Effective March 23, 2015, Ohio’s antiquated receivership statute (Ohio Rev. Code Chapter 2735) will be modernized, particularly as it relates to the appointment of a receiver in commercial mortgage foreclosures and the ability of a receiver to sell real estate free and clear of liens.
II. Appointment of a Receiver
Previously, commercial mortgagees were a bit hamstrung because only two of Ohio Rev. Code Section 2735.01’s provisions for appointment of a receiver typically potentially applied, Section 2735.01(B) (“In an action by a mortgagee, for the foreclosure of his mortgage and sale of the mortgaged property, when it appears that the mortgaged property is in danger of being lost, removed, materially injured, or that the condition of the mortgage has not been performed, and the property is probably insufficient to discharge the mortgage debt”) and Section 2735.01(F) (“In all other cases in which receivers have been appointed by the usages of equity”). In situations where it was unclear whether the property was worth less than the unpaid mortgage balance, some courts struggled with the decision of whether to appoint a receiver, even in cases where the borrower agreed in the mortgage to appointment of a receiver upon the occurrence … Continue Reading