The recording of a Land Contract with an Ohio county recorder becomes a public record so as to make any potential future buyer of the property aware of the existence of a contract encumbering the property.
Ohio Revised Code Section 5313.02(C) states that within 20 days after a land installment contract has been signed by both the vendor and the vendee, “the vendor shall cause a copy of the contract to be recorded” in the office of the county recorder of the county in which the property is located. And that “until so recorded or filed for record, [the Land Contract is] fraudulent insofar as [it] relates to a subsequent bona fide purchaser having, at the time of purchase, no knowledge of the existence of that former deed, land contract, or instrument”.
The vendor must also cause “a copy of the contract to be delivered to the county auditor.”
Once recorded, the Land Contract is a public record. Nearly all Ohio county recorder’s offices permit the public to conduct on-line electronic record searches of recorded documents. Documents can be searched by the names of the party to the real estate transaction (or, in some counties, by property parcel number or recoding date, among other data).
Some county recorders allow the party searching the record to view, download or print the actual recorded document.
Some parties to a Land Contract may choose not record the actual land contract itself, however, so as to maintain some privacy concerning the amount of the purchase price, payment terms, borrowing, etc.
Instead, these parties prepare and record a Memorandum of Land Contract that provides the names of the parties, the legal description of the property and a statement that a Land Contract was entered into on a specific date.
While the recording of a Memorandum of Land Contract is not expressly prescribed by Ohio statute, many courts have held that recording a Memorandum of Land Contract (along with the performance by the parties of the terms of the Land Contract itself) does not render the Land Contract invalid as between the vendor and vendee.
The recording of a Memorandum of Land contract is sufficient to put third parties on notice of the existence of the Land Contract, thereby eliminating the potential “fraudulent” (i.e. not enforceable) nature of the Land Contract as it relates to a subsequent purchaser who does not, at the time of that third party’s purchase of the property, have knowledge of the existence of that Land Contract.
In other words, the filing of the Memorandum of Land Contract puts future purchasers on notice of the existence of the Land Contract, even if the Land Contract itself is not recorded.