Chapter 1747: REAL ESTATE INVESTMENT TRUSTS

1747.01 Real estate investment trust definitions.

As used in Chapter 1747. of the Revised Code, unless the context otherwise requires:

(A) "Real estate investment trust" means a trust created by an instrument, pursuant to common law or enabling legislation, under which any estate or interest in real property is held, managed, administered, controlled, invested, reinvested, or operated by a trustee or trustees for the benefit and profit of persons who are or may become the holders of transferable certificates of beneficial interest, issued pursuant to the provisions of the trust instrument, such transferability being either restricted or unrestricted, which trust intends to comply or has at any time complied or intended to comply with sections 856, 857, and 858 of the "Internal Revenue Code of 1954," 68A Stat. 3, 26 U.S.C. 1 , as now or hereafter amended.

(B) "Domestic real estate investment trust" means a real estate investment trust organized in this state.

(C) "Foreign real estate investment trust" means a real estate investment trust organized in another state.

(D) "State" means the United States, any state, territory, insular possession, or other political subdivision of the United States, including the District of Columbia.

(E) "Trust instrument" means the instrument creating a real estate investment trust, including any amendments to it.

(F) "To transact real estate business in this state" means to take, hold, or dispose of any estate or interest in real property situated in this state.

(G) "Certificate of beneficial interest" means a certificate issued by a real estate investment trust evidencing a beneficial interest in the trust.

Effective Date: 07-17-1978

1747.02 Compliance with chapter.

No real estate investment trust shall be authorized to transact real estate business in this state unless it fully complies with section 1747.03 of the Revised Code, except that a real estate investment trust that holds an estate or interest in real property in this state on the effective date of this section may continue to transact real estate business in this state if it fully complies with section 1747.03 of the Revised Code within one year after the effective date of this section and may dispose of the estate or interest within one year after the effective date of this section. However, nothing contained in sections 1747.01 to 1747.13 of the Revised Code shall be construed to limit, prohibit, or invalidate the existence, acts, or obligations to the state or any person, of any real estate investment trust with respect to any real estate business or other business it transacted in this state prior to the effective date of this section.

Effective Date: 07-17-1978

1747.03 Filing with secretary of state before transacting business.

(A) Before transacting real estate business in this state, a real estate investment trust shall file the following report in the office of the secretary of state, on forms prescribed by the secretary of state:

(1) An executed copy of the trust instrument or a true and correct copy of it, certified to be such by a trustee before an official authorized to administer oaths or by a public official in another state in whose office an executed copy is on file;

(2) A list of the names and addresses of its trustees;

(3) The address of its principal office;

(4) In the case of a foreign real estate investment trust, the address of its principal office within this state, if any;

(5) The business name of the trust;

(6) The name and address within this state of a designated agent upon whom process against the trust may be served;

(7) The irrevocable consent of the trust to service of process on its designated agent and to service of process upon the secretary of state if, without the registration of another agent with the secretary of state, its designated agent has died, resigned, lost authority, dissolved, become disqualified, or has removed from this state, or if its designated agent cannot, with due diligence, be found;

(8) Not more than ninety days after the occurrence of any event causing any filing made pursuant to divisions (A)(2) to (6) of this section, or any previous filing made pursuant to this division, to be inaccurate or incomplete, all information necessary to maintain the accuracy and completeness of such filing.

(B) For filings under this section, the secretary of state shall charge and collect the fee specified in division (T) of section 111.16 of the Revised Code, except for filings under division (A)(8) of this section pertaining solely to division (A)(6) of this section, for which the secretary of state shall charge and collect the fee specified in division (R) of section 111.16 of the Revised Code.

(C) All persons shall be given the opportunity to acquire knowledge of the contents of the trust instrument and other information filed in the office of the secretary of state, but no person dealing with a real estate investment trust shall be charged with constructive notice of the contents of any such instrument or information by reason of such filing.

(D) A copy of a trust instrument or other information filed in the office of the secretary of state is prima-facie evidence of the existence of the instrument or other information and of its contents, and is conclusive evidence of the existence of such record.

(E) The agent designated pursuant to division (A)(6) of this section shall be one of the following:

(1) A natural person who is a resident of this state;

(2) A domestic or foreign corporation, nonprofit corporation, limited liability company, partnership, limited partnership, limited liability partnership, limited partnership association, professional association, business trust, or unincorporated nonprofit association that has a business address in this state. If the agent is an entity other than a domestic corporation, the agent shall meet the requirements of Title XVII of the Revised Code for an entity of the agent's type to transact business or exercise privileges in this state.

Amended by 130th General Assembly File No. 62, SB 98, §1, eff. 2/18/2014.

