Am. Servicing Corp. v. Wannemacher

[Cite as Am. Servicing Corp. v. Wannemacher, 2014-Ohio-3984.]

IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
PUTNAM COUNTY

AMERICAN SERVICING CORP.,

PLAINTIFF-APPELLANT, CASE NO. 12-14-01

v.

RONALD E. WANNEMACHER, OPINION

DEFENDANT-APPELLEE.

Appeal from Putnam County Municipal Court
Trial Court No. 2013 CVG 00308

Judgment Affirmed

Date of Decision: September 15, 2014

APPEARANCES:

Kurt A. Dauterman for Appellant

Gregory J. Hermiller for Appellee
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PRESTON, J.

{¶1} Plaintiff-appellant, American Servicing Corporation (“American

Servicing”), appeals the December 20, 2013 judgment of the Putnam County

Municipal Court denying its requests for forcible entry and detainer and damages.

For the reasons that follow, we affirm.

{¶2} On March 6, 2013, American Servicing entered into a contract with

defendant-appellee, Ronald E. Wannemacher (“Wannemacher”), regarding

property located at 145 Truax Road in Cloverdale, Ohio (“the property”). (Doc.

No 1).1 Under the terms of the contract, Wannemacher agreed to pay American

Servicing $244.87 per month (“the rent”) for 36 months. (Id. at 4, 6). American

Servicing calculated Wannermacher’s payments “at a $22,800.00 purchase price,

amortized over 180 payments with an interest rate of 9.99%.” (Id. at 4). The

contract noted that an amortization schedule was attached.2 (See id.).

Wannemacher’s payments were due on or before the first of each month to

American Servicing in the care of Timothy M. Runion (“Runion”), American

Servicing’s owner, and were subject to a $50.00 late penalty if paid after the fifth

day of the month. (Id.). Wannemacher was responsible for all repairs and

maintenance of the interior and exterior of the property, required to maintain

1
The record reflects that the property encompasses approximately 53 acres of land, including
approximately 40-41 acres of farmland, 5-6 acres of wooded area, and 5 acres of land on which a house
sits. (Nov. 18, 2013 Tr. at 89).
2
The amortization schedule purportedly attached to the contract is not included in the record. (See Doc.
No. 1).

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insurance on the property, and required to pay the property taxes. (Id. at 5). If

Wannemacher failed to pay the rent, taxes, or insurance for more than 30 days,

American Servicing had the right “to reenter and repossess the premises” and

terminate “the lease.” (Id.).

{¶3} The contract offered Wannemacher the option to purchase the

property for $22,800.00 during its term and included a prepayment penalty

provision.3 (Id. at 5). Otherwise, the contract stated that “at the end of the 36

month term of this Lease, [Wannemacher] is required to make a balloon payment

of Twenty Thousand Four Hundred Ninety Nine Dollars and eighty one cents

($20,499.81).” (Emphasis added.) (Id.). If Wannemacher paid all of the rent

payments and the balloon payment, American Servicing agreed to convey the

property to Wannemacher by general warranty deed. (Id.). If Wannemacher was

unable to pay the balloon payment, American Servicing had the right “to reenter

and repossess the premises” and terminate “the lease.” (Id.).

{¶4} Wannemacher timely remitted his payments for April, May, June, and

July 2013. (Doc. No. 8). (See also Nov. 18, 2013 Tr. at 49). Wannemacher

timely remitted his payment for August 2013 (“August payment”); however,

American Servicing returned the August payment to Wannemacher on August 13,

3
The prepayment penalty provision required Wannemacher to pay six payments in addition to the payoff
amount. (Doc. No. 1).

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2013 because he had insufficient funds in his account on which the check was

drawn. (Nov. 18, 2013 Tr. at 7); (Doc. No. 7).

{¶5} Wannemacher testified that he remitted his next payment (“September

payment”) on September 2, 2013.4 (Nov. 18, 2013 Tr. at 24). Because

Wannemacher’s August payment was more than 30 days late by that time,

American Servicing determined that Wannemacher was in breach of the contract.

(Id. at 55). As a result, American Servicing rejected Wannemacher’s September

payment, and Runion personally posted a “Termination of Lease & Notice to

Leave the Premises” notice (“the notice”) on the front door of the property on

September 5, 2013. (Id. at 53, 55). The notice stated that Wannemacher’s “lease”

of the property was terminated as of September 11, 2013 because Wannemacher

failed to remit the August payment in the time specified by the contract. (Doc.

