Ohio Foreclosure Laws
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Ohio is referred to as a lien theory state wherein the property stays as guarantee for the loan in question. The document through which the lien is placed on the property is referred to as a mortgage. The non-judicial foreclosure option cannot be availed of in Ohio.
Lenders in Ohio follow a judicial foreclosure process that is pursued through a court and the final verdict on the foreclosure is prepared by the court. The sale of the property occurs through a publicly notified sale. The County Court has jurisdiction over foreclosures. A complaint, with a lis pendens (a document which is recorded to provide notice to the public about the property in foreclosure) has to be filed in the County Court.
The documents are generally referred to as the mortgage or note, and when commercial transactions are involved, a security agreement. The security agreement is, from time to time, merged with the mortgage document. A mortgage needs to be filed to authenticate the debt in question and its repayment terms, which exist in the note.
It commonly takes about 150 to 180 days to bring into effect a foreclosure that hasn’t been contested; this does depend on the schedule of the court. If the action is contested in the court by the borrower and if the hearing is sought to be postponed or adjourned, or if the borrower files for bankruptcy, the process can be slowed down.
A foreclosure complaint needs to be filed in the County Court and the defendant is given twenty days for filing an answer, failing which, a judgment of default is entered. If the filing of an answer occurs, the case either goes to trial or is arbitrated by a summary judgment. After arbitration, the foreclosure ruling takes place and direction is given to the sheriff for the property to be sold by a foreclosure sale process.
The foreclosure property’s value has to be estimated or appraised by three free-holders who are disinterested. An offer of less than two-thirds of the appraised value for the property will not be accepted.
The sale of the foreclosure needs to be advertised at least thirty days before the sale, for three successive weeks, once each week. Sales of foreclosures in Ohio are handled by the sheriff and occur at County Courthouses. Post-sale the sheriff returns a writ of execution which indicates the sale having occurred, and the court then determines if the undertaking of the sale is legal, this is known as a confirmation. Redemption rights cease with the purchaser being issued the deed after the confirmation occurs.
There is a statutory right of redemption in place in Ohio where a foreclosed property can be reclaimed by upon full payment of the balance on the loan that is unpaid and costs. The redemption needs to take place before the County Court passes the confirmation on the sale of foreclosure.
If the amount on the loan secured by the mortgage in question is more than what the foreclosure property sells for at the public sale then the lender can obtain a deficiency judgment. The borrower then owes to the lender the difference of what the property sells for and the original loan amount. A deficiency judgment can be enforced within a period of two years; this time period, however, can be extended if the borrower concurs to it in writing.
Foreclosures in Ohio are governed by laws that are part of the Ohio Revised Code - §2323.07.
