Some Ohio Foreclosure Law

By Judge James L. Kimbler
A recent Ninth District Court of Appeals decision out of Summit County, Emerson Tool, L.L.C. v. Emerson Family Ltd. Partnership, 2009-Ohio-6617 addressed the issue of whether an entry ordering a foreclosure is a separate and appealable issue from an entry ordering a sheriff's sale. In paragraph 13 of Judge Whitmore's opinion, the following language appears:

"In a foreclosure action, the decree of foreclosure and the order confirming sale are separate and distinct actions, both of which constitute final appealable orders once entered. Citifinancial, Inc. v. Haller-Lynch, 9th Dist. No. 06CA008893, 2006-Ohio-6908, at 5-6. See, also, Bankers Trust Co. of California, N.A. v. Tutin, 9th Dist. No. 24329, 2009-Ohio-1333, at 14; Triple F Invests., Inc. v. Pacific Fin. Servs., Inc. (June 2, 2001), 11th Dist. No. 2000-P-0090, at *3. “The distinction is not merely academic, but has important procedural implications.” Smith v. Najjar, 163 Ohio App.3d 208, 2005-Ohio-4720, at 11. Before entering an order confirming the sale, a trial court must determine that all the statutory requirements for the sale have been met. R.C. 2329.31 (requiring that the trial court first determine if “the sale was made, in all respects, in conformity with sections 2329.01 to 2329.61 of the Revised Code” before issuing an order confirming the sale). See, also, Najjar at 10; Tadmor v. Huntington Natl. Bank, 9th Dist. No. 23021, 2006- Ohio-3818, at 5. Because the confirmation of a sheriff’s sale is a special proceeding, it is a final appealable order under R.C. 2505.02(B)(2). Metro. Bank & Trust Co. v. Roth, 9th Dist. No. 21174, 2003-Ohio-1138, at 12, citing Citizens Loan & Savings Co. v. Stone (1965), 1 Ohio App.2d 551, 552-553."

The syllabus in the Citizens Loan & Savings Co. case cited by Judge Whitmore lays out who has standing to file an appeal of a order confirming a sheriff's sale. The syllabus reads as follows:

1. Confirmation of a sale in a mortgage foreclosure proceeding is a special proceeding, and the order of confirmation is a final order appealable by the mortgagor. The purchaser at the sale is a party entitled to be heard upon confirmation and a party to the appeal.

2. The determination of the amount due on the debt in a foreclosure proceeding is not a money judgment.

3. A confirmation of a sale in a foreclosure proceeding requires a true hearing, including an opportunity for interested persons to be heard.

4. The mortgagor's right to redeem exists and may be exercised as an absolute right until confirmation of the sale. It cannot be cut off prior to confirmation, and the purchaser at the sale acquires no vested right to the property until after confirmation.

5. Where the only lien adjudicated to be valid has been redeemed by payment prior to the sale, there is no substantial reason to proceed with the sale, and it is error thereafter to confirm such sale. A purchaser at such a sale who was aware of the redemption before sale is not entitled to interest on his deposit from the person holding the mortgagor's title.

The Ohio Supreme Court upheld the power of a court of common pleas to adopt a local rule allowing for ex parte consideration of confirmation orders in Union Bank Co. v. Brumbaugh (1982), 69 Ohio St. 2d 202. In that case, the Ohio Supreme Court held that under the Modern Courts Amendment ( Ohio Const. Art. IV, § 5(B)) to the Ohio Constitution, local rules adopted pursuant to a the Ohio Rules of Civil Procedure controlled if they conflict with prior court decisions or statutes. In the Union Bank case, the Supreme Court found that the holding in the Citizens Bank case that a trial court had to conduct a full hearing prior to confirming a sheriff's sale conflicted with the local rule. Therefore, the local rule controlled.

The Ohio Supreme Court also issued a ruling in another case that dealt with the legal principle set forth in the first paragraph of the syllabus in the Citizens Bank case. In Ohio Sav. Bank v. Ambrose( 1990), 56 Ohio St. 3d 53, the Court wrote the following in its opinion syllabus:

Purchasers at a foreclosure sale have no vested interest in the property prior to confirmation of the sale by the trial court. As a result, the purchasers have no standing to appeal when the trial court denies confirmation.

In summary, then, it appears that under Ohio law:

1. The judgment entry granting the foreclosure and the judgment entry confirming the sheriff's sale are both final and appealable orders;

2. A common pleas court does not have to hold a hearing before signing an entry confirming the sheriff's sale;

3. A mortgagor has a right to redeem the property prior to confirmation of sale; and

4. If confirmation is denied, the buyers at the sheriff's sale have no standing to file an appeal.