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Banking & Finance Law Report

Significant Changes to Ohio Foreclosure Law Proposed

Posted in Collection and Foreclosure, Ohio Law

Legislation has been introduced in the Ohio House that would amend Ohio’s foreclosure law in a manner favorable to licensed auctioneers and realtors and unfavorable to county sheriffs and appraisers. As set forth below, House Bill 586 would, among other things, permit “private selling officers” to conduct judicial sales of real property; permit written or electronic bidding; eliminate the requirement that judgment creditors or lienholders who appear in an action pay deposits and eliminate the three-freeholder appraisal. The bill was introduced on June 17, 2014, and proposes amendments to O.R.C. §§2329.151, 2329.17, 2329.18, 2329.19, 2329.20, 2329.271, 2329.28, 2329.34, and 2329.39 and would enact new sections 2329.152 and 2329.311.

R.C. §2329.151 would be amended to permit goods and chattels levied upon execution to be sold by a licensed auctioneer who is a resident of the state and would permit sales of land upon execution to be auctioned by a “private selling agent”, defined at R.C. §2329.152(H) as a state resident who is both a licensed auctioneer under R. C. Chapter 4707 and a real estate agent under R. C. Chapter 4735.

Under new R.C. §2329.152(A), a judgment creditor may elect to sell real property at public auction by a court officer or by a private selling officer. The election to use a private selling agent rather than the sheriff is made via a praecipe filed with the clerk that identifies the private selling officer. R.C. §2329.152(A).

The bill would permit the following in a private sale:

  • If a sale is held at a physical location in Ohio, the private selling officer may accept written or electronically transmitted bids from either the judgment creditor or any lienholder who was party to and appeared in the underlying action. R.C. §2329.152(B).
  • In a boon to credit bidding, private selling officers may not require deposits from either judgment creditors or lienholders who were parties to and appeared in the action. R.C. §2329.152(C).
  • The judgment creditor may instruct the private selling agent to postpone the sale one or more times for up to 180 days. R.C. §2329.152(D).
  • The sale of real estate may be held in a county other than the county where the real estate is located and may be at a location other than the courthouse; the sale may also take place online. R.C. §2329.152(E).
  • Costs, including appraisal, publication and costs of the selling officer, are paid through sale proceeds or by the judgment creditor. R.C. §2329.152(F).

In addition, the private selling officer may do the following:

  • Hire a resident title insurance agent certified under Revised Code Chapter 3953 or hire a resident title insurance agency authorized to do business under that chapter;
  • Execute the deed to the purchaser or its representative; and
  • Record the deed.

The bill would also significantly change how sale prices for real estate are set. Instead of three disinterested freeholders, the appraised value for sale purposes will be the fair market value as shown on the county auditor’s web site, unless, for good cause, the court authorizes a separate appraisal. R.C. §2329.17. The minimum bid is two-thirds of the fair market value, which is referred to as the “appraised value”. R.C. §2329.20. In addition, in a sale by a private selling officer, the purchaser information required under R.C. §2329.271(A) goes to the private selling officer instead of to the sheriff. R.C. §2329.271(C).

There is also a new reporting requirement imposed on levying officers who are appointed by courts to sell residential one to four single-family units, who must report quarterly to the Ohio Attorney General to assess whether deadlines under Chapter 2329 are being met. The Attorney General is to maintain a database of the reported information and make it publically available. R.C. §2329.331.

Finally, the bill would revise R.C. §2329.34 to permit only judgment creditors to seek the appointment of special masters to sell property.

The bill was co-sponsored by Representatives Beck, Becker, Blessing, McClainm and McGregor and has not yet been assigned to a committee. Given that this bill, if enacted, would increase business for Ohio residents who hold both auctioneer and real estate licenses and decrease business for real estate appraisers and Sheriff’s offices, expect to see lobbying by all four industry groups at a minimum.