(Plain
language within the four corners of the deed is key-pursuant to Koprivec v.
Rails-to-Trails of Wayne County, Slip Opinion No. 2018-Ohio-465)
By:
Stephen D. Richman, Esq. - Senior Counsel-Kohrman, Jackson & Krantz
-A
Watch Your Language Series Article-
As established in other “Watch Your Language” articles for this Blog, as a
general rule, courts will typically uphold commercial document provisions
unless they are contrary to public policy or statutory law, or the subject of a
mutual mistake. Courts traditionally presume that commercial parties are on
more of an equal playing field and are more sophisticated concerning commercial
transactions, since both parties will usually have attorneys to review their
documents. More and more, parties to residential real estate contracts are
being held to the same standard governing commercial transactions. Because
courts often defer to the specific language of commercial (and other) real
estate documents, unintended results are often the norm for parties who do not
seek professional advice, and for professionals who do not closely review their
documents. Even the failure to follow a seemingly trivial grammar rule (the use
of i.e. vs. e.g.) can result in unintended consequences. In a 1995 Connecticut
case, despite the tenant’s verbalized intent to the contrary, the court held
that the use of “i.e.” [meaning, that is] vs. “e.g.” [meaning, for example]
preceding a short list of repair items in a lease served to limit landlord’s
structural responsibility to only those items listed in the lease vs. merely
providing examples of the same.
Because of this judicial deference to “plain language”
within real estate and other documents, and the fact that courts, as a general
rule will not look outside the four corners of a document (to consider
extrinsic evidence of intent) if the language is unambiguous, you must “watch
your language, and say what you mean, precisely, or a judge will
decide what you meant.”
The Ohio Supreme Court in Koprivec v. Rails-to-Trails of
Wayne County recently espoused this basic tenet of Ohio law with
regard to deeds, specifically, deeds creating “fee simple determinable”, or conditional
estates in land.
A Deeds/Estates in Land/Fee Simple Determinable
Primer
Like a
certificate of title for an automobile, the deed is the document that actually
transfers the title of real property from one to another. Unlike a certificate
of title for an automobile, however, the deed contains a specific legal
description of the property; and may also contain warranties of title;
reservations (e.g., right to reserve an easement over the property); and
restrictive covenants (e.g., “this property may only be used for residential
purposes”).
Also unique to
deeds vs. certificates of title (and bills of sale to transfer other personal
property) is the nature of the underlying property and the varied rights transferable
thereto. While both cars and land
can be leased for a specific period of time, a transfer of a “life estate” in
land, for example, can transfer real property for a person’s lifetime. (Note: a “fee simple” estate in land, on the
other hand gives the grantee the right to own and possess real property forever).
Ownership of real estate can be further, uniquely limited, if a
“defeasible” or “conditional” estate is transferred by deed. A defeasible fee
or estate in real property is a fee simple interest that can be taken away from
the grantee/holder upon the occurrence or non-occurrence of a specified event.
For example, when grantor transfers to grantee a parcel of land “for so long as that land is used for summer
camp purposes.”
The two main types of defeasible fees are “fee simple
determinable” and “fee simple subject to a condition subsequent.” The
difference between the two is that a fee simple determinable interest
terminates automatically upon the occurrence or non-occurrence of the event
(our example above), while the fee simple subject to a condition subsequent estate
is not terminated automatically, but can be terminated at the will of a future
interest holder upon the occurrence or non-occurrence of the specified event
(the magic words for this type of defeasible fee would be “grantor transfers x to grantee, but if …., then grantor retains a
right of re-entry”).
After a grantor transfers a fee simple determinable estate, said
grantor is deemed to retain a “possibility of reverter,” as the property would
revert to the grantor, automatically upon the occurrence or non-occurrence of
the condition stated in the deed.
Are there recognized, “magic words” to create a fee simple
determinable estate? Dating back to English common law, many courts recognized
the establishment of a fee simple determinable estate by use of the words “so
long as”, “as long as”, “until”, “during” and “on condition that.”
In Ohio, however, the Supreme Court in In re Petition of Copps Chapel Methodist Episcopal Church, 120 Ohio St.
309, 166 N.E. 218 (1929) held that a deed could not create a fee simple
determinable estate without “reverter language” (specific words stating the
property would revert back to the grantor, if the applicable condition in the
deed is satisfied).
In fact, the trial court, and the court of appeals in Koprive
relied on the Copps Chapel case to
deny the plaintiffs’ claim of ownership.
The
main issue for the court in Koprivec would be: 1) whether
or not Copps Chapel was still good law in Ohio; and 2) if not, what new “magic
words” in Ohio would be required to create a fee simple determinable.
Background/Facts
of Koprivec v. Rails to Trails of Wayne
Cty.
As well summarized by the court
in Koprivec, “[t]his case involves a dispute about ownership of an abandoned rail
corridor. It pits a nonprofit organization, Rails-to-Trails of Wayne County
(“Rails to-Trails”), which seeks to develop the corridor into a bike trail,
against three landowners, who claim ownership of the sections of the corridor
adjacent to their properties. We have before us issues of deed construction and
adverse possession.” [AUTHOR NOTE: This article only addresses the deed
construction issues].
