Page 21 - 2018 October Bar Journal

REAL ESTATE LAW

estate’s assets. Creditors’ counsel should evaluate
whether it would be cost-effective to do so, based
on the known assets of the estate.
First American.
The Foreclosure
The note holder’s right to foreclose on a 125 years of experience.
recorded mortgage remains intact after the
borrower’s death, as Ohio’s Tenth District 44 commercial service centers.
Court of Appeals recently illustrated in 40 countries served worldwide.
Deutsche Bank Natl. Trust Co. v. Vigue,
th
2017-Ohio-7037 (10 Dist.). In that case, the 1 point of contact in Cleveland.
borrower’s next of kin continued making the
mortgage payments after the borrower died
so that the loan was not in default until three Experience the difference.
years after the borrower’s death. The next of
kin, citing Ohio’s statute requiring creditors
to present a claim against a decedent’s estate Amy Whitacre
within six months after the borrower’s death, Vice President, Sales
argued that the creditor’s failure to present a
timely claim not only barred the creditor from awhitacre@firstam.com | 216.802.3528
enforcing the note, it also barred the creditor
from foreclosing on the mortgage. The next of
kin argued that if the debt is unenforceable, the
mortgage securing the debt is unenforceable.
However, the court, citing ORC §2117.10,
made clear that a lienholder with a recorded
mortgage is not barred from foreclosure, even if 216.241.8500 q www.firstam.com/ncs
it failed to present a claim against the decedent’s
©2018 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF
estate within six months. The court reiterated
that the foreclosure on the mortgage is an action
against the property and is a separate cause of order for foreclosure. Many times, the estate’s • If the mortgage holder is served with a
action from the claim against the borrower on the fiduciary is unable to find a buyer for an summons in a third-party foreclosure
note. Based on this reasoning, the court allowed amount sufficient to pay off the mortgage and action or in a land sale action, promptly
the foreclosure to proceed. other liens, resulting in a significant passage of file an answer to protect the mortgage, and
If the borrower dies before the foreclosure is time and risk of deterioration of the property. determine whether to file a counterclaim
filed or before the court enters the foreclosure By filing and pursuing a counterclaim, counsel or crossclaim to affirmatively seek an order
judgment (assuming the borrower died while for the mortgage holder can usually push the of foreclosure.
being the titled owner of the real property), case to a sale without delay.
the borrower’s heirs, if any, must be joined as
defendants in the action, served with summons, Takeaways for Attorneys Representing Larry R. Rothenberg is a shareholder
and given an opportunity to contest the case. Note Holders in Weltman, Weinberg & Reis’s
• After the borrower’s default, obtain a Cleveland office, focusing on
Land Sale Actions under ORC Chapter 2127 money judgment either in a separate action residential and commercial real
If a mortgage holder is served with a summons or as a claim in the foreclosure action estate foreclosures and transactions,
in an Ohio land sale action under ORC Chapter (unless the borrower filed for bankruptcy evictions, and title insurance. Mr. Rothenberg
2127, the mortgage holder must file an answer or is already deceased), and if the borrower has been recognized in 14 editions of Ohio Super
to protect its interest in the real property, just has other assets, pursue collection of the Lawyers, and is a frequent lecturer on foreclosure
as in any Ohio third-party foreclosure action. If debt through all legal means. and real estate issues. He is the author of the
the mortgage holder is served with a summons • Deliver a claim to the deceased borrower’s Ohio Jurisdictional Summary in the treatise,
and fails to file an answer, the mortgage will estate within the allowable timeframe. The Law of Distressed Real Estate, and
be released upon the court’s entry of the order • If no estate has been filed, investigate contributed the lead articles in the book, Ohio
confirming the sale, and the mortgage holder will whether the deceased borrower had other Foreclosures, both of which were published by
not be entitled to any proceeds of the sale. assets, and force the opening of an estate the West Group, and he has been published in
If the loan secured by the mortgage is in if warranted and cost-effective. numerous industry publications. Larry R.
default, in addition to filing an answer to • Be aware that the right to foreclose on a Rothenberg has been a Member of CMBA since
protect its interest, the mortgage holder may mortgage in default is not affected by the 1979. He can be reached at (216) 685-1135 or
file a counterclaim to affirmatively seek an borrower’s death. lrothenberg@weltman.com.
OctOber 2018 Cleveland Metropolitan Bar Journal | 21