Title: LRC Realty, Inc. v. B.E.B. Properties

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
LRC Realty, Inc. v. B.E.B. Properties, Slip Opinion No. 2020-Ohio-3196.] 
 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
 
SLIP OPINION NO. 2020-OHIO-3196 
LRC REALTY, INC., APPELLANT, v. B.E.B. PROPERTIES ET AL.; 112 PARKER 
COURT, L.L.C., APPELLANT; BIRD ET AL., APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as LRC Realty, Inc. v. B.E.B. Properties, Slip Opinion No.  
2020-Ohio-3196.] 
Real property—Absent an express reservation, the right to receive rents runs with 
the land and follows the legal title—Court of appeals’ judgment reversed 
and cause remanded. 
(No. 2018-1262—Submitted December 11, 2019—Decided June 9, 2020.) 
APPEAL from the Court of Appeals for Geauga County, 
No. 2016-G-0076, 2018-Ohio-2887. 
__________________ 
FISCHER, J. 
{¶ 1} This case concerns the leased land beneath a cell tower and the right 
to receive rental payments from the tower’s owner following the transfer of the 
underlying property.  Specifically, this case asks us to reaffirm and apply the 
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time-tested rule that absent an express reservation in the deed conveying the 
property, a covenant to pay rent runs with the land.  Because the deed at issue 
here did not contain such a reservation, we reverse the judgment of the court 
below. 
I.  FACTUAL AND PROCEDURAL BACKGROUND 
{¶ 2} In 1994, B.E.B. Properties leased a portion of the roughly three-acre 
commercial property it owned in Chardon, Ohio, to Northern Ohio Cellular 
Telephone Company.  B.E.B. Properties also granted Northern Ohio Cellular an 
easement on that same property.  Both the lease and the easement were 
subsequently recorded and a cellular tower was erected on the site. 
{¶ 3} In 1995, B.E.B. Properties sold the property to two individuals, 
Keith Baker and Joseph Cyvas.  Within months after selling the property to Baker 
and Cyvas, two of the three general partners in B.E.B. Properties sold their 
interests in the partnership to the third partner and his wife, appellees Bruce and 
Sheila Bird.  The Birds understood this transaction to include the assignment of 
the right to receive all future rental payments for the tower located on the 
partnership’s former property. 
{¶ 4} Pertinently, throughout the time that Baker and Cyvas owned the 
property, the Birds did, in fact, receive annual rental payments from Northern 
Ohio Cellular and its successor in interest, appellee New Par.  And, New Par 
continued to send the Birds its rental payments even after appellant 112 Parker 
Court, L.L.C., (“Parker Court”) purchased the land from Baker and Cyvas’s 
successor in interest. 
{¶ 5} In 2013, appellant LRC Realty, Inc., acquired the property from 
Parker Court and then began inquiring about its rights to the rental payments.  Not 
long after that, this litigation commenced. 
{¶ 6} In 2014, LRC Realty filed a complaint against B.E.B. Properties, 
Parker Court, and New Par seeking a declaratory judgment that it was entitled to 
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the annual rental payments for the cell tower located on its property.  LRC Realty 
also sought to recover the rent that New Par had paid the Birds in 2013.  As the 
assignees of B.E.B. Properties, the Birds responded and filed a counterclaim and 
cross-claim, asking the court to declare that they were entitled to receive the rental 
payments and to reform several of the deeds in the chain of title of the property to 
reflect that fact. 
{¶ 7} In 2015, after New Par filed a notice of interpleader of that year’s 
rental payment, the parties filed cross-motions for summary judgment.  The trial 
court granted Parker Court’s and LRC Realty’s motions for summary judgment in 
part and denied the Birds’ motion.  The trial court ordered the Birds to pay Parker 
Court the rent that they had received from 2007 to 2013 and to pay LRC Realty 
the rent that they had received in 2013.  The trial court also awarded LRC Realty 
the funds that New Par had deposited with the court. 
{¶ 8} Following that ruling, the Birds appealed to the Eleventh District 
Court of Appeals.  The Eleventh District affirmed the trial court’s judgment in 
part and reversed it in part.  With respect to the legal claims involved, the court 
found that the Birds were entitled to the past and future rental payments based on 
the language contained in the deed transferring the property from B.E.B. 
Properties to Baker and Cyvas and remanded the case with an instruction for the 
trial court to enter a judgment in favor of the Birds. 
{¶ 9} LRC Realty and Parker Court separately appealed to this court, and 
we granted jurisdiction.  154 Ohio St.3d 1437, 112 N.E.3d 923, 2018-Ohio-4732. 
II.  ANALYSIS 
{¶ 10} This case presents two issues: (1) whether it is still true that absent 
an express reservation in the deed conveying property, the right to receive rents 
runs with the land and (2) whether language in a deed indicating that the property 
being conveyed is “subject to” a recorded lease agreement and easement is 
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sufficient to reserve the grantor’s right to receive future rental payments under 
that lease agreement. 
{¶ 11} Because our analysis of these issues arises out of the trial court’s 
grant of summary judgment in this case, we apply a de novo standard of review.  
Doe v. Shaffer, 90 Ohio St.3d 388, 390, 738 N.E.2d 1243 (2000), citing Grafton v. 
Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). 
A.  The Right to Receive Rental Payments 
{¶ 12} The parties all agree that absent a reservation in the deed conveying 
the property, the right to receive rents runs with the land.  We agree with this 
statement of law. 
{¶ 13} Under the common law of this state, a covenant to pay rent ran 
with the land.  Smith v. Harrison, 42 Ohio St. 180, 185 (1884).  This meant that 
the right to receive rents and profits would ordinarily follow the legal title.  
Commercial Bank & Savs. Co. v. Woodville Savs. Bank Co., 126 Ohio St. 587, 
186 N.E. 444 (1933), paragraph one of the syllabus.  One exception to that 
general rule occurred when the grantor included a specific provision reserving the 
right to receive rental payments in the deed conveying the subject property.  See 
Liberal S. & L. Co. v. Frankel Realty Co., 137 Ohio St. 489, 501, 20 N.E.2d 1012 
(1940). 
{¶ 14} The General Assembly codified these common-law rules in R.C. 
5302.04.  That statute provides that “[i]n a conveyance of real estate or any 
interest therein, all rights, easements, privileges, and appurtenances belonging to 
the granted estate shall be included in the conveyance, unless the contrary is 
stated in the deed * * *.”  R.C. 5302.04. 
{¶ 15} Against this backdrop, we hold that the right to receive rents runs 
with the land and follows the legal title unless it is reserved by the grantor in the 
deed conveying the property. 
 
