Lease Option Question

My second question comes from some research in state law regarding some verbaige that needs to be put in the Lease Agreement according to Ohio. This protects and helps the tenant if the original lein holder gets foreclosed on and also helps with regard to the filing of Memo of Option and "When it was filed" first or second to the mortgage holder. I want to make sure I understand this correctly. Are there folks including this verbaige in their Sandwich Lease Agreements with Option to purchase where you utilize the original owners mortgage until the sublease will purchase at a later date according to the contract? See below from a local Law Blog respectively:

If you are a landlord, tenant, or lender, and have no clue as to what the title of this Blog article is referring to, please read on. The bottom line is that if “the form does not fit, you must alter it”. If you are a lender, the “A” - (Attornment) will be necessary to prevent a tenant from walking away from its lease without liability, in the event its landlord is foreclosed upon. Without the “ND” - (Non-Disturbance), a tenant can be permanently evicted from its leased premises after a foreclosure of its landlord’s property, regardless of how much time is left in the lease term. The “ND”, the “A”, and at times, the entire “SNDA”(Subordination, Non-Disturbance and Attornment Agreement) are often overlooked because they are not understood, frequently resulting in disastrous and unintended consequences.

The general purpose of recording acts is to protect people who have acted in good faith, paid value for property, and want to assure themselves that they have all the rights to their property, as against the rest of the world. Ohio has what is called a “Race-Notice Recording Act” (for deeds and other instruments, except mortgages-O.R.C. Sec. 5301.25) providing that unless one party has actual notice, the person that “wins the race”, and records their interest in a property has priority over the person that records later. As between mortgages, Ohio has adopted a “Race” Recording Act (O.R.C. Sec. 5301.23), with the date and time of recording being the sole test for priority. For an example on how the law works, if a bank lends money to a landlord and takes back a mortgage, and records that mortgage, the bank has staked its first priority position. If the landlord later leases the property to a tenant, and the lease, or a memorandum of lease is subsequently recorded, the tenants’ rights are second in position. In the Olympics, second place is a coveted silver medal. In real estate, however, especially in Ohio, second place can be catastrophic for a tenant due to the “second basic principle of Ohio real estate law discussed below.

Ohio and a minority of other states declare a lease terminated, upon foreclosure of the property being leased, whether or not the tenant was joined in the foreclosure action. (See New York Life Ins. Co. v. Simplex Products Corp., 21 N.E. 2d 585 [1939- Ohio]; Hembree v. Mid-America Federal Savings & Loan, 580 N.E. 2d 1103 [Ohio App.-2nd Dist., 1989]). If the tenant does not vacate the premises after the foreclosure, the new owner can file for eviction and prevail, regardless of how much time the tenant had left on its lease. (Note: as a result of some contrary lower court authority, mortgagees seeking assurance that “junior” leases to a property will terminate, often will join the tenants as additional parties defendant in their foreclosure action. See Ohio Real property Law and Practice Sec 20.23 [Matthew Bender & Company- 2007]).

Thank you in advance...

you have hired an attorney, any information received here would be moot. Your attorney should approve or correct your documents because he is the one that will be defending you if things go wrong. He should also explain to you the answers to the questions that you have. Just my honest opinion.

Thank you... This can be a little overwhelming at times.. I had my meeting with attorney and did my initial disucssion and gave him my templates. I am waiting on his thoughts and will bring this new research to his attention. Again thank you..