Ohio Legislature Contemplating Streamlining Foreclosures of Vacant and Abandoned Properties
Kegler Brown Creditors' Rights + Bankruptcy Alert March 17, 2016
Legislation was introduced in the Ohio General Assembly on February 16, 2016, to allow certain mortgages to go through an expedited foreclosure process, but only if those properties are in monetary default. Sponsored by Representative Jonathan Dever (R-Madeira), the legislation seeks to amend Section 2308.02 and related sections. Full text of HB 463 can be accessed here.
To initiate the expedited process, the mortgage holder, in the foreclosure action, must file a motion to proceed in an expedited manner, and, not later than 21 days later, the court must decide that motion. The fast track process applies only to vacant and abandoned property with the following:
- the note is in monetary default;
- the plaintiff is the holder of the note or has the rights of a holder;
- five of eleven indicia of abandonment exist; and
- no statements are filed with the court indicating that the property has not been abandoned.
The fast-track process would not be available if the borrower defends the foreclosure or if the note holder can’t produce the promissory note. Fast-track benefits have two new deadlines: (1) 21 days or time permitted by local rule for court to rule on motion, and (2) 75 days to sell property.
The proposed legislation also clarifies the current process permitting judgment creditors the right to ask the court to use a "private selling officer" in lieu of the county sheriff in the foreclosure sale. Judgment creditors would have the right to use a private party (a person who is a resident of Ohio, licensed as an auctioneer, and either a real estate broker or real estate sales person) to conduct the sale. This would be an alternative to the sheriff.
The foreclosure appraisal process would remain with the county sheriff. But, if the sheriff's appraisers do not return the appraisal within 21 days, the appraised value will default to the county auditor's appraised value unless the judgment creditor believes that a new appraisal is warranted. If so, the judgment creditor can file a motion with the court requesting permission to have another appraisal conducted.
Finally, and significantly, the legislation, if passed, would permit an electronic auction aide and give judgment creditors and lien holders the right to submit bids electronically. This means the traditional courthouse auction would no longer be the sole place for the foreclosure auctions. The bill authorizes online sales with the goal of opening up sales to a wider audience. The legislation would require the Ohio Department of Administrative Services to propose a new online sheriff website (the "official public sheriff sale website") and thereby modernize the sheriff sale process by moving it from the courthouse steps to a single website for use by all county sheriffs.
While not yet law, the proposed bill stands a likely chance of being passed. It is supported by numerous interest groups, as well as the Ohio State Bar Association.
Stay tuned for further developments.