There have been several recent developments in Ohio concerning Tax Foreclosures. First, on September 2, 2014, the Ohio Supreme Court issued a decision clarifying a lien holder's standing to redeem properties from tax foreclosure, by paying the taxes prior to the confirmation of the sale. Second, Ohio Governor John Kasich signed SB 172 into law, effective September 4, 2014, amending the existing statutes relative to Ohio Tax Foreclosures on abandoned properties; granting broader powers to the County Land Banks and County Boards of Revision. The amendments do not apply to mortgage foreclosures but will affect lienholders when a tax foreclosure on abandoned property is filed.
In April 2013, we issued an advisory concerning an Ohio Court of Appeals decision titled, In re Foreclosure of Liens for Delinquent Taxes v. Parcels of Land Encumbered with Delinquent Tax Liens, 2013-Ohio-1400. The decision was alarming to lien holders because the court of appeals determined that a lien holder was not intended under the pertinent redemption statute as a person entitled to redeem the real estate. The court found that "the intent of the statute is to provide the owner with an opportunity to redeem the property if they so desire. The Court limited the rights of the lien holder to redeem and insisted that the lien holder must protect its rights only by bidding at the sale.
The case was taken up on appeal by the Ohio Supreme Court. This Supreme Court's decision affects those tax foreclosures which have been filed in the Court of Common Pleas, not those filed in the Board of Revisions pursuant to the abandoned property statutes discussed below.
The Supreme Court reversed this alarming decision and found that the redemption statute protects the lien holder and the owner's competing interests in the property. The court held that any lien holder with an interest in the property is permitted to redeem the land by paying the taxes prior to the confirmation of the sale. Following this Ohio Supreme Court decision, lien holders can determine at any time prior to the confirmation of the sale whether they desire to redeem the property by paying the taxes, penalties and fees associated with the tax foreclosure.
In Ohio, the treasurer or tax lien holder may commence a tax foreclosure on abandoned land in the County Board or Revisions. The Board of Revisions is not a court, and therefore the proceedings are only quasi-judicial. The authority is granted to the Board of Revisions for the purpose of fast tracking the transfer of abandoned lands without the need to go through the lengthy and costly process of a tax foreclosure in the Court of Common Pleas.
The Amendments to Statutes governing these tax foreclosures on abandoned property will affect lien holders as follows:
Lienholders who are served with a tax foreclosure complaint filed against abandoned property in the Board of Revisions need to be cognizant of these amendments. The amended statute requires quick and decisive action. The summons should be provided to counsel as soon as received to ensure that the lien interest can be properly protected throughout the foreclosure proceedings. Failure to act in the proper manner can leave a lien holder exposed to the forfeiture of its lien interest.