No. 1). The notice further indicated that Wannemacher was to vacate the premises

by September 11, 2013 or American Servicing would pursue an eviction action

against him. (Id. at 13).

{¶6} On September 23, 2013, American Servicing filed a complaint for

forcible entry and detainer and damages. (Id. at 1). The trial court held a

4
The record reflects that the check was dated August 30, 2013, and postmarked September 3, 2013. (See
Doc. No. 7).

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“hearing”5 on American Servicing’s complaint on November 18, 2013. (Nov. 18,

2013 Tr. at 1).

{¶7} At the hearing, Wannemacher testified that he confirmed with his

bank on August 15, 2013 that the August payment was returned for insufficient

funds, after receiving a notice in the mail on August 14, 2013. (Id. at 18-19).

After confirming the returned check, Wannemacher testified that he called Runion

to inform him of the returned check and to inquire how to cure the deficiency.

(Id.). Specifically, Wannemacher testified that he offered to write Runion another

check, present him with a cashier’s check, personally deliver cash to him, or

represent the returned check. (Id.). According to Wannemacher, Runion told him

that he would represent the returned check to his bank. (Id.). Wannemacher

testified that because he did not hear anything more from Runion, he assumed the

matter was cured, and he proceeded by remitting the September payment. (Id.).

{¶8} Runion testified that he did not recall receiving a phone call or

voicemail message from Wannemacher on August 15, 2013 because it was a

stressful time for him due to a close friend’s illness and subsequent death. (Id. at

55). However, phone records included in the record reflect that a phone call

between Wannemacher and Runion occurred on August 15, 2013 and lasted for

approximately three minutes. (Id. at 59). (See also Doc. No. 8). More

5
We note that the parties refer to the November 18, 2013 inquiry as a “hearing,” but it appears that it was a
trial on the merits of American Servicing’s complaint.

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specifically, Runion testified that he did not recall telling Wannemacher that he

would represent the check. (Nov. 18, 2013 Tr. at 59). Rather, Runion testified

that he would have told him that he needed to remit the August payment and that

he would have accepted any form of payment. (Id. at 54). Runion testified that he

did not send any written correspondence to Wannemacher indicating that his

August payment was late or that he owed American Servicing a $50.00 late fee

and a fee for the returned check because he assumed Wannemacher’s bank would

inform Wannemacher that his August payment was returned for insufficient funds.

(Id. at 65).

{¶9} At the hearing, Runion also testified regarding Wannemacher’s

interest in the property. Without any further explanation, he stated, “The lease

was filed so [Wannemacher] would have one position.” (Id. at 63).6 Runion also

testified that if Wannemacher made all of his payments and the balloon payment,

he would own the property. (Id. at 64).

{¶10} Wannemacher offered testimony regarding his impression as to his

interest in the property. Wannemacher testified that he signed the contract on the

advice of legal counsel, and indicated that he understood the contract to mean that

the property would be leased back to him, he would make payments for three

years to bolster his credit so that he could qualify for a loan to make the balloon

6
The record reflects that the instrument was recorded on March 7, 2013 with the Putnam County
Recorder’s Office. (See Doc. No. 1). The recorder’s stamp at the top of the first page of the document
reads, “Lease.” (See id.).

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payment, and after making the payments and the balloon payment, the property

would be his. (Id. at 86-87). Wannemacher further testified that he understood

the contract to be a loan and that he agreed to pay a 9.99 percent interest rate. (Id.

at 88).

{¶11} On December 20, 2013, the trial court concluded in a judgment entry

that the contract between the parties constituted a land installment contract, not a

lease with an option to purchase and that R.C. 5313.08 governed American

Servicing’s complaint. (Dec. 20, 2013 JE, Doc. No. 9). The trial court concluded

that American Servicing did not comply with the notice provisions of R.C.

5313.06, as required by R.C. 5313.08, and dismissed its complaint. (Id.).

{¶12} American Servicing filed its notice of appeal on January 17, 2014.

(Doc. No. 10). American Servicing raises two assignments of error for our

review. For ease of our discussion, we will address American Servicing’s

assignments of error together.

Assignment of Error No. I

The parties stipulated to the admission of the written agreement
and such was referred to as a “Lease” and when stipulated on
the record by both parties, there is no ambiguity.

