Few issues catch both landlords and tenants off-guard more than an automatic renewal provision in a lease. Ostensibly to ensure and protect an ongoing landlord-tenant relationship, most of the time these provisions just end up surprising one or more parties and forcing them into another term that neither was interested in. More cunningly, these provisions are sometimes snuck in by landlords hoping that their tenants will just “forget” that they needed to give notice of an intent not to renew a lease. Many tenants, both commercial and residential, can suddenly find themselves on the hook for another whole year, or more, and unable to move to a more desirable location.
Not all is lost, however. In many cases, automatic renewal provisions neglect to put a limit on how many times that the renewal provision applies without action by a party. If that’s the case, the lease term is deemed to have gone beyond at least three years and, without being signed and notarized by the landlord, is unenforceable.
The general rule in Ohio is that any lease in real property is subject to the statute of conveyances. R.C. 5301.01. Essentially, for any lease in real property, the landlord must both sign the lease AND have the lease notarized. If they don’t, then the term of the lease is void.
The only exception to this general rule is any lease that does not exceed three years. R.C. 5301.08. As most leases, especially residential leases, go for a period of twelve months, this doesn’t
usually apply unless there is an automatic renewal clause.
Why does this matter for an automatic renewal clause? Two reasons:
Both landlords and tenants can help themselves by being aware of Ohio’s notarization requirements for leases that last longer than three years, including automatically renewing leases with no end date.
Takeaways for Landlords
Landlords can protect their interests in one of two ways:
Though somewhat counterintuitive, the easier action to take is just to have someone on staff, or have yourself, notarize every contract that you make with a Tenant. Becoming a notary is not a complicated process, and many public notaries are available at a low cost. As only the landlord’s signature, not the tenant’s, must be notarized you can even set aside a day and just have all your leases signed and notarized at the same time.
If you’re worried about your process falling through and not being able to notarize every lease, your lease agreements can be changed fairly quickly and at low cost by a competent real estate attorney. Just make sure that your lease terms are limited to three years or less in terms of your automatic renewals, and you won’t have to worry about complying with the statute of conveyances.
Takeaways for Tenants
Tenants, if you’re looking to get out of a lease and there is an automatic renewal provision, ask to see a copy of the lease agreement. If there is this provision, and it doesn’t limit itself to three years or less, THE TERM IS VOID, and most courts will interpret the new agreement to be a month-to-month tenancy. A word of caution, some landlords may attempt to bring a claim against you anyway, even though the lease is unenforceable. Make sure you consult with an attorney with landlord-tenant experience that can raise the statute of conveyances defense and make the landlord leave you alone.
Ohio’s statute of conveyances is a powerful tool for both landlords and tenants. Landlords should make sure that they are in with it if they wish to enforce any lease going longer than three years, including leases with automatic renewal provisions. Tenants should read their lease carefully if they are looking to leave a property without penalty, and be ready to use a landlord’s failure to notarize the lease as a defense to paying rent under the lease.
This article is meant to be utilized as a general guideline for understanding automatic renewal provisions. Nothing in this blog is intended to create an attorney-client relationship or to provide legal advice on which you should rely without talking to your own retained attorney first. If you have questions about your particular legal situation, you should contact a legal professional.
Nick Weiss is available at 216-417-5111, or nick@npweisslaw.com. See more articles at npweisslaw.com.
