Second Point of Sale Ordinance Found Unconstitutional

By Peg Ritenour, Ohio REALTORS Vice President of Legal Services/Administration

A federal court has held that a prior version of the point of sale inspection ordinance of the City of Bedford, as well as its rental inspection provisions, was unconstitutional because they permitted warrantless inspections of property. Bedford is a Cleveland area suburb. This is the second federal court to strike down such ordinances; earlier this year the federal district court for the Southern District of Ohio ruled that the point of sale ordinance of the City of Oakwood in the Dayton area was also unconstitutional.

Under the Bedford ordinance the City required an inspection before selling a property, along with payment of an inspection fee. This applied to owners of residential or commercial real estate, including single-family and two-family dwellings, duplexes, apartments and condominiums, and all commercial and industrial properties.

The City also required inspections and fees for rental properties. Such an inspection by the City was required whenever there was a change in tenants, but at least every two years. Property owners who refused to allow either the rental or point of sale inspection were subject to fines and possible criminal prosecution.

The lawsuit, which was filed on behalf of several property owners by the 1851 Center for Constitutional Law, a non-profit entity, alleged that because the inspections were done under the threat of criminal prosecution, the ordinance violated the Fourth Amendment protection against unreasonable searches. Shortly after the lawsuit was filed, a preliminary injunction was issued enjoining the City of Bedford from enforcing the point of sale ordinance. The City ultimately amended its ordinances to require an administrative warrant and to remove the criminal sanctions, and on Jan. 17, 2017 the court determined that the plaintiffs’ motion for a permanent injunction was therefore moot. However, the case proceeded forward on the claims for a declaratory judgment and monetary relief to those property owners who paid inspection fees under the previous ordinances.

Relying on the Oakwood case as well as other precedents, the court in this case ruled that both the Bedford point of sale inspection and rental property inspection ordinances were unconstitutional. In doing so, the court held that a municipality violates the Fourth Amendment when it requires a property owner to consent to a warrantless inspection of their property or face criminal penalty. Rejecting the City’s argument that the owners consented to the inspections, the court held that such consent cannot be freely given when the alternative is the risk of fines and criminal sanctions. The court stated that an owner has a constitutional right to privacy in their property, including their rental property, and therefore has a right to refuse to allow the City to conduct an inspection and to demand a warrant.

The court also found that the City of Bedford has been unjustly enriched by charging a fee for these inspections and therefore shall not be permitted to retain the fees that were unlawfully collected. The case is now moving forward on issues involved in determining class action participation.

This article was published by the Ohio Realtors in the Ohio REALTORS Buzz. Legal articles provided in the Ohio REALTORS Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.


4 responses to “Second Point of Sale Ordinance Found Unconstitutional

  1. Linas Muliolis says:

    So what does this mean for all the other area suburbs that have required point of sale inspections?

  2. phil mann says:

    about time.
    pos inspections have hurt real estate sales in the last 15 years.
    private home inspectors do a much better job.
    less government regulation…also less payroll and benefits for cities.
    escrow requirements have really stifled investment efforts..
    let the free market and private home inspectors take care of itself..
    realtor phil mann remax

  3. David Sturgeon says:

    So does the issue of ‘warrantless searches’ also affect rental inspections that many cities are doing after the property is registered as a rental property? Also many cities may issue a ticket if the property is transferred without a point-of-sale inspection – would that be part of criminal prosecution which is not allowed in a warrantless search?

  4. ACAR says:

    We reached out to Peg Ritenour for additional insight. She shared the following:

    “The Bedford ordinance was struck down for two reasons: (1) there were criminal sanctions for persons who failed to allow the inspections; and (2) the ordinance did not provide for an administrative warrant that assured that there was a judicial determination that probable cause existed to issue the warrant. This case will have no impact on cities with a POS that provide for a warrant. In my opinion ordinances that do not provide for a warrant would likewise be struck down by this court based on the same constitutional challenge under the 4th amendment.”

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