Assignment of Error No. II

The lease with the option to purchase is not a land sale contract
since the option to purchase the property was not mandatory,
but an option of Appellee, thus the court had jurisdiction to

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decide the matter for non-payment of rent pursuant to the lease
agreement and award Appellant possession of the premises.

{¶13} In its first assignment of error, American Servicing argues that the

parties stipulated at the November 18, 2013 hearing that the contract was a lease

with an option to purchase, not a land installment contract. In its second

assignment of error, American Servicing argues that the trial court erred in

concluding the contract was a land installment contract and dismissing its

complaint. Specifically, American Servicing argues in both of its assignments of

error that the trial court’s conclusion that the contract was a land installment

contract was contrary to the parties’ stipulation and contrary to law.

{¶14} “With regard to reviewing the language of any contract, ‘[t]he

cardinal purpose for judicial examination of any written instrument is to ascertain

and give effect to the intent of the parties.’” Reinhart v. Fostoria Plumbing,

Heating & Elec. Supply, Inc., 3d Dist. Seneca No. 13-10-08, 2010-Ohio-4825, ¶

16, quoting Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention

Facilities Auth., 78 Ohio St.3d 353, 361 (1997). “Courts presume that the intent

of the parties to a contract resides in the language they chose to employ in the

contract.” Judson v. Lyendecker, 10th Dist. Franklin No. 12AP-615, 2013-Ohio-

1060, ¶ 12, citing Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130 (1987), paragraph

one of the syllabus. “‘If a contract is clear and unambiguous, then its

interpretation is a matter of law and there is no issue of fact to be determined.’”

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Barhorst, Inc. v. Hanson Pipe & Prods. Ohio, Inc., 169 Ohio App.3d 778,

2006-Ohio-6858, ¶ 10 (3d Dist.), quoting Inland Refuse Transfer Co. v.

Browning-Ferris Industries of Ohio, Inc., 15 Ohio St.3d 321, 322 (1984). In that

case, we apply a de novo standard of review. St. Marys v. Auglaize Cty. Bd. of

Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, ¶ 38, citing Nationwide Mut. Fire

Ins. Co. v. Guman Bros. Farm, 73 Ohio St.3d 107, 108 (1995).

{¶15} “However, if the contract is ambiguous, ascertaining the parties’

intent constitutes a question of fact.” Fadelsak v. Hagley, 4th Dist. Lawrence No.

02CA41, 2003-Ohio-3413, ¶ 9, citing Crane Hollow, Inc. v. Marathon Ashland

Pipeline, LLC, 138 Ohio App.3d 57, 74 (4th Dist.2000). “We will not reverse a

factual finding of the trial court so long as some competent, credible evidence

supports it.” Id., citing C.E. Morris Co. v. Foley Constr. Co., 54 Ohio St.2d 279

(1974), syllabus.

{¶16} “To determine whether an agreement is a land installment contract or

a lease with an option to purchase, a court must analyze the intent of the parties at

the time they executed the agreement.” Judson at ¶ 12, citing Fadelsak at ¶ 10,

Hubbard v. Dillingham, 12th Dist. Butler No. CA2002-02-045, 2003-Ohio-1443, ¶

11 and Riverside Builders, Inc. v. Bowers, 10th Dist. Franklin No. 89AP-834,

1990 WL 75433, *4 (June 7, 1990). If the court is unable to ascertain the parties’

intent from the four corners of the document, “the court may also consider the

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factual circumstances surrounding the parties’ agreement.” Fadelsak at ¶ 10. See

also Judson at ¶ 12 (“[W]here a contract is ambiguous, a court may consider

extrinsic evidence to ascertain the parties’ intent.”), citing Westfield Ins. Co. v.

Galatis, 100 Ohio St.3d 216, 2003-Ohio-5849, ¶ 12.

{¶17} The Revised Code defines a land installment contract as:

an executory agreement which by its terms is not required to be fully

performed by one or more of the parties to the agreement within one

year of the date of the agreement and under which the vendor agrees

to convey title in real property located in this state to the vendee and

the vendee agrees to pay the purchase price in installment payments,

while the vendor retains title to the property as security for the

vendee’s obligation. Option contracts for the purchase of real

property are not land installment contracts.

R.C. 5313.01(A).

{¶18} By contrast, “Ohio courts have defined a ‘lease’ as ‘a conveyance of

an estate in real property for a limited term, with conditions attached, in

consideration of rent.’” Fadelsak at ¶ 11, quoting Cuyahoga Metro. Hous. Auth. v.

