or acknowledgement of the real property instrument."  This will help with the legal fiction that a document not properly acknowledged is not entitled to be recorded, and thus does not provide constructive notice to third parties.  If SB 257 passes in its current form, third parties, including bankruptcy trustees, won't be able to set aside documents due solely to technical defects.  If the title examiner can find it, third parties will be deemed to have notice of it.  

 

 

 




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Categories: Ohio Legislation

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Any Updates
Any updates if this Bill is still awaiting vote, passed, canned? 
by Allen Bruce | 2016/12/12 | log in or register to post a reply

It's Progressing

SB 257 passed the House and the Senate has concurred in the House amendments.  It seems to be moving forward and I'd expect it to be signed by the Governor soon.

Best,
Robert A. Franco
SOURCE OF TITLE 

 
by Robert Franco | 2016/12/22 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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