 
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B.  The Reservation Clause 
{¶ 16} We now turn our attention to the deed involved here and decide 
whether it reserved to B.E.B. Properties and subsequently the Birds the right to 
receive future rental payments from the owner of the cell tower located on the 
transferred property. 
{¶ 17} When interpreting a deed, the primary goal of this court is to give 
effect to the intentions of the parties.  Koprivec v. Rails-To-Trails of Wayne Cty., 
153 Ohio St.3d 137, 2018-Ohio-465, 102 N.E.3d 444, ¶ 23.  The best way to do 
that is to look at the words found within the four corners of the deed itself and to 
adhere to the plain language used there.  See id.; see also Jolliff v. Hardin Cable 
Television Co., 26 Ohio St.2d 103, 106, 269 N.E.2d 588 (1971), citing Hinman v. 
Barnes, 146 Ohio St. 497, 508, 66 N.E.2d 911 (1946). 
{¶ 18} The language that the Eleventh District focused on in the deed 
before us provides: 
 
“B.E.B. Properties * * * the said Grantor, does for its self and its 
successors and assigns, covenant with * * * Grantees [Baker and 
Cyvas] * * * that it will warrant and defend said premises * * * 
against all lawful claims and demands whatsoever, such premises 
further to be subject to the specific encumbrances on the premises 
as set forth above.” 
 
