New County E-Filing Systems Impact Deadlines for Withdrawals from Sheriff Sales

By David W. Cliffe, Esq.

Over the past several years in Ohio, lenders increasingly modified their goal in foreclosures from the speedy recovery and resale of the property toward achieving loss mitigation and borrower retention of the property.  As result of this trend, lenders are requesting a greater volume of their sheriff sales withdrawn.   In the past, sheriff sales were commonly withdrawn only due to the borrower’s filing a bankruptcy petition.  Today, lenders’ motives to withdraw sales expanded to charge-offs, a borrower’s eleventh hour proposal for loss mitigation or receipt of an updated appraisal indicating no equity in the property.  The sheriff’s representative in one large Ohio County stated that lenders now request a withdrawal of approximately one-fifth of all initial sheriff sales scheduled.  Lenders file many of those requests within twenty-four hours of the sale.

As there is no state statute governing the withdrawal of sheriff sales, each Ohio county court system develops its unique policy for handling these requests. Prior to the advent of mandatory e-filing, the common practice for withdrawal of sheriff sales immediately before sales, involved the lender’s attorney sending a court runner to the courthouse and then “walking” the motion from the clerk’s office to the judge’s chambers, then back to the clerk’s office and on to the sheriff with a signed, stamped order, all frequently being done within hours of the sale.

In the interest of promoting a more efficient and cost-effective court system, the Ohio Supreme Court and its Advisory Committee on Technology promoted the goal of Ohio counties converting to a mandatory e-filing system. First, Montgomery County, then Franklin County in October 2011 and, this month, Hamilton County implemented mandatory e-filing systems.  As a result, the old method of a court runner “walking” through orders withdrawing sales became obsolete, and control over obtaining orders to withdraw sales shifted away from the attorney to the court system. In Montgomery County, the Court replaced this traditional method of withdrawing a sheriff sale with a mandatory e-filing system that included a special queue for filing emergency orders.  From that queue, a clerk electronically forwards the motion to withdraw the sale to that day’s designated judge and, assuming the judge grants the order, that order is then filed with the clerk.  Although a court runner no longer physically delivers the motion and order through the clerk and judge’s office, a court runner may still assist in nudging an order through the process and then can take the eventual order to the sheriff to get the sale stopped. This new procedure increases the potential for delay and an attorney attempting to withdraw a sale in Montgomery County now has a much slimmer chance of a withdrawal on the actual date of the sheriff’s sale.

When the Franklin County Common Pleas Court established, by administrative order, its e-filing guidelines, the Court specifically acknowledged that the practice of attorneys filing motions to withdrawal sales on the date of sheriff sales “would no longer be feasible with e-filing”.  Unlike Montgomery County, Franklin County has no special queue for e-filing emergency motions and the Franklin County Court specifically warned that the procedure relating to motions requesting sales withdrawals would follow the same process “like all other filings”.  The motion and order are electronically submitted to the clerk and then to the queue of a judge’s specified assistant for review.  After that review, the motion and order are electronically forwarded to that judge’s own queue.  After the judge’s approval, the judge’s office electronically returns the approved order to the clerk for recordation and storage on the court’s docket system. 

By longstanding practice, the Franklin County Sheriff will not stop a sale in the absence of a docketed entry ordering it. The Court’s administrative order, referenced above, contains the aspirational goal that motions for orders withdrawing sheriff sales filed prior to 5 p.m. on the eve of the sheriff sale would be approved.  As foreseeable delays occur, however, as a result of so many electronic exchanges of the motion and order to withdraw a sale, prudence dictates the timely submission of any request to withdraw a Franklin County Sheriff Sale by the Monday preceding that Friday’s sheriff sale.

In Hamilton County, the phase-in of mandatory e-filing began January 3, 2012.  The judges have not yet set a formal procedure regarding withdrawals of sheriff sales. Based on discussions with both court staff and a representative of the sheriff’s office, however, the introduction of mandatory e-filing has not altered the preexisting practice of the Sheriff’s Office to cancel a sale upon its receipt of a motion requesting withdrawal.  Provided that practice continues, a request to withdraw a sale early on the morning of the sheriff’s sale in Hamilton County, while not guaranteed or even recommended, remains possible. 

As more counties implement mandatory e-filing systems in Ohio, lenders may expect this new technology to expand the period of advanced warning that their attorneys require to successfully withdraw sales and also make same-day sales withdrawals virtually impossible in some counties.  As a result, lenders and their attorneys need to partner together to streamline communications and the formation of bidding strategies.  In the event a sheriff’s sale occurs in spite of a late withdrawal request, lenders may take comfort that, in many circumstances, the court will vacate the sale.  Most judges would set aside a sale when the lender was the winning bidder and it obtained a reinstatement, short sale, or similar loss mitigating arrangement from the borrower. Judges are not as sympathetic, however, where a lender makes a late determination not to sell the premises due to poor condition or an unfavorable valuation. In light of mandatory e-filing, lenders and their attorneys must thus work together and fix a bidding strategy well prior to the sale date to prevent problems in getting sheriff’s sales withdrawn.

If you have any questions on this matter, please contact Mr. David W. Cliffe, Esq. David is an associate in the Real Estate Default Group of Weltman, Weinberg & Reis Co., LPA, focused on foreclosure and eviction services. He can be reached at 513.333.4054 and dcliffe@weltman.com.

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