Welcome To Build On This

By Grant M. Yoakum, Esq.

 This issue of Build on This offers two articles outlining recent changes in Ohio law, one related to leasing and one related to licensing. David Woodburn’s article on the renter’s right to “quiet enjoyment” under a lease highlights the importance to both owners and tenants of this commonly misunderstood lease provision. Robert Hager outlines changes effective as of September 16, 2004 in the licensing requirements for all building trades. The new law includes significant fines and criminal penalties for violation of its requirements. We have also taken this opportunity to introduce our clients and friends to a new BDB Shareholder, John Ross, who has joined our Canton office after more than 20 years of practice in construction law.  In addition, we introduce Henry Reder, Partner, to our Cleveland office.

Grant Yoakum is a Shareholder and member of the Real Estate & Construction Law and Business Law Practice Groups.  He can be contacted at gyoakum@bdblaw.com or 216.615.7356.

quiET ENJOYMENT IN LEASE AGREEMENTS

By David W. Woodburn, Esq.

One often-misunderstood concept in leases is the right to quiet enjoyment.  Virtually anyone who has signed a residential or commercial lease has seen a provision within the document stating that the tenant has a right to quiet enjoyment of the property.  An average tenant does not understand the scope of quiet enjoyment and often fails to realize when his or her rights have been invaded by a landlord.  Likewise, landlords often fail to realize the significant scope of the right to quiet enjoyment and inadvertently breach this right in trying to place certain restrictions on the tenant.  The right to quiet enjoyment includes many different elements, and lease provisions should specify any restrictions.

Ohio law recognizes that there is a covenant of quiet enjoyment implied in every lease.  This covenant has been recognized for over a century and is designed to protect the tenant’s rights to the peaceful and undisturbed enjoyment and possession of the lease property.[1]  Although the name implies only one type of right, “quiet enjoyment” is not simply the right to have a noise-free tenancy.  Rather, the right consists of the right to enjoy unimpaired physical control of the property at the time of the execution of lease, and throughout the remaining term. 

The covenant of quiet enjoyment is breached when a landlord obstructs, interferes with, or takes away from the tenant the beneficial use of the leasehold to any substantial degree.[2]  In other words, when the tenant is deprived of the beneficial enjoyment of the leased premises, or even a part of the leased premises, it is conceivable that the right to quiet enjoyment has been breached.  The tenant does not have to be dispossessed of the property (as in the case of an actual eviction), but can simply be constructively evicted to constitute a breach of the covenant.

A breach of the covenant of quiet enjoyment can occur in many forms.  For example, when an owner permits the premises to deteriorate through lack of heat, faulty electrical wiring, or poor structural maintenance so as to create a substantial interference with the beneficial enjoyment, a resulting breach of the covenant of quiet enjoyment arises.  Similarly, when an individual locks the tenant out of the building or prevents the tenant from using the building for a purpose permitted under a lease, a breach of the covenant of quiet enjoyment can arise. 

The degree of the impairment required to breach the covenant of quiet enjoyment is a question for the court.  When a landlord breaches the covenant of quiet enjoyment, a tenant is relieved of its obligation to pay rent for the premises.  This is a significant weapon available for the tenant to use if it feels it has been injured by the landlord.  The significance of this remedy is evidenced by the Hamilton Brownfields Redevelopment, LLC v. Duro Tire & Wheel[3] case.  In this recent case, a commercial landlord was held liable for the breach of quiet enjoyment and the tenant was relieved of its obligation to pay rent for the premises.  This result arose despite the fact that the commercial landlord had brought a successful forcible entry and detainer action against the tenant.  The court reasoned that although the tenant was entitled to be evicted, the landlord’s decision to change the lease in mid-tenancy so that the tenant could not continue with its past use of the property constituted a breach of quiet enjoyment.  Accordingly, the commercial tenant was entitled to damages for the period during which the landlord was deemed to have breached the covenant of quiet enjoyment. 

Clearly, a landlord needs to be careful how it enforces certain rules pertaining to its property.  Based on the Hamilton Brownfields case, a landlord will want to specify the restrictions it desires to place on the use of the property in the lease agreement.  Placing such restrictions clearly in the lease makes it more difficult for a tenant to claim a breach of quiet enjoyment when the landlord attempts to enforce those restrictions.  If the restrictions are not set forth in the agreement, the tenant can argue that its quiet enjoyment of the property has been injured.

From a tenant’s perspective, one will want to pay careful attention to the terms and permitted uses for the property under the lease agreement.  Obviously, the more restrictions in the document, the less likely it is that

the tenant will be able to claim a breach of the covenant of quiet enjoyment.  Accordingly, it is incumbent upon both the landlord and tenant to make sure that they understand up front the permitted uses for the property and any restrictions.  Failure to do so can result in an inadvertent breach of the covenant of quiet enjoyment and entitle the tenant to damages.

