This afternoon, Ohio Governor Ted Strickland signed H.B. 138, as passed by the full Senate. The new law will change many procedures relating to foreclosures in Ohio. The bill was introduced in the House, over a year ago, to implement a method to help the cities identify foreclosure sale purchasers so they could be notified of building code violations. Larry Rothenberg, WWR’s partner in charge of the Cleveland-based foreclosure department, who had been involved in the development of the bill, attended the Governor’s signing ceremony by invitation.
After the bill was introduced with limited purposes during early 2007, Mr. Rothenberg introduced a number of new ideas to change various long-standing statutory procedures in order to reduce timelines and cut unnecessary costs in foreclosures. After convening meetings with representatives from other foreclosure firms in Ohio to obtain a consensus for his ideas, and meetings with the bill’s sponsor, Mr. Rothenberg testified before the Senate’s Civil Justice Committee and attended meetings with members of the committee. The bill was amended numerous times but ultimately incorporated most of Mr. Rothenberg’s proposals.
Some highlights of the new law relating to mortgage foreclosures, to take effect in 90 days, are as follows:
Lis Pendens
Lis Pendens will become effective when the complaint is filed, rather than when service is complete. This will eliminate the need for supplemental complaints to be filed in a significant percentage of foreclosure cases, greatly reducing the timeline and costs in those cases.
Service by Publication
If service by publication is necessary because the whereabouts of a party cannot be determined, publication will be required for only three weeks, rather than six, and the identification of the property can be by parcel number rather than by the complete legal description. This will reduce the timeline for service by publication by half and also save substantially on costs.
Purchaser’s Designee
The initial version of the bill would have required out-of-state purchasers, including creditors, to designate a person residing in Ohio to receive notices, such as notices of building code violations. This requirement was modified so that out-of-state creditors will be able to designate a person at their principal place of business outside of the state.
Notices of Sheriff’s Sale
Notices will be published commencing 3 weeks before the sale date, rather than 30 days prior to the sale date. This will reduce the timeline by 9 days. The legal description of the property will not be required for publication in the sale notice, significantly reducing the cost to publish.
Open Houses
Sheriffs “may” hold open houses prior to Sheriff’s Sales of vacant properties, in order for prospective purchasers to be able to view the premises. We do not expect that they will actually hold open houses often, since sheriffs do not have sufficient staffing and are already overburdened.
Payment of Purchase Price
All purchasers, including creditors, will be required to pay the amount due to complete the sale, within 30 days after the entry of confirmation of the sale.
Preparation of Deed
The foreclosure attorney is to prepare the deed for the sheriff’s execution. This will eliminate errors that were often made by sheriffs who prepared their own deeds.
Payment of Taxes
The purchaser will be required to pay the real estate taxes as of the date of confirmation of the sale. This will eliminate inconsistencies among the counties and eliminate the need for many amended confirmations to be processed in order to revise tax amounts in some counties.
Recording the Deed
The Sheriff, rather than the purchaser, will now be required to record the Sheriff’s Deed, within 14 days after the purchaser’s payment.
Mediations
A prior version of the bill contained procedures for mediations. The current version passed by the Senate only contains a brief provision allowing the courts to require mediations.
Evictions
A prior version contained an amendment that would have prohibited the purchaser from commencing an eviction action against a party in possession under a rental agreement until 90 days after serving the tenant with a notice of termination. We submitted extensive comments against this idea, and the amendment was dropped from the final version of the bill.
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, “Dunaway, The Law of Distressed Real Estate”. 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.