Amendments to Ohio's Foreclosure Processes
Amendments to Ohio's Foreclosure Processes:
Ohio's judicial foreclosure process received an overhaul from the Ohio legislature, which became effective September 28, 2016. One of the purposes of the overhaul was to create a more streamlined process for Ohio's residential foreclosures. The highlights of the streamlined process include the ability to use a private selling officer to conduct sales, a new expedited foreclosure process for vacant and abandoned homes, and the creation of a statewide sheriff sale website to conduct online sales. Below, you will find some of the important changes to Ohio's foreclosure processes.
Notable Revisions to the Foreclosure Process:
- Creation of Statewide Public Sale Website:
The largest change to the foreclosure process may be the creation of an official statewide public sheriff sale website ordered to be created under R.C. § 2329.153. This website, to be designed in less than one year, will provide sheriff’s sale bidders the opportunity to pay via the website, and allow for an attorney or law firm to enter a bid in a representative capacity. R.C. § 2329.153. County Sheriffs are not required to use the sale website for the sale of residential property until five years after the system becomes fully operational. There is no requirement for commercial properties to be sold using the website. However, if sales are conducted on the sale website, they must be open for bidding for at least seven days. R.C. § 2329.153.
- Faster Transfer of Title:
Under R.C. § 2329.31, the officer who made the sale shall record the deed within 14 days after the confirmation of sale and payment of the balance due. If the deed is not prepared and recorded within 14 days after confirmation and payment, the purchaser may file a motion with the court to proceed with the transfer of title and the if the court finds that a proper sale was made by order, the plaintiff may present a certified copy of the order to the recorder to have the same effect as a deed. R.C. § 2329.31(C).
- Use of Private Selling Officer:
R.C. § 2329.151 allows for a "private selling officer" to conduct the public auction of lands. A private selling officer is defined as an Ohio resident who is licensed as both an auctioneer and as a real estate broker or real estate salesperson. R.C. § 2329.01 (B) (2). In addition, parties who wish to bid, may now do so via facsimile, electronic mail, overnight delivery or courier. R.C. § 2329.152. The private selling officer is permitted to market the real estate and conduct the public auction of the real estate online or at any physical location in the county in which the real estate is location. Online auctions must be open for a minimum of seven days. R.C. § 2329.152 (E). The private selling officer is required to hire a title insurance agent to perform the title, escrow, and closing services. R.C. § 2929.152 (E)(3).
- No Sale After First Auction:
The revisions to R.C. § 2329.52 have changed what occurs when a residential property is ordered to be sold and the sale is held at a physical location and fails to bring two-thirds of the appraised value. The statute requires a second auction to be held not earlier than seven days and not later than thirty days after the first auction in which the property shall be sold to the highest bidder without regard to the minimum bid requirement. R.C. § 2329.52 (B).
- Prosecutor May Act as Plaintiff after 12 Months with no Sale:
If a decree of foreclosure has been entered with respect to residential real property but the sale has not been completed, or is not underway within 12 months, the local political subdivision, or the county prosecuting attorney may file a motion with the court for the sale of the property as if the prosecutor was the attorney for the party in whose favor the decree of foreclosure and order of sale was entered. R.C. § 2329.071.
- Creation of the Expedited Foreclosure of Vacant and Abandoned Properties:
The new statute allows for a creditor to expedite the foreclosure process when a residential property is vacant and abandoned. Once the Court finds the property is vacant and abandoned, the creditor may enter the property to secure it from damage and move to have the sale within 75 days of the Court’s order.
The first step to move in an expedited manner is to file a motion to proceed in an expedited manner on the basis that the property is vacant and abandoned. R.C. § 2308.02 (A). After the Court finds that the residential mortgage loan is in monetary default and the party bringing the action is the party entitled to enforce the instrument secured by the mortgage, the Court must find that at least three of a number of factors are true which include: Utility services have been disconnected; Broken and/or boarded up windows and doors; continuously unlocked doors; Junk, litter, and litter accumulated on the property; evidence of vandalism, loitering, or criminal conduct, or there is evidence of physical destruction or deterioration of the property; the mortgagee made a written statement of their intent to abandon the property; no owner or tenant appears to be residing in the property at the time of an inspection of the property by a government official or the mortgagee; the government official provides a written statement; the property is sealed; and the court may consider other reasonable indicia of abandonment. See R.C. § 2308.02 (C)(3).
If the court decides that the property is vacant and abandoned and that the mortgagee who filed the motion to proceed in an expedited manner is entitled to judgment, the court shall enter a final judgment and decree of foreclosure and order the property to be offered for sale not later than 75 days after the issuance of the order of sale. R.C. § 2308.02 (D), (E).
Once the court makes the finding that the residential property is vacant and abandoned, the mortgagee may enter the property and secure and protect it from damage. R.C. § 2308.03(A). In order to deter individuals from damaging the property in the process, the statute also provides for a criminal penalty of criminal mischief in violation of R.C. § 2909.07 for those who damage their own residential property after being served with the complaint for a residential mortgage loan foreclosure action. R.C. § 2308.04.
While the creation of the new statewide sheriff sale website will take time to complete, the new expedited foreclosure process for vacant and abandoned homes should be immediately available for utilization. The new and improved foreclosure rules in Ohio have the potential to improve the process for mortgagees resulting in lower costs and faster results.