Watkins, 23 Ohio App.3d 20, 23 (8th Dist.1984) and Jones v. Keck, 79 Ohio App.

549, 552 (5th Dist.1946). And Ohio courts have defined “[a]n option contract for

the purchase of real property [as] an agreement wherein the legal titleholder of the

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property grants another person the privilege, without the obligation, to purchase

the real property at a set price within a set time.” (Emphasis added.) Judson at ¶

10, citing Wolf v. Miller Diversified Consulting, LLC, 6th Dist. Wood No. WD-07-

049, 2008-Ohio-1233, ¶ 22 and George Wiedemann Brewing Co. v. Maxwell, 78

Ohio St. 54, 63 (1908) (“[D]efining option contracts as ‘instrument[s] * * * by

which one party in consideration of the payment of a certain sum to the other

party, acquires the privilege of buying from or otherwise acquiring or selling to

such other party an interest in the specified property at a fixed price within a stated

time.’”).

{¶19} “‘The distinction, then, between a land [installment] contract and a

lease with an option to purchase is that the land [installment] contract conveys a

present ownership interest in realty, while the lease conveys an interest less than

ownership.’” Id. at ¶ 11, quoting Riverside Builders, 1990 WL 75433, at *4

(“[A]n option to purchase property when coupled with a lease conveys a present

interest in the realty which may be redeemed upon execution of the option.”).

{¶20} American Servicing argues that the contract was clearly and

unambiguously a lease with an option to purchase. Specifically, American

Servicing argues that the parties’ intent for the contract to be a lease with an

option to purchase was established by the parties’ stipulation as such, and the trial

court’s characterization of the contract as a lease. American Servicing’s assertion

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is erroneous. A “stipulation” is “a voluntary agreement entered into between

opposing parties concerning the disposition of some relevant point to avoid the

necessity for proof on an issue.” Crow v. Nationwide Mut. Ins. Co., 159 Ohio

App.3d 417, 2004-Ohio-7117, ¶ 18 (5th Dist.), citing Rice v. Rice, 8th Dist.

Cuyahoga No. 78682, 2001 WL 1400012, *4 (Nov. 8, 2001).

{¶21} Here, the parties stipulated that the contract contained the terms it

contained to avoid prolonged testimony regarding the contents of the contract. In

other words, the parties did not stipulate that the contract was a lease with an

option to purchase as opposed to a land installment contract. See Village of

Oakwood v. Makar, 11 Ohio App.3d 46, 50 (8th Dist.1983) (stipulation merely

indicated that the bills were the ones actually sent, not as to the amount of

reasonable attorney fees). The transcript of the hearing reveals the following

exchange in response to American Servicing’s counsel’s direct examination of

Wannemacher regarding the contents of the contract:

[Trial Court]: Can we just stipulate to the lease?

Is there any objection to the lease

agreement [Wannemacher’s

counsel]?

[Wannemacher’s Counsel]: No.

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[Trial Court]: [American Servicing’s counsel],

is there any reason not just to

stipulate to the terms of the lease

agreement?

[American Servicing’s Counsel]: That’s fine.

[Trial Court]: Okay. If you want to make a

point about something in there,

that’s fine, but otherwise, can you

just stipulate to the admission of

the lease and then all of his

contact[?]

[American Servicing’s Counsel]: Sure, and I will move to a more

pointed more direct question,

Your Honor.

[Trial Court]: Very well. The lease will be

admitted into the record upon

stipulation of the parties.

(Nov. 18, 2013 Tr. at 22-23).

{¶22} Also, American Servicing argues that the trial court sustained its

objection to Wannemacher’s characterization of the contract as a “loan,” and

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stated “it is a lease with terms,” which demonstrates that the contract was

considered a lease with an option to purchase. (See id. at 87). The transcript of

the hearing reveals the following exchange:

[Wannemacher’s Counsel]: What was your understanding of

the agreement as to what it was?

[Wannemacher]: Well, it was supposed to lease the

property back to me, and then

after three years then I would

have to make this payment of

$22,800 [sic] more than I actually

got after all that, but that would

help build up my credit so I could

get the money for the loan.

[Wannemacher’s Counsel]: So this money was loaned to you?

[American Servicing’s Counsel]: Objection. Your Honor, we have

a lease agreement here. The

agreement’s already been

admitted into the record. I mean

the agreement speaks for itself.

