Considerations for School Districts When Acquiring or Disposing of Real Property

School districts in Ohio own real property for a variety of reasons including proximity to or for use as school facilities. Useful real estate for school districts does not always come with substitutes. Properly acquiring or disposing of real estate by a board of education in compliance with a board’s authority under the Ohio Revised Code protects the validity of a board’s acquisition or disposition of real property.

Not only does this process require that certain steps occur in a particular sequence, the embodiment of these sequential steps in a board’s resolution and documents for sale of school district owned real estate is important to make a valid transfer.

Selling Real Property

When a board of education determines that real property is no longer needed for school purposes, the board is authorized to sell, exchange or lease that property so long as the required statutory process is followed and the applicable restrictions are observed for each scenario. Note that alternative restrictions apply if the board is selling real property that it owns to certain kinds of political subdivisions, including other state entities.

Among these rules is the requirement that a board of education first offer property that is valued at over $10,000 for sale at a public auction. In other words, under the statute, school districts cannot sell to a private third party real estate valued at over $10,000 without first offering the property for sale at a public auction. School districts will need to be prepared with an appraisal, resolution of the board approving sale of the property, related informational materials, and the terms and conditions of sale. These materials should be made available prior to and at the auction.

If a bid at auction is accepted by a board of education, then the prepared conditions of sale and purchase contract are executed. Currently these auctions are conducted formally and in person, with requisite public notice. If that auction is unsuccessful, and the proper process is observed, then the board may then sell the property through a private sale.

Regardless of if the property was sold at auction or by way of a private sale, there are specific findings and terms that a board of education should include in its authorizing resolutions and in its contracts for sale. The specific findings and terms that are advisable to include vary based on the type of sale, the purchaser, the presence of improvements or buildings on the property, and the involvement of other political subdivisions. Seeking the advice of counsel prior to commencing the disposition of real property is recommended.

Acquiring Real Property

Generally, boards of education have the authority under the Revised Code to enter into contracts for purchase of real estate. Restrictions vary when a board of education is seeking to acquire real property. These restrictions can apply to both parties, particularly if the sale is between two political subdivisions.

Like the sale of property, sequential steps and the making of proper findings is advisable when acquiring real property. The process, beyond title work and related due diligence, can appear simpler than that of disposing of real property. However, there are additional considerations for the purchase of real property by a board of education that can impact the future use of that land. For example, school districts are often attracted to undeveloped agricultural lands with the eventual goal of development of that land or use of the land for school facilities. Beyond the environmental practicality of construction, agricultural lands are often subject to farm leases – be that of oral arrangements or written. Since the planting of crops and other maintenance of those crops occur only at specific times of the year, a school district’s plans for the land and the timing of any existing farm lease should be dealt with under the purchase agreement and at closing in negotiation with the seller.

In addition, boards of education prior to making an offer to a seller, should evaluate the expenditure of funds being used to purchase the property. Embodying the authority and proper expenditure of funds in the necessary resolutions and purchase agreements in the correct order, will validate the school district’s authority to acquire the desired real estate and avoid costly fixes needed to resolve any missing steps.  

 First Step - Seek Advice of Counsel

When a school district is confronted with the possibly of acquiring or disposing of real property, public sector legal advice can support a board of education in determining the proper process and agreement terms to protect the school district’s actions and interests.