Can A Court Force A Conveyance To A Mortgage Holder Without A Sale, Over Its Objection?

by Larry R. Rothenberg

The Statutory Scheme for Foreclosures in Ohio

The statutory scheme for mortgage foreclosures in Ohio calls for a judicial action in which the mortgage holder files a complaint seeking an order for the property to be sold at a judicial sale, typically by the county sheriff.  Once the court grants the judgment, the clerk of courts issues an order of sale to the sheriff, who causes the property to be appraised and scheduled for sale with a minimum bid not less than two-thirds of the appraised value.  The property owner has a statutory right to redeem the property until the court enters an order confirming the sale.

Bank Walkaways

As a result of vandalism, rapidly declining property values, and stagnant REO inventories, mortgage holders often decide not to purchase property at the judicial sale, or even to walk away from the property without scheduling a sale, leaving the neighborhood to deal with the fallout.  Ohio US Senator Sherrod Brown called for a federal investigation into “bank walkaways”.  Ohio State Representative, Dennis Murray, stated that he expects to introduce a bill within the next week that would require lenders or mortgage servicing companies to take foreclosure properties to sheriff’s sale within a certain time, or see their mortgage lien erased.  Properties that don’t sell would go to a local land bank. 

An Unprecedented Court Order

A judge in rural Darke County, Western Ohio has gone one step further.  In a September 29, 2009 decision(1), Judge Jonathan Hein ordered the property conveyed by a commissioner’s deed directly to the mortgage holder, without a judicial sale, despite the mortgage holder’s objection.

Wells Fargo Bank filed the foreclosure and when the borrower failed to appear, it filed a motion for default judgment.  Instead of granting the motion and ordering the usual sheriff’s sale as requested by Wells Fargo, the judge issued a notice to all parties to appear and show cause why the property should not be simply conveyed to Wells Fargo without a judicial sale.  Wells Fargo objected to such a conveyance.  At the hearing, a top expert in Ohio real estate law testified that such a conveyance would result in a clouded title.  The court was also made aware of the concern posed by state and national title insurance companies that such a conveyance by commissioner’s deed could result in title insurance claims, requiring the companies to defend the marketability of the title.  Nevertheless, the court decided that such concerns were not sufficiently significant and proceeded to order the conveyance by commissioner’s deed to Wells Fargo.  In granting Wells Fargo’s motion for default, the court also granted a monetary judgment and stated in its order that the right to petition the court for a deficiency judgment after any subsequent sale of the property is preserved.  The court’s order also stated that the mortgagor’s right of redemption would be cut off three days after the entry of the order.

It remains to be seen whether Wells Fargo or the borrower will file an appeal to the Court of Appeals .  In several other foreclosure cases pending in the county, where the borrower has not responded to the plaintiff’s complaint, other mortgage holders and servicers are in identical situations, as the court issued notices to appear and show cause why the properties should not be “transferred back to plaintiff without a judicial sale.”  One of the mortgage holders filed an action in the court of appeals seeking a writ of prohibition, claiming that the judge does not have jurisdiction to order a conveyance to the mortgage holder without its consent.  That action remains pending.

We will keep you advised of further developments.  For a complete copy of the court’s order, go here.

(1)Wells Fargo Bank, N.A. v. Leroy E. Young, Darke County Case No. 09-CV-00301


If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq. Larry is the partner-in-charge of the Cleveland real estate and foreclosure department of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained within the treatise, “The Law of Distressed Real Estate”, published by The West Group. The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at  

Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A .  For over 75 years, we have been providing comprehensive creditor representation and legal services to clients. Our approach integrates the filing of legal action with our recovery activity anywhere a debtor or debtor’s assets may be located. We coordinate the handling of files personally throughout our footprint states of Illinois, Indiana, Kentucky, Michigan, New Jersey, Ohio and Pennsylvania, or through our national attorney network. When it comes to creditor representation at WWR, we get it.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s