The specific facts of the
case are as follows:
In 2009, Rails-to-Trails
purchased an old railroad corridor with the intention of converting the land
into a public, multi-purpose trail. In 2011, however, three owners of adjacent
properties (the “landowners”) filed suit to establish their ownership of the
sections of the corridor next to their respective properties. The landowners
claimed title (ownership) based upon: 1) an 1882 deed, that they claim served
to revert the corridor land to them when the corridor stopped being used as a
railroad; and 2) all three claimed adverse possession of those sections of the
corridor.
The granting clause (“[t]he words
that transfer an interest in a deed,”) of the 1882 deed granted the
property to the railroad company “and to
its assigns forever.” The habendum
clause (“the part of a… deed … that
defines the extent of the interest being granted and any conditions affecting
the grant”) provided that the grant was “forever for the purpose of constructing and using thereon a Rail Road.”
The plaintiffs in Koprivec construed the deed as creating
a fee simple determinable. They argued
that when the land stopped being used as a railroad (which was the only purpose
of the transfer), the part of the property adjacent to the properties they already
owned reverted back to them as the successors-in-interest of the original
grantors. Rails-to-Trails sought to establish that it was the valid property
owner, based upon a valid, 2009 deed.
The trial court entered summary judgment in
favor of Rails-to-Trails on all the landowners’ claims. It easily determined
that under Copps Chapel, the 1882
deed did not create a determinable fee because it did not contain the “magic
words”; that is, it did not explicitly state that the property would revert to
the grantors when it ceased being used for railroad purposes. The Ohio Ninth
District Court of Appeals affirmed the trial court’s judgment on the deed issue,
holding that the 1882 deed created a fee simple absolute estate because the
deed did not contain the magic reversionary language.
Analysis
of Koprivec v. Rails to Trails of Wayne
Cty.
It would have been easy for
the Ohio Supreme Court to have affirmed the Ninth District’s decision on the
basis of the Copps Chapel case. No
magic reversion language, no fee simple determinable. That is why the Supreme
Court of Ohio deemed the appellate court’s holding, “understandable.”
Instead, recognizing lower
court decisions “have taken bites out of the
Copps Chapel holding” and that the Ohio Supreme Court’s later decision in Hinman v. Barnes acknowledged/applied ‘the modern and prevalent rule for determining
estates conveyed by a deed,” the Supreme Court in Koprivec admitted that “there
is no longer reason to rely on Copps Chapel, and to do so would be
inappropriate.”
The Ohio Supreme Court still
affirmed the Ninth Appellate District’s decision (on the issue of deed
construction), but not on the basis of Copps
Chapel. According to the Ohio Supreme Court in Koprivec, case law of the past seven decades dictates the need to
utilize the “‘modern and prevalent rule
for determining the estate conveyed by a deed,’ which rule is, ‘that if the
intention of the parties is apparent from an examination of the deed ‘from its
four corners,’ it will be given effect regardless of technical rules of
construction.’” Citing Hinman v. Barnes, 146 Ohio St. 497, 66 N.E.2d 911
(1946). In other words, according to the court in Koprivec,” it is the plain language of the deed that matters.”
The court in Koprivec reconciled the Copps Chanel and Koprivec cases by reasoning that the words of reversion in the Copps Chapel deed were simply the plain
language words of the deed that established a fee simple determinable estate.
The court in Koprivec, however, recognized that the
prime example of creating a fee simple determinable estate is when a grantor
conveys a property to another “for so
long as it is used for X;” the magic words being conditional language, not
reversion language. The court reasoned
that when a grantor uses those [conditional] words, “she means exactly that—that she intends for the property to be held by
the grantee for so long as it is used for X; [and] when the property stops
being used for X, it reverts to the grantor.” Recognizing this tenet was far from new law,
the Koprivec court (citing prior law
review articles) admitted that “the
phrase so long or as long as ha[d] been recognized as sufficient to create a
determinable interest ‘since before the days of [the 16th-century legal
commentator Edmund] Plowden.’ “
Applying the “modern law” to
the facts of the case, the court in Koprivec
found no use of the words “so long as”, or similar conditional phrases. Nor was
there any reversion language. Instead, classic fee simple absolute language was
utilized; namely, “to grantee and to its
assigns forever.” True, the deed
also contained the language: “forever for
the purpose of constructing and using thereon a Railroad.” However,
focusing more on the purpose than the forever language of this clause, this
kind of language, according to the court, “simply
describes the reason for the conveyance,” and “does not condition the railroad company’s right to hold the estate on
its use as a railroad.” Citing classic, “black letter treatise law”, the
court in Koprivec concluded that, “Unless a conditional estate is created by
the express language of a deed or will, the grantor or testator will be
conclusively presumed to have intended a fee simple [estate].”
What
is the moral of this story? Watch your language, and say what you
mean precisely, or a judge will tell you what you meant. While reversionary
language is no longer necessary to establish a fee simple determinable estate
in Ohio, “it couldn’t hoit.” Why not use all the magic words-the requisite
conditional language (so long as, as long as…) and the reversion language? That
way, there is nothing left open to interpretation. Make the plain language,
plain as day, and you won’t need your day…in court.
