Today, over a year since House Bill 138 was introduced, and after passage by the Ohio House, the Ohio Senate’s Civil Justice Committee has approved the 9th version of the bill, which will alter some procedures in Ohio’s judicial foreclosure process.  The bill will now be scheduled for a vote of the full Senate.

The bill incorporates many (but not all) of our proposals contained in our testimony and comments to the Committee.  Although not all of the provisions of the final version of the bill are favorable to the creditors, many of the provisions will be of significant help in reducing timelines and foreclosure costs. Some highlights of the bill relating to mortgage foreclosures are as follows:

Lis Pendens 
Lis Pendens will become effective when the complaint is filed, rather than when service is completed.  This will eliminate the need for supplemental complaints to be filed in a significant percentage of foreclosure cases, greatly reducing the timeline and cost in those cases.

Service by Publication 
If service by publication is necessary because the whereabouts of a party cannot be determined, publication will only be required for 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 cut the timeline for service by publication in half, as well as save substantial cost.

Purchaser’s Designee
A prior 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 has been 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.  This will reduce the timeline by 9 days.  Furthermore, the legal description of the property will not be required to be published in the sale notice, significantly reducing the cost.

Open Houses
The 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 the sheriffs will actually hold open houses often, as they 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 will be required to prepare the deed for the sheriff’s execution.  This will help to 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
The 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 on this issue, and the amendment was dropped from the final version of the bill.

While the bill must still be voted on by the full Senate and approved by the governor, we expect that now that the arduous process by the Ohio House and the Senate’s Civil Justice Committee to get to this stage is complete, the bill will probably pass.  We will advise you if and when that occurs.

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