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[Trial Court]: I will sustain the objection to the

effect, [Wannemacher’s counsel],

that the characterization of a loan

I don’t believe is accurate given

the fact it is a lease with terms.

[Wannemacher’s Counsel]: Okay. I will ask another question.

Why is there an interest rate on

this lease agreement, to your

understanding?

[Wannemacher]: Well, I never really thought about

it. I guess it seems like a loan to

me, whether they call it a lease or

a loan.

(Id. at 87-88).

{¶23} Taken in the context of Wannemacher’s counsel’s line of

questioning, it is apparent from the record that Wannemacher’s counsel was

attempting to elicit testimony from Wannemacher regarding his understanding of

the intent of the parties at the time the contract was executed. The fact that the

trial court sustained American Servicing’s counsel’s objection to Wannemacher’s

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counsel’s characterization of the contract as a “loan” as opposed to a “lease

agreement” is not dispositive of the contract’s legal nature in this case.

{¶24} Consequently, we reject American Servicing’s argument that the

parties stipulated that the contract was a lease with an option to purchase and the

trial court characterized it as such. We also reject American Servicing’s argument

that the contract was clearly and unambiguously a lease with an option to

purchase. Rather, we apply a de novo standard of review and conclude that the

four corners of the contract clearly and unambiguously indicate that the parties

intended a land installment contract as defined under R.C. 5313.01(A).

{¶25} First, we note that some courts apply a six-factor test supplied by the

Fourth District to ascertain the intent of the parties. See Fadelsak,

2003-Ohio-3413, at ¶ 10, citing In re D.W.E. Screws Products, Inc., 157 B.R. 326,

330 (Bankr.S.D.Ohio 1993) and Hubbard, 2003-Ohio-1443, at ¶ 11. However, the

statute unambiguously defines a land installment contract. See R.C. 5313.01(A).

“The first rule of statutory construction is that a statute which is clear is to be

applied, not construed.” Vought Industries, Inc. v. Tracy, 72 Ohio St.3d 261, 265

(1995). “There is no authority under any rule of statutory construction to add to,

enlarge, supply, expand, extend or improve the provisions of the statute to meet a

situation not provided for.” Id., citing State ex rel. Foster v. Evatt, 144 Ohio St.

65 (1944), paragraph eight of the syllabus. Therefore, if a statute’s language is

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plain and unambiguous, this court will apply it as written. State v. Hairston, 101

Ohio St.3d 308, 2004-Ohio-969, ¶ 13. Because R.C. 5313.01(A) is unambiguous,

we need not look outside the definition of a land installment contract under the

statute.

{¶26} From the plain language of the contract, we discern that the parties

intended a land installment contract because the contract comports with the

definition of a land installment contract, as it is defined by the statute. See R.C.

5313.01(A). Notwithstanding the contract’s title, the language employed in the

body of the contract demonstrates that the parties intended a land installment

contract.

{¶27} The contract is titled “Lease Agreement with Option to Purchase;”

however, its caption is not dispositive of its meaning. See Fadelsak at ¶ 12

(finding that the parties intended a land installment contract even though the

agreement was captioned “Lease with Option to Purchase”); Anderson v. Ballard,

6th Dist. Lucas No. L-10-1007, 2010-Ohio-3926, ¶ 42 (“The fact that an

agreement is titled “Option to Purchase,” however, does not necessarily make it

so.”).

{¶28} Rather, the language employed in the body of the contract

demonstrates that the parties intended a land installment contract. First, the

contract was an executory agreement that was not required to be fully performed

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by either of the parties within one year of the date of the agreement. See R.C.

5313.01(A). More precisely, the contract was to be fully performed three years

from the date of the agreement. (See Doc. No. 1). Second, American Servicing

agreed to convey the title to the property, and Wannemacher agreed to pay the

purchase price in installment payments. See R.C. 5313.01(A). Third, American

Servicing retained the title to the property as security for Wannemacher’s

obligation. See id.

