Appellate Court Limits Slander of Title Claim

Blog, Real Estate

Appellate Court Limits Slander Title Claim

Slander of title is a civil claim for damages resulting from the publishing of false information about real property, such that the property is disparaged, or its title is clouded. For example, at its simplest terms, if a person records an affidavit with the county recorder, specifying the person has a legal or equitable interest in the property, and it turns out the affidavit is false, the owner of the property could bring a slander of title claim against the person. An Ohio Appellate Court has issued a decision that limits the applicability of a slander of title claim, when it is determined the information was accurate when recorded, even though it later becomes inaccurate.

The case stems from a 1984 lease agreement between a property owner and tenants and a right of first refusal in favor of the tenants. The tenants recorded a “Memorandum of Lease” with the county recorder, disclosing the right of first refusal to purchase the property. The tenants leased the property for three years and then moved out, but never cancelled the Memorandum of Lease.

30 years later, in 2014, the owner entered into a purchase contract to sell the property to a buyer. The Memorandum of Lease was discovered during the title search, clouding title. The owner approached the tenants about releasing the Memorandum of Lease, but they declined. The owner then provided the tenants the opportunity to purchase the property on the same terms as the buyer, to which they also declined. Eventually, the owner filed a lawsuit against the tenants and among other causes of action, sought to have the Trial Court quiet the title in favor of the owner and award the owner damages for slander of title.

The Trial Court eventually did quiet the title in favor of the owner, effectively vacating the Memorandum of Lease. As to the slander of title claim, the Trial Court found that at the time the Memorandum of Lease was recorded, it was truthful. Thus, the tenants could not have published a false or slanderous statement. On appeal the owner argued that when the tenants allowed the Memorandum of Lease to continue without paying rent or paying any further consideration, the tenants slandered the owner’s title. The Appellate Court found that the time period for a cause of action for slander of title is at the time of publication, or the time the document is filed with the recorder. The Appellate Court agreed with the Trial Court and found that at the time the Memorandum of Lease was recorded, it was not false. Thus, the owner could not advance a claim for slander of title against the tenants.

The Appellate Court’s decision is noteworthy. The owner was not able to sell the property because of the cloud on title and was not able to recover damages from the tenant for refusing the release the Memorandum of Lease, because at the time it was filed, it was not false. The complete decision can be viewed at Cairelli v. Brunner, 2019-Ohio-1511.

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