Ohio Foreclosure Laws

Answers

How are mortgage liens treated in Ohio?

Ohio is known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage. Non-judicial foreclosure is not available in Ohio.

How are Ohio mortgages foreclosed?

In Ohio, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. The court with jurisdiction over a foreclosure is known as the county court. A complaint is filed in county court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish an Ohio mortgage?

The documents are known as the mortgage, note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement.  A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Ohio?

Depending on the court schedule, it usually takes approximately 150-180 days to effectuate an uncontested foreclosure. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy.

In order to effectuate a foreclosure in Ohio, the following procedures must be followed:

1. A foreclosure complaint is filed in county court where the defendant has 28 days to file an answer otherwise a default judgment is entered. If an Answer is filed the case is adjudicated by summary judgment or trial. Once adjudicated a foreclosure decree is entered and the sheriff is directed to sell the property by foreclosure sale.
2. Three disinterested freeholders must provide an appraisal or estimate of the value of the property being foreclosed. The property cannot be offered for less than 2/3 of the appraisal or appraisement as it is commonly known.
3. The foreclosure sale must be advertised thirty (30) days in advance of the sale and such advertisement must occur once per week for three (3) consecutive weeks before the sale.
4. The Sheriff handles foreclosure sales in Ohio and these sales take place at the county courthouse. After the sale the sheriff will return a writ of execution indicating the sale has taken place and the court will determine if the sale has been undertaken legally which is called a confirmation. Once a confirmation takes place any right of redemption is extinguished and a deed is issued to the purchaser.
   
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Is there a right of redemption in Ohio?

Ohio has a statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a time limit to undertake such redemption which must occur before confirmation of the of the foreclosure sale by the county court.

Are deficiency judgments permitted in Ohio?

Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan. There is a two (2) year limit on the enforceability of any deficiency judgment unless the borrower agrees in writing to extend the time to enforce the same.

What statutes govern Ohio foreclosures?

The laws that govern Ohio foreclosures are found in §2323.07 of Ohio Revised Code.