Effective Date: 06-06-2001

1747.04 Amendment of trust instrument.

A trust instrument may be amended in the manner specified in it or in any manner that is valid under the common or statutory law applicable to the trust created under it. However, no amendment adopted subsequent to the initial filings required by section 1747.03 of the Revised Code is legally effective in this state until an executed or certified true and correct copy of the amendment has been filed in the office of the secretary of state accompanied by the fee specified in division (T) of section 111.16 of the Revised Code.

Effective Date: 06-06-2001

1747.05 General powers of trust.

(A) Subject to the limitations of division (C) of this section, every real estate investment trust authorized to transact real estate business in this state has the following general powers:

(1) To take, hold, and dispose of any estate or interest in real or personal property;

(2) To sue and be sued, complain and defend, in all courts;

(3) To transact its business, carry on its operations, and exercise the powers granted by this chapter in any state;

(4) To make contracts, incur liabilities, lend or borrow money and to receive or give security therefor; to sell, mortgage, lease, pledge, exchange, convey, transfer, and otherwise dispose of all or any part of its property and assets; to issue bonds, notes, and other obligations and secure them by mortgage or deed of trust of all or any part of its property, franchises, or income;

(5) To acquire by purchase or in any other manner and to take, receive, own, hold, use, employ, improve, encumber, and otherwise deal in or with real or personal property or any interests in the property, wherever situated;

(6) To purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, loan, pledge, or otherwise dispose of, and otherwise use and deal in and with, securities, shares, or other interests in or obligations of domestic or foreign corporations, other real estate investment trusts, associations, partnerships, and individuals, or direct or indirect obligations of any state or municipal corporation, or any instrumentality thereof;

(7) To elect or appoint trustees, officers, and agents of the trust for the period of time the trust instrument or bylaws provides, to define the authority and duties of such trustees, officers, and agents, and to adopt and operate employee and officer benefit plans;

(8) To make and alter bylaws not inconsistent with law or with its trust instrument for regulating the government of the trust and for the administration of its affairs;

(9) To curtail or cease its trust activities by a partial or complete distribution of its assets and to terminate its existence by voluntary dissolutions;

(10) To exercise the foregoing powers in the business name of the trust or in the name of one or more of its trustees or nominees;

(11) To exercise the foregoing powers by acting through one or more of its duly authorized trustees, officers, or agents;

(12) Generally, to exercise the powers set forth in its trust instrument and those granted by law and to do every other act or thing not inconsistent with law, which may be appropriate to promote and attain the purposes set forth in its trust instrument.

(B) The original or a copy of the record of the proceedings or meetings of holders of certificates of beneficial interest in the trust estate of a real estate investment trust authorized to transact real estate business in this state or of the trustees shall be prima-facie evidence of the facts stated therein when certified to be true by a trustee, secretary, or assistant secretary of the real estate investment trust. Every meeting referred to in such certified original or copy shall be deemed duly called and held, all motions and resolutions adopted and proceedings had at such meeting shall be deemed duly adopted and had, and all elections or appointments of trustees, officers, or agents chosen at such meeting shall be deemed valid, until the contrary is proven. If a person who is not a holder of a certificate of beneficial interest in the trust estate has acted in good faith in reliance upon any such certified original or copy of such record, it is conclusive in his favor.

(C) Nothing in this section grants a real estate investment trust any power that would violate the public policy of this state, nor shall any such trust be authorized to engage in any business that a private corporation for profit organized under the laws of this state may not legally transact, nor does anything in this section grant to any such trust any power or authorize any action specifically denied by the terms or operation of its trust instrument.

Effective Date: 07-17-1978

1747.06 Interests in property.

(A) A real estate investment trust may take, hold, and dispose of any estate or interest in real property in its business name, or in the name of one or more of its trustees, or in the name of one or more of its nominees. A conveyance to a real estate investment trust in its business name shall recite that the grantee is a real estate investment trust, and the estate or interest so acquired can be conveyed by the trust only in its business name. Any estate or interest in real property taken, held, or disposed of by a real estate investment trust in its business name prior to the effective date of this section is hereby confirmed as if the conveyance thereof had been made pursuant to the authority of this section.

(B) The fact that a recorded deed, mortgage, or other conveyance of an estate or interest in real property designates a real estate investment trust or one or more trustees or nominees of a real estate investment trust as the grantee does not give notice to or put upon inquiry any person dealing with the property that there are any limitations on the power of such trust, trustees, or nominees to dispose of or encumber the estate or interest specified in such conveyance, unless such conveyance specifically contains such limitations or incorporates by reference another instrument of record in the same county which specifically contains such limitations. As to all bona fide purchasers and encumbrancers of the property, a conveyance, release, or encumbrance by such trust, trustees, or nominees transfers or releases the estate or interest in the property specified free from the claims of the holders of certificates of beneficial interest in the trust estate and free from any obligation on the part of such purchaser or encumbrancer to see to the application of any purchase money or other consideration.