{¶29} Irrespective of the above, American Servicing argues that the

contract was an option contract, which by the statute’s definition is not a land

installment contract. See id. Specifically, American Servicing argues that the

contract did not “bind” Wannemacher to purchase the property, but provided him

the “opportunity” to purchase the property. (See Appellant’s Brief at 16). The

statute does not define “option contract;” however, courts have defined “option

contract.” See Judson, 2013-Ohio-1060, at ¶ 10. American Servicing’s argument

is erroneous because Wannemacher agreed to purchase the property. Stated

another way, the contract required Wannemacher to remit the balloon payment at

the end of the three-year contract term—he did not merely “acquire the privilege”

to purchase the property. Maxwell, 78 Ohio St. at 63. (See also Doc. No. 1). As a

result, the contract is not an option contract because it required Wannemacher to

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purchase the property. Compare Judson, 2013-Ohio-1060, at ¶ 14 (contract did

not obligate the vendee to purchase the property).

{¶30} Therefore, the four corners of the contract clearly and

unambiguously indicate that the parties intended a land installment contract

because the contract comports with the definition of a land installment contract

under the statute. See R.C. 5313.01(A). As a result, we hold that the trial court

did not err in concluding that the parties intended a land installment contract.

{¶31} As we stated above, because the statute is dispositive that the parties

intended a land installment contract, it is unnecessary to address any other

court-created measures for ascertaining the parties’ intent. Nevertheless, even

assuming the statute was ambiguous and in need of construction, application of the

Fadelsak factors also demonstrates that the parties intended a land installment

contract. Those factors are: “(1) the characterization of the document; (2) the

lessee’s rights at the end of the lease term; (3) the application of rent to the

purchase price; (4) the responsibility for payments for repairs, utilities, and taxes;

(5) the nonexistence of a financing statement; and (6) whether an option to

purchase existed.” Fadelsak, 2003-Ohio-3413, at ¶ 12.

{¶32} Here, the first Fadelsak factor—the contract’s characterization—is

the only factor that indicates the parties intended a lease with an option to

purchase. As we noted above, while the contract is captioned, “Lease Agreement

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with Option to Purchase,” its characterization is not dispositive of its meaning.

Instead, application of the second, third, fourth, and sixth Fadelsak factors indicate

that the parties intended a land installment contract. Before addressing the four

factors that indicate the parties intended a land installment contract, we note that

because the existence of a financing statement cannot be ascertained from the four

corners of the document, the fifth Fadelsak factor is inapplicable in this case to

determine intent.7

{¶33} The second and sixth Fadelsak factors indicate that the parties

intended a land installment contract because the contract obligated Wannemacher

to make payments for 36 months and required him to remit the balance of the

purchase price as a balloon payment at the end of the contract term to gain

ownership of the property. See Fadelsak at ¶ 12 (“The agreement obligates the

Fadelsaks to make rent payments for two hundred forty months, and implies that

the Fadelsaks would gain ownership of the property upon the end of the lease

term.”). Therefore, because under the contract Wannemacher would be vested

with ownership after making the 36 installment payments and the balloon payment

at the end of the contract term, the factor regarding Wannemacher’s rights at the

end of the contract term demonstrates that the parties intended a land installment
7
The record does not reflect any extrinsic evidence indicating whether the parties filed, or did not file, a
financing statement. However, as we previously noted, the record reflects that the contract was recorded as
a “lease” with the Putnam County Recorder’s Office on March 7, 2013. (See Doc. No. 1). Much like the
caption of a document is not dispositive of its meaning, the characterization of a document by a county
recorder’s office through its stamp at the top of a document is also not dispositive of its legal nature.
Compare Fadelsak, 2013-Ohio-3413, at ¶ 12; Anderson, 2010-Ohio-3926, at ¶ 42.

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contract. See id. By the same token, that Wannemacher was required to purchase

the property—not given the privilege, without the obligation, to purchase the

property at a set price and at a set time—also demonstrates that the parties

intended a land installment contract.

{¶34} The third Fadelsak factor also indicates that the parties intended a

land installment contract because the contract applied Wannemacher’s rent to the

purchase price based on the amortization schedule purportedly attached to the

contract. Compare Fadelsak at ¶ 12 (contract was considered land installment

contract because, in part, it applied all rent paid to the purchase price). See also

Black’s Law Dictionary 103 (10th Ed.2014) (defining amortization schedule as

“[a] schedule of periodic payments of interest and principle owed on a debt

obligation; specif. [sic], a loan schedule showing both the amount of principal and

interest that is due at regular intervals over the loan term and the remaining unpaid

principal balance after each scheduled payment is made”).

