In our Client Advisory published on October 28, 2009, we discussed the importance of fulfilling the prerequisite for foreclosure on most mortgages in Ohio, by delivering the contractually required notice of default prior to acceleration of the debt. Our advisory discussed:
(1) Who must be served with the notice;
(2) What must be included in the notice;
(3) When must the notice be provided;
(4) Where must the notice be delivered; and
(5) How must the notice be delivered.
As a sequel, this Advisory will discuss a recent Court of Appeals decision that focused on this issue.
On June 14, 2010, in the case of LaSalle Bank v. Kelly, the Court of Appeals for the Ninth Judicial District of Ohio reversed the trial court’s judgment for foreclosure, due to the mortgage holder’s attorney’s failure to allege in the complaint, even generally, that the mortgage holder had delivered the required notice prior to acceleration of the debt. Even though the borrowers did not raise the defense in their answer to the complaint, the Court decided that the borrowers were nevertheless entitled to raise that defense, for the first time, in their brief in opposition to the plaintiff’s motion for summary judgment.
Weltman, Weinberg & Reis Co., L.P.A. consistently includes in its foreclosure complaints a general allegation that the plaintiff complied with all conditions precedent. Therefore, as long as the required notice was, in fact, delivered, our clients should be safe from similar defenses being successfully interposed in our cases. Nevertheless, we anticipate that borrowers’ attorneys will now be scrutinizing the proceedings even more closely, in search of such a defense. Thus, the importance of fulfilling the condition prior to acceleration cannot be emphasized enough.
A REQUEST TO OUR CLIENTS
In order to assure a clean case and avoid delays in our foreclosure matters, we request that our clients include with the foreclosure transmittals a copy of the notice that was delivered prior to acceleration, and further advise us as to when, where, and how it was delivered.
In the alternative, we request that our clients expressly state in the foreclosure transmittals that a proper notice was delivered to the borrowers at their last known address not less than 30 days prior to the referral for foreclosure.
For a complete copy of the LaSalle Bank v. Kelly decision, go here.
If you have any questions or would like to discuss this issue in more detail, please contact Larry Rothenberg at 216-685-1135 or via email at lrothenberg@weltman.com. Larry 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.