Effective Date: 07-17-1978

1747.07 Service of process.

Real estate investment trusts are subject to all applicable provisions of law, rules of procedure, and rules of court, now in effect or hereafter enacted, relating to domestic or foreign corporations, with regard to service of process.

Effective Date: 07-17-1978

1747.08 Certificate of beneficial interest is security.

A certificate of beneficial interest is a security subject to Chapter 1707. of the Revised Code.

Effective Date: 07-17-1978

1747.09 Perpetual period of existence - termination.

Unless otherwise stated in the trust instrument, a real estate investment authorized to transact real estate business in this state has a perpetual period of existence and is not affected by any rule against perpetuities. Nothing contained in this section shall be construed or interpreted to limit, prohibit, or invalidate any provision of a trust instrument providing that such real estate investment trust may be terminated at any time by action of the trustees or by the vote of a specified percentage in interest of the beneficial owners thereof.

Effective Date: 07-17-1978

1747.10 Surrender of authority.

Any domestic or foreign real estate investment trust authorized to transact real estate business in this state may surrender its authority at any time by filing in the office of the secretary of state a verified copy of a resolution duly adopted by its trustees declaring its intention to withdraw, accompanied by the fee specified in division (T) of section 111.16 of the Revised Code. Such real estate investment trust then ceases and is without authority to transact real estate business in this state, except as necessary for its conclusion.

Effective Date: 06-06-2001

1747.11 Forfeiture for transacting business without authority.

(A) Any real estate investment trust that transacts real estate business in this state without authority shall forfeit not less than one thousand dollars nor more than ten thousand dollars. Such forfeiture shall be recovered in an action in the name of the state brought in the court of common pleas of Franklin county, or in the court of common pleas of any county in which the trust has transacted real estate business or has property or a place of business, by the attorney general or the prosecuting attorney. If such action is brought by the attorney general, such forfeiture shall on collection be paid into the state treasury to the credit of the general revenue fund. If brought by the prosecuting attorney, one-half of such forfeiture shall on collection be paid to the treasurer of the county in which action was brought and one-half shall be paid into the state treasury to the credit of the general revenue fund. In addition to such forfeiture, the court shall render a judgment that the trust pay the filing fees required by division (B) of section 1747.03 of the Revised Code, plus interest on the fees at the rate of six per cent per annum for the time during which the court determines that the trust transacted real estate business in this state in violation of section 1747.02 of the Revised Code. An action for the recovery of such forfeiture and filing fee shall be brought within five years after the real estate investment trust has ceased to transact real estate business in this state.

(B) For good cause shown, the secretary of state, with the consent of the attorney general, before or after judgment, or the court in which an action is pending for the collection of a forfeiture, may remit all or part of the forfeiture.

(C) This section does not apply to any real estate investment trust that either:

(1) Holds an estate or interest in real property in this state on the effective date of this section and transacts business after that effective date, if the real estate investment trust complies with section 1743.03 of the Revised Code within one year after the effective date of this section;

(2) Holds an estate or interest in real property in this state on the effective date of this section, if it disposes of the estate or interest within one year after the effective date of this section.

Effective Date: 07-17-1978

1747.12 Violation effects.

(A) The failure of any real estate investment trust to be authorized to transact real estate business in this state does not affect the validity of any contract with such trust, or the validity of the title to any estate or interest in real property taken, held, or disposed of by such trust. No real estate investment trust that should have been so authorized, nor any persons on its behalf shall maintain any action in any court of this state until it has obtained such authority by filing with the secretary of state as required by division (B) or (C) of this section, paying the fee associated with the filing, and further paying to the secretary of state a forfeiture of one thousand dollars.

(B) If such real estate investment trust has not been previously authorized to transact real estate business in this state or if its authority has been surrendered, it shall make the filings specified in divisions (A)(1) to (7) of section 1747.03 of the Revised Code and pay the specified fee for the filing.

(C) If such real estate investment trust has been previously authorized to transact real estate business in this state and its authority has expired for failure to make the filings required by division (A)(8) of section 1747.03 of the Revised Code, it shall make such filings, and pay the specified fee for the filings.

(D) Full compliance with this section prior to the bringing of an action to recover a forfeiture under section 1747.11 of the Revised Code constitutes a bar to such action.

Effective Date: 07-17-1978

1747.13 False or fraudulent filings prohibited.

No person knowingly shall prepare, make, assist in preparing or making, or procure or advise the preparing or making of any false or fraudulent filings required or permitted by sections 1747.01 to 1747.13 of the Revised Code.

Effective Date: 07-17-1978

1747.99 Penalty.

Whoever violates section 1747.13 of the Revised Code shall be fined not more than ten thousand dollars.

Effective Date: 07-17-1978