{¶35} Finally, the fourth Fadelsak factor indicates the parties intended a

land installment contract because the contract treated Wannemacher as the

property owner since it required him to be responsible for all interior and exterior

maintenance and repairs of the property, taxes, and insurance. See Fadelsak at ¶

12 (contract considered land installment contract because it, in part, treated the

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Fadelsaks as property owners by requiring them to be responsible for all

maintenance, repairs, taxes, and insurance).

{¶36} Moreover, assuming the intent of the parties was not clear from the

contract and looking beyond the statutory definition of land installment contract

under R.C. 5313.01(A) and the Fadelsak factors, the facts and circumstances

surrounding the contract also indicate that the parties intended to execute a land

installment contract. See Fadelsak at ¶ 10 (the court may consider the facts and

circumstances surrounding the contract if it is necessary to ascertain the parties’

intent). The record reflects that Wannemacher had a significant interest in having

an ownership interest in the property. While it is unclear from the record how

American Servicing came to own the property, the record documents that

Wannemacher owned the property prior to American Servicing’s ownership. (See

Nov. 18, 2013 Tr. at 89).8 Wannemacher testified that his father was born in the

home that is located on the property. (Id.). According to Wannemacher, he

entered into the contract with American Servicing to retain the property while

repairing his credit. (Id. at 87). As such, the facts and circumstances surrounding

the contract demonstrate that the parties intended a land installment contract.

{¶37} Next, we hold that the trial court did not err in dismissing American

Servicing’s complaint after determining that the contract was a land installment

8
The record reflects that Wannemacher has lived in the home located on the property since 2004. (Nov.
18, 2013 Tr. at 89).

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contract and concluding American Servicing did not comply with the notice

provisions of R.C. 5313.06 as required by R.C. 5313.08. See Krivins v. Smyers,

9th Dist. Summit No. 9935, 1981 WL 3945, *2 (Apr. 22, 1981) (the forcible entry

and detainer complaint was dismissed because the notice of default did not comply

with R.C. 5313.06). Because the trial court concluded that the contract was a land

installment contract, R.C. Chapter 5313 applied to determine whether

Wannemacher forfeited the land installment contract and whether American

Servicing was entitled to restitution of the property.

{¶38} “R.C. 5313.08 applies when a vendee defaults on a land installment

contract that has been ‘in effect for less than five years’ * * * [and] permits a

vendor to bring an action for forfeiture of the vendee’s rights in the contract and

for restitution of the property.” Voska v. Coffman, 6th Dist. Sandusky No.

S-13-008, 2013-Ohio-5474, ¶ 10, quoting R.C. 5313.08. R.C. 5313.08 specifically

states:

If the contract has been in effect for less than five years, in addition

to any other remedies provided by law and after the expiration of the

periods prescribed by sections 5313.05 and 5313.06 of the Revised

Code, if the vendee is still in default of any payment the vendor may

bring an action for forfeiture of the vendee’s rights in the land

installment contract and for restitution of his property under Chapter

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1923 of the Revised Code. When bringing the action under Chapter

1923 of the Revised Code, the vendor complies with the notice

requirement of division (A) of section 1923.04 of the Revised Code

by serving notice pursuant to section 5313.06 of the Revised Code.

The court may also grant any other claim arising out of the contract.

R.C. 5313.08.

{¶39} Therefore, to maintain a forfeiture action under R.C. 5313.08, the

vendee must “be in default, and remain in default, after the passage of the times

provided in R.C. 5313.05 and 5313.06, and the notice given under the provisions

of R.C. 5313.06.” Shriver v. Grabenstetter, 3d Dist. Seneca No. 13-87-13, 1988

WL 53868 *5 (May 18, 1988). See also Chemical Bank v. Sullivan, 121 Ohio

App.3d 111, 113 (6th Dist.1997).

{¶40} R.C. 5313.05 states:

When the vendee of a land installment contract defaults in payment,

forfeiture of the interest of the vendee under the contract may be

enforced only after the expiration of thirty days from the date of the

default. A vendee in default may, prior to the expiration of the

thirty-day period, avoid the forfeiture of his interest under the

contract by making all payments currently due under the contract

and by paying any fees or charges for which he is liable under the

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contract. If such payments are made within the thirty-day period,

forfeiture of the interest of the vendee shall not be enforced.

