Ohio’s new law affecting foreclosure procedures, which became effective on September 11, 2008, was implemented primarily to alleviate problems caused by purchasers who delayed recording their sheriff’s deeds. Language contained in the new law seems to indicate that the sheriff is to collect the amount needed to cover the recording of the deed from the purchaser at the time of the sale, even though they will not need that money until after the court enters the order confirming the sale and the purchaser pays the balance due to complete the sale. Although probably unintended by the legislature, the majority of counties are interpreting the language as abolishing the previous custom of waiving the deposit requirement for the first mortgage holder.
As a result, many counties are imposing diverse deposit requirements. I attended the state sheriff’s association committee meeting on September 17, 2008, at which the association was considering whether to make a recommendation to the sheriffs in order to promote more uniformity among the counties. Despite any recommendation by the sheriff’s association, each county remains free to impose any requirement it deems appropriate. Letters are being received almost daily from various sheriffs announcing their requirements or changes to their requirements.
I met with the chief sponsor of the legislation and submitted language for a proposed amendment to the law, in order to impose a uniform statutory waiver of the deposit requirement for mortgage holders. However, another problem has come to light, which might lead the sheriffs to object to our proposed amendment. Many lienholders have not only delayed recording their deeds, but they have also delayed paying their balance due to the sheriff to compete their purchase. Presumably, this is an attempt to limit the amount of time they are out-of-pocket until the REO is sold to a new purchaser. These delays cause additional work for sheriffs. In some cases, mortgage holders have even attempted to abandon their purchases. Hence, some sheriffs feel that a deposit from the mortgage holder is necessary as a form of security against the potential “default” by a mortgage holder.
The chief sponsor of the new law has advised that the Legislature is not scheduled to reconvene until after the November elections. We expect the issues to be discussed at length among interested parties between now and then. Therefore, if mortgage holders promptly pay the balances due to complete their purchases at past Sheriff’s Sales, it would definitely help our cause. The new law requires that the purchaser, including the first lienholder, pay the amount due, typically the amount of the court costs and real estate taxes, within 30 days after confirmation. If the purchaser fails to do so, they can be found in contempt of court and subject to fines or other undesirable sanctions.
For an updated county-by-county list of deposit requirements, based on information available to date, go here.
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. (c)2008