David Woodburn is an Associate in the Real Estate & Construction Law Practice Group.  He can be reached at dwoodburn@bdblaw.com or 330.258.6506.

New licensing requirements for trade contractors

By:  Robert A. Hager, Esq.

Overview

New legislation for regulation of the commercial construction industry in Ohio with an eye towards consumer protection became effective on September 16, 2004.  Substitute Senate Bill 179 (“SB 179”) significantly changes the Construction Industry Licensing Law.  All trade contractors (refrigeration, plumbing, electrical, hydronics and HVAC) must now be licensed.  Changes have been made to the licensing and training requirements, which now include licensing and training of backflow technicians.

Consumer Protections

SB 179 creates sanctions designed to protect consumers.  These sanctions include significant fines, criminal penalties and increased continuing education requirements that can be imposed on licensed contractors.  Consumers were previously required to file a complaint against a contractor within one year.  Under the new law, consumers can now file a complaint for up to three years.

Penalties for Unlicensed Trade Contractors

Now the Ohio Construction Industry Licensing Board (“OCILB”) (formerly the Ohio Construction Industry Examining Board) can take an unlicensed contractor to court for performing unlicensed work.  An individual performing trade work without a license can face criminal charges of a minor misdemeanor on the first offense and a misdemeanor of the fourth degree on subsequent offenses.

Licensing Requirements

Every contractor now must annually renew its license and comply with newly modified continuing education provisions.  Unexpired licenses may be renewed without examination, and contractors with licenses from other states may also be excluded from the examination requirement, but must still obtain an Ohio license.  Municipalities and counties may no longer register contractors who are not licensed by OCILB.

Separate definitions for each type of contractor have been eliminated and combined into a new definition for “contractor” as one who performs one or more licensed trades.  A “licensed trade” is “a trade performed by a heating, ventilating, and air conditioning contractor, a refrigeration contractor, an electrical contractor, a plumbing contractor, or a hydronics contractor.”  Backflow technicians are now specifically included as a licensed trade.  Tradesperson trainees are no longer included in the definition of a contractor.

Additional Information

For more information concerning the requirements of the new law, contact Bob Hager at (216) 615-7318.  Applications, forms and other information can be accessed and downloaded from the OCILB’s web site located at http://www.com.state.oh.us/dic/dicocieb.htm. 

Email Bob Hager at bhager@bdblaw.com for a copy of the Act and the Legislative Service Commission Final Analysis.

Bob Hager is a Shareholder in the Real Estate & Construction Law Practice Group.  He speaks regularly at seminars and presentations concerning various construction law issues.  He can be contacted at bhager@bdblaw.com or 216.615.7318.  Special thanks to Mark F. Craig, Esq. of Buckingham, Doolittle & Burroughs, LLP for his contribution to this article.

SPOTLIGHT ON OUR ATTORNEYS

The Real Estate & Construction Law Group is pleased to announce the addition of two lawyers to our team!

Save the Date for our Annual Real Estate & Construction Law Seminar:

Wednesday, February 23, 2005

Hilton Akron/Fairlawn

Registration 2:30 p.m.

Presentation 3:00 p.m. – 5:00 p.m.

Post Reception:  5:00 p.m. – 6:00 p.m.

Pending approval, this seminar will be offering 2 Credits Hours through the

Ohio Division of Real Estate & Professional Licensing.

Invitations will be mailed in January, 2005 – OR -

register on-line now at: http://www.bdblaw.com/seminars.asp.

Out and About – Recent Presentations:

On October 22, 2004, Edward V. Buehrle (Buckingham Akron^SM) was a guest on the Ray Horner radio talk show featured on WAKR.  Ed’s topic, Disclosure Obligations When Selling Residential Real Estate, was presented on behalf of the Akron Bar Association.

On November 11, 2004, Mark F. Craig and John P. Slagter (Buckingham Cleveland^SM) presented at a Lorman Seminar in Cleveland, Ohio.  Mr. Craig spoke on Preserving And Presenting Claims Under Payment And Performance Bonds.  Mr. Slagter discussed the Bonding Off Liens and Notice To Commence Suit On Liens.  For more information on this seminar visit www.lorman.com.

On November 18, 2004, Rana M. Gorzeck and L.A. Perkins (Buckingham Boca^SM) presented at the South Florida Chapter of the American Women’s Society of CPA’s.  Their topic was Trends in South Florida Real Estate.

If you are interested in obtaining information on upcoming seminars or would be interested in having speakers from Buckingham, Doolittle & Burroughs, LLP make a presentation to your organization, please contact: Lorna J. Henderson, Client Relations Administrator at lhenderson@bdblaw.com or 800.686.2825 ext. 473.