Like many other states, Ohio has a statute governing the rate of interest applicable to judgments that are awarded in civil lawsuits.  Ohio Revised Code section 1343.03(A) provides that a creditor is entitled to interest on a promissory note or other written instrument at the rate provided in the contract.  Hence, in foreclosures on mortgages securing promissory notes or lines of credit, the creditor is entitled to interest on the judgment at the rate provided by the terms of the note or contract.

The statute goes on to provide that in the rare case where the contract does not specifically provide for interest, the creditor is entitled to interest on its judgment at a specified rate, which is to be determined by the State Tax Commissioner in October of each year and is applied for the following year.

In Cuyahoga County, Ohio, Judge Shirley Saffold has notified the foreclosure attorneys that in foreclosure cases assigned to her, she intends to disallow the interest rate provided in the contract, and instead, will award interest on the judgment only at the statutory rate, which is currently 5% per annum. 

We expect to start seeing magistrate’s decisions and judgments entered in Judge Saffold’s cases along these lines.  When received, we will advise you and recommend that an objection be filed on your behalf.  We believe that both the statute and the case law interpreting the statute clearly provide that the creditor is entitled to the interest rate provided in the contract.

We are hopeful that the judge will reverse her position quickly, so that other judges in the county or state do not follow her lead.  We will keep you advised of further developments with regard to this issue, as we continue to protect your interests to the full extent allowed by law.

If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry Rothenberg is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com.  

Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A., an organization providing comprehensive creditor representation.  The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship.  Contact any of our offices or visit our website at realestatedefaultgroup.com for more real estate related information, company facts and attorney profiles. (c)2009