Creditors and borrowers beware: the foreclosure process in Ohio is about to change. One of the last actions the Ohio Legislature took before summer break was to pass HB 390 which included revisions to the Ohio foreclosure statutes. Governor Kasich signed the bill into law on June 28, 2016, and the effective date of the new law is September 26, 2016. The revisions will affect both residential and commercial properties in foreclosure; however, some of the revisions only apply to residential properties.
Here are a few highlights of the bill:
- Creates an expedited foreclosure process for vacant and abandoned residential properties if certain criteria in the statute are satisfied.
- A party may file a motion to proceed in an expedited manner. ORC 2308.02.
- If the property is found to be vacant and abandoned by the court, a mortgagee may enter the property to secure it and protect it from damage provided that the mortgage provides for such an entry. ORC 2308.03.
- Once a property is determined to be vacant and abandoned, the property must be offered for sale within 75 days. ORC 2308.02(E).
- The equitable and statutory rights to redeem property found to be vacant and abandoned expire upon confirmation of the sale of the property. ORC 2308.03(C).
- If a foreclosure decree is entered and a sale has not occurred or is “underway,” the County prosecutor may petition the court on behalf of political subdivision to start the sale as if the prosecutor were the attorney for the judgment creditor. ORC 2329.071.
- Adopts the Uniform Law Commission language concerning standing and the ability to sue for foreclosure when the promissory note is lost or destroyed. Notably, the proposed language provides that a creditor may enforce a promissory note when the creditor has directly or indirectly acquired ownership of the note from a party who was entitled to enforce the note when the note was lost. ORC 1303.08.
- Establishes that a person is guilty of criminal mischief if one knowingly causes damage to the residential property after being served with a complaint in foreclosure. ORC 2308.04.
- All Ohio counties will follow the same procedure for the proration of real estate taxes to be paid at confirmation of sale. The apportioned pro rata taxes will include all taxes due and payable to the county treasurer as reflected on the tax list in the office of the auditor of the county in which the real estate is situated on the date of the sale. ORC 323.47.
- Allows the creditor to use, after court approval, private selling officers instead of the sheriff to sell property in a foreclosure action. ORC 2329.152.
- The judgment creditor files a motion with the court for an order authorizing a private selling officer (“PSO”). The PSO must be authorized by the court or county sheriff to sell properties.
- The sheriff still conducts the appraisal. The PSO advertises and sells the property.
- If the sale is conducted at a physical location rather than online, a judgment creditor or lienholder that was a party to the foreclosure case may submit a remote bid to the sheriff or PSO via fax or email. If the sheriff or PSO fails to submit the remote bid, then the remote bidder may file a motion to vacate sale within 10 days.
- The PSO fee, appraisal, and advertisement costs shall be taxed as costs.
- Creates an online auction site for all properties to be sold in foreclosure. ORC 2329.153.
- Modifies the sale process for residential property not sold after the first sale attempt, and eliminates the 2/3rd minimum bid requirement on subsequent sale attempts. ORC 2329.52(B).
- Defines “residential property” as land and a structure containing four or fewer dwelling units, each of which is intended for occupancy by a separate household. ORC 2308.01. Defines “commercial property” as any property not that is not residential property. ORC 2329.01(B)(1).
- If the judgment creditor is the purchaser of residential property at the foreclosure sale, the purchaser shall not be required to make a sale deposit. ORC 2329.211.
- The officer conducting the sale shall record the deed within 14 days of the confirmation of sale. ORC 2329.31(C)(1). If this fails to occur, a motion may be filed with the court to order transfer of the title to the purchaser. ORC 2329.31(C)(2). If the court issues such an order, it will require the plaintiff or plaintiff’s attorney to present a certified copy of the order to the county recorder for recording, and the county recorder shall record the order in the record of deeds.
These are only some of the new changes to the foreclosure process in Ohio under HB 390.