2013 Ohio 2545
Ohio Ct. App.2013Background
- Michaels purchased the Belmont County property from Fleaganes in 2002; the deed contained a repurchase option and a right of first refusal.
- Michaels obtained a mortgage from Novastar (later assigned to Wells Fargo); Wells Fargo had notice of both covenants.
- Michaels defaulted; Wells Fargo foreclosed; original complaint did not name Fleaganes initially.
- Foreclosure judgment was partially granted; court held repurchase option and ROFR survived foreclosure, subject to Fleaganes’ preemptive rights.
- Trial court later ruled those covenants survived foreclosure and could be invoked post-foreclosure; Wells Fargo appealed.
- Seventh District reversed, holding repurchase option does not run with the land and ROFR is not triggered by foreclosure; remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does repurchase option run with the land after foreclosure? | Wells Fargo argues repurchase is a deed-based covenant and personal, not binding successors. | Fleaganes contend repurchase runs with land and is enforceable against foreclosing grantee. | Repurchase option does not run with the land; not enforceable post-foreclosure. |
| Is the right of first refusal triggered by foreclosure at Sheriff’s sale? | ROFR survives foreclosure and can be invoked to match highest bid. | ROFR is triggered by events other than foreclosure; foreclosure is not a triggering event. | Foreclosure is not a triggering event for ROFR; cannot be invoked at Sheriff’s sale. |
Key Cases Cited
- Welch v. Welch, 188 Ohio App.3d 641 (2010-Ohio-2981) (ROFR triggered by language; foreclosure not required)
- Wargo v. Henderson, 2009-Ohio-2443 (7th Dist.2010) (personal covenants enforceable with notice; language controls)
- Tadros v. Middlebury Medical Center, Inc., 263 Conn. 235 (2003) (foreclosure not triggering ROFR where arms-length/voluntary sale required)
- Huntington Nat. Bank v. Cornelius, 80 A.D.3d 245 (N.Y.App.Div.2010) (ROFR requires voluntary sale, not involuntary foreclosure)
- Pearson v. Schubach, 52 Wash.App. 716 (1988) (ROFR not triggered by court-ordered sale)