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As a landlord, you always want to try to save money if you can. But sometimes this can lead to being penny-wise and pound-foolish. If you own or manage your property through a corporation (and an LLC qualifies as a corporation), and you need to evict some tenants, then you have a problem. Here is how it works, and here is how you can avoid it.
You set up a corporation called ABC Rentals, Inc., and you transfer your investment property to the corporation. After a few years, you get unlucky and get some tenants who don't pay the rent. You put the three day notice to vacate on the door. You file the Forcible Entry and Detainer action, and get a notice of your hearing date at court.
The clerk calls your case. The first question that the Magistrate asks you is, "Excuse me, sir, are you an attorney?"
"Why no, your honor. I've always filed my own evictions in the past."
"Well, the problem is that the property is now owned by a corporation. You can always represent yourself in court, but you cannot represent another person or another entity, like a corporation, unless you are licensed to practice law by the Ohio Supreme Court. I am going to have to dismiss your case."
So the tenant walks out smiling, knowing that he now has at least another month of free rental space before you can get a lawyer on the job to take care of things. So avoid the second filing fee and another month of lost rent by hiring a lawyer.
Some non-attorney landlords who tried to represent their companies argued that since Ohio Revised Code Sections1923.01(C)(2) and Ohio Revised Code Section 5321.01(B) which stated that:
"Landlord" means the owner, lessor, or sublessor of residential premises, the agent of the owner, lessor, or sublessor, or any person authorized by the owner, lessor, or sublessor to manage the premises or to receive rent from a tenant under a rental agreement.
The Ohio Supreme Court, recognizing the Ohio Constitution gives to the Judiciary Branch the right to control who practices law in the State of Ohio, determined that the Ohio Legislature could not change this simply by enacting the landlord tenant act or the eviction act and redefining who a "landlord" was. The Court held that the "definitions in R.C. 1923.01(C)(2) and 5321.01(B) represented unconstitutional invasions of our power to define the practice of law." The Court reasoned that "Our authority to define the practice of law is inherent, Judd v. City Trust & Sav. Bank (1937), 133 Ohio St. 81 at paragraph one of the syllabus, and the legislative branch has no right to limit the inherent powers of the judicial branch of the government . . . ." The case on this was Cleveland Bar Association v. Picklo (2002), 96 Ohio St.3d 195.
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