(Third ellipsis and emphasis sic.)  2018-Ohio-2887, 118 N.E.3d 260, ¶ 39. 
{¶ 19} The Eleventh District believed that the “specific encumbrances on 
the premises as set forth above” language was a reference to the previously 
recorded lease and easement and therefore reserved the right to receive future 
rental payments in favor of B.E.B Properties, giving the Birds that right by way of 
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B.E.B. Properties’ subsequent assignment.  Id. at ¶ 40-42.  We disagree with the 
Eleventh District’s interpretation and the conclusions it drew from that reading. 
{¶ 20} Black’s Law Dictionary defines a reservation as “[t]he creation of a 
new right or interest (such as an easement), by and for the grantor, in real property 
being granted to another.”  Black’s Law Dictionary 1500 (10th Ed.2014).  While 
no magic words are required to create a reservation, typically a reservation clause 
will contain the words “reserve,” “reserving,” or “reservation.”  See Gill v. 
Fletcher, 74 Ohio St. 295, 304, 78 N.E. 433 (1906).  Parties will also use the 
words “except” or “excepting” to achieve the same ends, see, e.g., id., although it 
should be noted that an exception is technically distinct from a reservation, see 
Black’s at 683 (defining “exception” as “[t]he retention of an existing right or 
interest, by and for the grantor, in real property being granted to another”).  
Sometimes, parties will even use the words “reserve” and “except” together.  See, 
e.g., Gill at 304.  So, for example, a reservation may be stated by simply 
acknowledging that the conveyance of the property is subject to a reservation and 
then including a description of the thing the grantor is reserving.  See, e.g., Ohio 
Transaction Guide, Section 188.200. 
{¶ 21} Crucially, in this case, no words of reservation appear on the face 
of the instrument in connection with the words “rent” or “rental payments,” which 
are entirely absent from the deed.  Unlike the Eleventh District, we do not read 
the words “subject to the specific encumbrances on the premises as set forth 
above” to make up for the lack of a specific reservation clause or some language 
in the deed reserving the right to receive future rental payments.  Accordingly, in 
the absence of such wording, B.E.B. Properties did not reserve the right to receive 
future rental payments for the leased land when it conveyed the property to Baker 
and Cyvas and its subsequent assignment of that interest to the Birds was thus 
ineffective.  After all, it is impossible to assign an interest that one does not 
possess.  Smith v. Barrick, 151 Ohio St. 201, 85 N.E.2d 101 (1949), paragraph 
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five of the syllabus.  Consequently, we reverse the Eleventh District’s judgment 
concluding otherwise. 
C.  Remand 
{¶ 22} Our reaffirmance of certain longstanding legal principles and their 
application to the deed at issue here does not put an end to this matter, however.  
As Judge Grendell observed in her dissent below and as the facts of this case 
make clear, there are still other issues that remain unresolved—e.g., whether any 
equitable defenses should apply based on the parties’ courses of conduct.  
Because the Eleventh District did not previously address these issues, we remand 
the cause to that court so that it may do so now, in light of our decision today. 
III.  CONCLUSION 
{¶ 23} For the reasons stated above, we hold that absent a reservation, the 
right to receive rents runs with the land and follows the legal title.  Because the 
words in the deed at issue here did not create such a reservation, we reverse the 
judgment of the Eleventh District Court of Appeals and remand the matter to that 
court for further proceedings consistent with this opinion. 
Judgment reversed 
and cause remanded. 
O’CONNOR, C.J., and KENNEDY, FRENCH, DEWINE, DONNELLY, and 
STEWART, JJ., concur. 
_________________ 
 
Koehler Fitzgerald, L.L.C., James F. Koehler, and Timothy J. Fitzgerald, 
for appellant LRC Realty, Inc. 
 
Kegler, Brown, Hill & Ritter Co., L.P.A., and Robert Dove; and Robert A. 
Franco, for appellant 112 Parker Court, L.L.C. 
 
Cohen Rosenthal & Kramer, L.L.P, James B. Rosenthal, and Ellen M. 
Kramer, for appellees Bruce and Sheila Bird. 
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Gregory W. Happ, urging reversal for amicus curiae, Ohio Association of 
Independent Title Agents. 
_________________