Ohio House Bill (HB) 9, which becomes effective March 23, 2015, both clarifies existing law and substantially reforms Ohio’s receivership laws (ORC Chapter 2735) for the first time in over 60 years. A summary of some of the most significant features is provided below:
- The Sale of Encumbered Property: Receivers may sell encumbered property free and clear of all liens by private sale, private auction, public auction, or by any other method the court determines is fair. Upon the completion of the sale and the recording of the deed by the purchaser, the liens of secured creditors are transferred from the property to the proceeds of the sale in the same priority as listed on the property.
- The Authority of the Receiver: The powers of receivers have been modified to allow receivers to do the following, under the supervision of the court: (i) bring and defend actions in the receiver’s own name as receiver; (ii) take and keep possession of both real and personal property; (iii) collect rents and other obligations; (iv) enter into contracts of sale, lease, or, in some cases, contracts for construction; (v) sell and transfer real and personal property; (vi) execute deeds, leases, or other conveyance documents of real or personal property; (vii) open and maintain deposit accounts in the receiver’s name; and (viii) engage in any other acts the court may authorize.
- Established Timeframe for Exercise of Equity of Redemption: Court orders approving the receiver or first mortgage holder’s application to sell real property must set a reasonable time, not less than three days, in which parties must exercise their equity of redemption or have their claim forever barred.
- The Appointment of Receivers by Written Consent: In the event of foreclosure, written consent of the mortgagor now provides sufficient basis for a court to appoint a receiver. Provided a mortgage has a provision where the mortgagor agrees to receivership, a court may put the mortgaged property into receivership without any inquiry into the value of the property. Parties also may nominate qualified persons to act as receivers who will be given priority consideration by the court.