May 2, 2016
by Andrew Top
and William L. Purtell
Lerner, Sampson & Rothfuss
USFN Member (Kentucky, Ohio)
House Bill Aims to Facilitate Faster Foreclosures — Ohio HB 134 was unanimously passed in the Ohio House of Representatives on November 17, 2015 and, as this article is being written in early spring, is in the Ohio Senate for deliberation. This bill proposes many changes to the foreclosure process in Ohio that are aimed at facilitating faster foreclosures in certain situations. As with most legislation, changes can be expected during the legislative process. Below is a summary of three key sections of the bill.
Expedited Foreclosures — The section of the proposed legislation that is receiving the greatest attention is the proposal for “expedited” foreclosures on residential properties proved to be vacant and abandoned. Under the current version of the proposed legislation, once a complaint in foreclosure is filed, a mortgagee can file a motion to request an expedited foreclosure from the court. Once the motion for the expedited foreclosure is filed, the court is then required to rule on that motion no later than 21 days after the last default date of service on a defendant. Before the court can grant the judgment and expedited foreclosure, the mortgagee must make several different showings to the court.
First, the mortgagee must show by a preponderance of evidence that there is a monetary default, and that the mortgagee has standing to bring the foreclosure action. Secondly, the mortgagee must show by clear and convincing evidence that at least three of the following eleven factors exist: (1) the utilities to the property have been disconnected; (2) the windows or other entrances are boarded up; (3) the doors to property are smashed and/or broken off; (4) trash or debris has accumulated on the property; (5) the furnishings and/or window treatments are removed; (6) the property is the object of vandalism; (7) a mortgagor has submitted a written statement confirming that the property is abandoned; (8) a governmental official determines that no one appears to reside in the property after an inspection; (9) a government official provides the court with a written statement attesting to the vacancy and abandonment; (10) the property has been sealed by the government authority; or (11) there are other indicators of vacancy and abandonment. Then, the court must confirm that the borrower is in default of answer contesting the complaint in foreclosure, and that no defendant has contested the determination of vacancy or abandonment by any other written instrument. If the court is satisfied that all of the above elements are proven, the court may rule in favor of the mortgagee on the vacant and abandoned issue and it will, at the same time, award a decree of foreclosure in the same entry. The sheriff is then required to sell the vacant/abandoned property within 75 days of the praecipe for order of sale submitted by the mortgagee.
Second Sale Provision — In addition to the “expedited” element, changes are made to the foreclosure sale and deed process. Each sale advertisement will include a provision for a second sale, which shall be held 7-30 days after a first sale that failed for lack of bids. At this second sale, there will be no minimum bid required. The sheriff shall, however, require a deposit of $5,000 to $10,000 to cover the costs and taxes in the event that the winning bid is insufficient to cover these costs. In addition, once the sale is complete, the sheriff will be statutorily required to record the prepared deed within 14 days after sale confirmation. If this is not completed for any reason, the purchaser can ask the court to order the plaintiff to record a certified copy of the confirmation entry in lieu of a deed. The clerk will separately issue a certified copy of the confirmation to the auditor, who cannot refuse the transfer of the property due to any taxes that have accrued since the date of sale.
Post-Sale Taxes — The proposed legislation provides that the purchaser at sale will be liable for all pro-rated taxes as of the date following the sale. Rather than having the county estimate the current-year taxes and hold a pro-rated amount for the next tax bill (which slows down the confirmation process and sometimes requires an additional second confirmation entry), the buyer simply accepts title subject to all taxes that accrue the day after the sale.
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Spring 2016 USFN Report