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Ohio: Redemption at Tax Foreclosure

Posted By USFN, Thursday, August 1, 2013
Updated: Monday, November 30, 2015

August 1, 2013


by Bill Purtell
Lerner, Sampson & Rothfuss, LPA
USFN Member (Kentucky, Ohio)

Ohio’s Fifth District Court of Appeals (Fifth District) has recently ruled that only a homeowner can stop a tax foreclosure once it is filed. [In re Foreclosure of Liens for Delinquent Taxes v. Parcels of Land Encumbered with Delinquent Tax Liens, 2013-Ohio-1400]. The county treasurer is under no duty to accept redemption of delinquent taxes from a lender or anyone other than the homeowner, even if the taxes are paid before a sale of the property occurs.

The case stems from an attempt by a lender to pay the delinquent taxes on a property being foreclosed by the county treasurer. The lender intervened in the foreclosure after a judgment was granted in favor of the treasurer, but before a sale of the property had occurred. The lender did not bid at the sale and the land was sold to a third party for $9,000. In an attempt to vacate the sale, the lender tendered funds to the treasurer in the amount of $6,000, representing the delinquent taxes and costs of the foreclosure. The treasurer rejected the funds and stated that the lender was not a “person entitled to redeem the land” under Ohio Revised Code 5721.25. The trial court overruled the treasurer’s objection and allowed the lender to redeem the property. The third-party purchaser of the property then intervened in the case and appealed the trial court’s decision that allowed the redemption.

The Fifth District reversed the decision of the trial court, holding that only the former owner of the property has the right of redemption. Further, this right is a nontransferable personal privilege. The lender argued that its mortgage allowed it to advance taxes on behalf of the homeowner, their borrower, and therefore it could stand in the shoes of the homeowner. The Fifth District found that the original owner had no desire to redeem the property, so the lender could not pay the taxes in order to cancel the sale. The Fifth District held that the only protection to a lender is to bid at the foreclosure sale to protect its interests.

Proper monitoring for a tax delinquency is more important than ever. The decision whether to advance funds to pay taxes must now be made before the tax foreclosure is filed, at least in the fifteen counties of the Fifth District. Most other counties will still allow a lender to pay the taxes to stop the foreclosure. It is critical that a lender file a timely answer to the tax foreclosure in order to preserve its lien, since there is no guarantee that the sale can be stopped by simply paying the taxes.

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