In Cleveland Botanical Garden v. Worthington Drewien, Slip Opinion No. 2022-Ohio-3706, the Ohio Supreme Court held that a reversionary interest created in the root of title was not extinguished under the Ohio Marketable Title Act (the “OMTA”) because the OMTA only extinguishes interests and claims existing prior to the date of the root of title. The Court’s holding effectively overruled a 1978 decision from the Second District Court of Appeals, which found that a reversionary interest created in the root of title was extinguished under the OMTA because the holders failed to record a notice of preservation, which is the only means to preserve future interests from extinguishment under the OMTA (See, R.C. 5301.49(A)).[1]
Cleveland Botanical Garden involved the 1882 conveyance of land, whereby Jeptha Wade conveyed 73 acres to the City of Cleveland to be used as a public park, subject to several conditions restricting the use of the property. The 1882 deed also included a reversionary clause, which would cause the property to revert back to Jeptha Wade or his heirs (the “Wade Heirs”) in the event that the property was no longer used for public purposes or did not comply with the 1882 deed’s park-use restrictions.
Cleveland Botanical Garden (“CBG”) had leased part of Wade Park from the City of Cleveland for a number of years. The lease to CBG incorporated the 1882 deed’s park-use restrictions. In 2003, CBG sought to modify the terms of its lease to permit charging admission and parking fees. Some of the Wade Heirs believed that charging these fees violated the 1882 deed’s restrictions requiring the park to be “open at all times to the public.” In 2013, after unsuccessfully attempting to obtain the approval of all of the Wade Heirs, CBG filed a declaratory judgment action, arguing amongst other claims, that the 1882 deed did not give the Wade Heirs policing or veto power over the 1882 deed and that their reversionary interests were extinguished under the OMTA. Specifically, CBG argued that, under R.C. 5301.49(A), the OMTA extinguishes reversionary interests that exist in the root of title, unless the party seeking to enforce such interest had recorded a notice of preservation within the 40-year period following the root of title. The trial court ruled that the MTA extinguished the heirs’ reversionary interest, concluding that the interest could only be preserved by filing a notice of preservation, which the Wade Heirs had not done. On appeal, the Eighth District Court of Appeals (the “Eighth District”) reversed the trial court’s judgment as to the application of the OMTA, finding that the City of Cleveland, having been in continuous possession of the property, had notice of the heirs’ interest from the 1882 deed.
The Ohio Supreme Court agreed with the Eighth District’s conclusion that the CBG had notice of the reversionary interest from the 1882 deed and rejected the CBG’s argument that R.C. 5301.49(A) required the Wade Heirs to record a separate notice to preserve their reversionary interest, despite the interest being contained in the root of title. In coming to its decision, the Court noted that requiring the Wade Heirs to record a separate notice of preservation would be “redundant and futile since the reversionary interest is inherent in the root of title itself” and the OMTA does not extinguish interests contained in the root of title.
[1] Verona United Methodist Church v. Shock, 1978 WL 216179.