3 May 2021 / Larry R. Rothenberg

An Analysis of Ohio's New Statute of Limitations Applicable to Mortgage Foreclosures

Ohio’s recently-enacted Senate Bill 13, which becomes effective June 14, 2021, impacts the statutes of limitation applicable to various matters, including mortgage foreclosures.1

The New Six-Year Statute of Limitations for Foreclosures
In 2012, the limitation period for commencing an action on a written contract, such as a mortgage foreclosure, was reduced from 15 years to eight years. The new law further reduces the period to six years after the cause of action accrued.
When Does the Clock Start Running? 
The new law, like its predecessors, does not define when the cause of action accrues, causing the time period to commence running.  

Suppose the mortgage requires the mortgage holder to send a notice of default as a prerequisite to being entitled to accelerate the debt and commence a foreclosure. Does the limitation period commence as of the date of the oldest unpaid payment, or as of the date the notice is sent even if long after the default date? 

Some Ohio counties’ courts of appeals have held that if the mortgage requires the sending of a notice of default as a prerequisite, the cause of action does not accrue until the notice of default is sent. This holding is binding on the trial courts in those counties and may be used as persuasive authority in other counties. The Ohio Supreme Court has not issued a ruling applicable statewide on this issue.

Of course, if a balloon payment note has matured, the cause of action should be deemed to accrue as of the maturity date.

Interestingly, although the new law does not define when the cause of action accrues for mortgage foreclosures, it does contain such a definition for actions on non-written contracts (which will have a four-year statute of limitations) or certain statutory actions. The cause of action on a non-written contract or those statutory actions will accrue 30 calendar days after the last charge or payment, whichever is later.

The Limitation Period Applicable to Mortgage Foreclosures Now Matches That For Promissory Notes
In Ohio, a claim for a money judgment on a promissory note is a separate and distinct claim from a claim for foreclosure on a mortgage securing the note.  Hence, the creditor may join both claims in a single action, or it may bring each claim in a separate action. 
Until now, Ohio has had different statutes of limitation for the money judgment claim on a promissory note, and for the foreclosure claim.  Since 1994, the limitation period for the money judgment claim has been six years2. Under the new law, the limitation period for foreclosures will match the six-year limitation period for the money judgment claim.
What If the Cause of Action For Foreclosure Accrues Prior to June 14th?
The law provides that if the cause of action for foreclosure accrues prior to June 14, 2021, the limitation period will expire on June 14, 2027 or upon the expiration of the eight-year limitation period in effect under the prior law, whichever occurs first.

For a complete copy of Senate Bill 13, click HERE

For more comprehensive information and insights, watch our Foreclosures & Loss Mitigation webinar.

This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.

ORC §2305.06(C)
ORD §1301.16(A)

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Larry R. Rothenberg


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