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Banking & Finance Law Report

Ohio Foreclosure Procedure . . . Twice the Appeal

Posted in Collection and Foreclosure, Ohio Law, Real Estate

Earlier this month the Supreme Court of Ohio resolved a split of authority between the Fifth District and Seventh District regarding whether a foreclosure decree is a final appealable order when it includes unspecified amounts advanced by the mortgagee for inspections, appraisals, property protection and the like. Prior to the May 15 decision in CitiMortgage, Inc. v. Roznowski1, it was unclear whether a judgment decree of foreclosure – which typically includes unspecified amounts that may be advanced by the mortgagee prior to confirmation of the foreclosure sale for inspections, appraisals, property protection and maintenance – is a final appealable order, or whether a foreclosure defendant must wait until after the property has been sold at sheriff’s sale and the order of confirmation of sale issued before he or she may appeal.

The Supreme Court of Ohio’s decision in the CitiMortgage case establishes that there are two separate opportunities for appeal. The first opportunity arises after the trial court issues a judgment decree of foreclosure. The Court found that as long as the foreclosure decree addresses the rights of all lienholders and the responsibilities of the mortgagor – regardless whether all exact amounts for which the mortgagor is liable are set forth in the judgment order, such as interest and protective advances made or to be made by the mortgagee – the foreclosure decree constitutes a final appealable order. A party appealing a foreclosure decree may challenge “the court’s decision to grant the decree of foreclosure” and once that appeals process has run its course, “all rights and responsibilities of the parties have been determined and can no longer be challenged.”

The second opportunity for appeal arises after the trial court issues an order confirming the foreclosure sale, which order sets forth the specific damage amount and orders distribution of sheriff’s sale proceeds accordingly. The Court stated that because some amounts will necessarily not be calculated until after the sale of the property, such as interest and protective advances made by the mortgagee up to the time of sale, the proper time for foreclosure defendants to contest the accuracy and validity of those amounts is after the confirmation order is issued, which is also the appropriate time to contest generally “whether the sale proceedings conformed to law.” But as the Court pointed out, a mortgagor cannot seek to undo the foreclosure decree itself via an appeal of a confirmation order because the proper time to appeal the validity of the foreclosure itself is after the foreclosure decree is issued, not after the order confirming the sale of the property is issued. As the Court summarized it, “if the parties appeal the confirmation proceedings, they do not get a second bite of the apple, but a first bite of a different fruit.”

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12014-Ohio-1984