R.C. 5313.05. And R.C. 5313.06 states:

Following expiration of the period of time provided in section

5313.05 of the Revised Code, forfeiture of the interest of a vendee in

default under a land installment contract shall be initiated by the

vendor or by his successor in interest, by serving or causing to be

served on the vendee or his successor in interest, if known to the

vendor or his successor in interest, a written notice which:

(A) Reasonably identifies the contract and describes the property

covered by it;

(B) Specifies the terms and conditions of the contract which have

not been complied with;

(C) Notifies the vendee that the contract will stand forfeited unless

the vendee performs the terms and conditions of the contract within

ten days of the completed service of notice and notifies the vendee to

leave the premises.

Such notice shall be served by the vendor or his successor in interest

by handing a written copy of the notice to the vendee or his

successor in interest in person, or by leaving it at his usual place of

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abode or at the property which is the subject of the contract or by

registered or certified mail by mailing to the last known address of

the vendee or his successor in interest.

R.C. 5313.06.

{¶41} “Moreover, [R.C. 5313.08] states that the procedure to be followed is

dictated by R.C. Chapter 1923 (the forcible entry and detainer statute) and that the

notice provision of R.C. 1923.04(A) is satisfied by the notice mandated in R.C.

5313.06.” Chemical Bank at 113. R.C. 1923.04 states, in relevant part:

(A) Except as provided in division (B) or (C) of this section, a party

desiring to commence an action under this chapter shall notify the

adverse party to leave the premises, for the possession of which the

action is about to be brought, three or more days before beginning

the action, by certified mail, return receipt requested, or by handing

a written copy of the notice to the defendant in person, or by leaving

it at the defendant’s usual place of abode or at the premises from

which the defendant is sought to be evicted.

Every notice given under this section by a landlord to recover

residential premises shall contain the following language printed or

written in a conspicuous manner: “You are being asked to leave the

premises. If you do not leave, an eviction action may be initiated

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against you. If you are in doubt regarding your legal rights and

obligations as a tenant, it is recommended that you seek legal

assistance.”

(B) The service of notice pursuant to section 5313.06 of the

Revised Code constitutes compliance with the notice requirement of

division (A) of this section.

***

R.C. 1923.04.

{¶42} American Servicing’s complaint for forcible entry and detainer and

damages did not comply with R.C. 5313.08. The three-day notice that American

Servicing supplied to Wannemacher failed to notify him that he would forfeit the

land installment contract unless he satisfied the terms and conditions of the

contract within ten days after service of the notice pursuant to R.C. 5313.06, a

condition precedent to an action under R.C. 5313.08. See Jones v. Seven Hills

Farm, Inc., 4th Dist. Lawrence No. 1977, 1991 WL 224159, *9 (Oct. 30, 1991)

(forfeiture action cannot be sustained if the provisions of R.C. 5313.06 are not

complied with prior to bringing the action); Keene v. Schnetz, 13 Ohio App.3d 87

(9th Dist.1983), paragraph one of the syllabus (“R.C. 5313.05 and 5313.06 create

a statutory right to forfeiture when certain conditions are met.”).

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{¶43} Thus, the trial court did not err in dismissing American Servicing’s

complaint because American Servicing failed to provide adequate notice under

R.C. 5313.06, which is requisite for forfeiture and restitution under R.C. 5313.08.

{¶44} We note that the trial court also concluded, based on American

Servicing’s noncompliance with R.C. 5313.06, that the trial court did “not yet

have jurisdiction over the subject matter for forfeiture of the land contract,” citing

Austin v. Sullivan, 7th Dist. Mahoning No. 93CA43, 1994 WL 650228 (Nov. 17,

1994). In Austin, the Seventh District held that the appellee’s failure to comply

with R.C. 5313.06 deprived the trial court of jurisdiction over the subject matter of

the land installment contract. Id. at *2. At least one district has questioned the

Seventh District’s conclusion in Austin. State ex rel. Investco Mgt. Co. LLC v.

Geauga Cty. Court of Common Pleas, 11th Dist. Geauga No. 2012-G-3085,

2012-Ohio-4651, ¶ 19 (noting that the issue of whether the failure to comply with

R.C. 5313.06 deprives a trial court of jurisdiction over the subject matter of the

land contract is far from settled because Austin has never been followed). We

need not, and do not, decide this issue in this case because the trial court

ultimately dismissed the complaint, which was the proper disposition of the case

in light of the trial court’s conclusion that American Servicing failed to satisfy

R.C. 5313.06.

{¶45} Therefore, American Servicing’s assignments of error are overruled.

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{¶46} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgment of the trial court.

Judgment Affirmed

ROGERS and SHAW, J.J., concur.

/jlr

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