Fast-Track Foreclosure: HB 463 Ohio’s Overdue Answer to Vacant and Abandoned Homes

May 31, 2016Articles

Homes left abandoned and vacant in neighborhoods across the state stand as a stark reminder of the housing crisis eight years ago. In late May, the Ohio legislature has taken steps to address these properties and streamline the foreclosure process for all parties involved with the passage of House Bill 463. The bill reflects three years of work by the Legislature, the Ohio Mortgage Bankers Association and other industry partners. It was passed with overwhelming bipartisan support and only one dissenting vote. The bill is now before the governor for signature and will become effective in 90 days.

HB 463 amends several chapters of the Ohio Revised Code (O.R.C.) with an aim to speed up the foreclosure process for abandoned and vacant residential property. Sub. H.B. No. 463 Lines 11-19. Perhaps the most positive change is a provision allowing the county prosecutor to petition the court to start the sale process if a sale is not underway within 12 months of foreclosure. O.R.C.§ 2329.071(A) Currently, a foreclosure from start to finish takes nearly eighteen months, during which time the property often deteriorates, having a negative impact on the neighborhood as a whole.

The bill also includes a provision allowing judgment creditors the right to use a private selling officer rather than a county sheriff to conduct the foreclosure sale. O.R.C. § 2327.02 This will alleviate workload from the sheriff’s office, decreasing delays in the sale process. The state will also create a website to manage and conduct foreclosure sales creating a more efficient process. O.R.C. § 2329.153(A)

The bill strikes a balance between the competing interests of homeowners and creditors. Both the judgment creditor and mortgagor in a foreclosure action will have 14 days after the sale to redeem the property by paying the purchase price. O.R.C. § 2329.071(C)  In an attempt to deter homeowners from destroying the property before vacating, the bill creates criminal mischief liability for homeowners who destroy property after a foreclosure action is instituted. O.R.C. § 2308.04

HB 463 details the process by which a mortgagee can elect an expedited foreclosure of a vacant or abandoned property. O.R.C. § 2308.02  HB 463 creates an avenue for a person not in possession of an instrument to enforce the instrument if certain conditions are met. O.R.C. § 1303.38  It also includes a series of factors, several of which must be shown in order for the property to be declared abandoned or vacant. O.R.C. § 2308.02(C) These factors allow for many types of evidence and alternative avenues to show vacancy or abandonment and therefore, fast-track the foreclosure process. O.R.C. § 2308.02(C)  Once a property is determined to be vacant or abandoned and a final judgment is entered, the property must be offered for sale within 75 days. O.R.C. § 2308.02(E)  A mortgagee is also granted the right to enter the vacant or abandoned property to protect it from vandalism. O.R.C. § 2308.03(A)

HB 463 creates a fast-track for resolution to the problem abandoned and vacant homes throughout the state. Please contact your Dinsmore commercial finance attorney, who can help you navigate your rights and obligations under the new law.