COLUMBUS — State Representative Jim Butler (R-Oakwood) today applauded the Ohio House of Representatives’ passage of Substitute House Bill 201, legislation that revises requirements for entries of mortgage satisfaction and clarifies the priority of interests in real property.
Sub. H.B. 201 establishes common-sense reforms that will streamline the process for obtaining a mortgage and provides lenders with greater clarity about priority of liens, with the hope that lenders will continue to support Ohio’s economic recovery by providing favorable financing terms in real estate transactions within Ohio.
“I sponsored this legislation because the areas of the law encompassed in Substitute House Bill 201 were in great need of revision,” said Representative Butler. “Ensuring that lenders, mortgagees, mortgagors, title agencies, attorneys, and everyone involved with transactions involving real property understand how the processes are supposed to work, and that there are potential penalties if the processes are not followed correctly is critically important. Increasing efficiency and expediting real estate transactions will have a positive economic impact in communities throughout Ohio.”
Specifically, Sub. H.B. 201:
• Codifies Ohio’s common law approach to determining the priority of liens between lenders. This gives lenders predictability and assurances as to how Ohio’s real property priority system works, which will facilitate more lending and reduce unnecessary litigation.
• Promotes secured lending by increasing the penalty for failure of timely recording of a mortgage. Tardy recording means that future real estate transactions may be delayed as information contained in the chain of title to property throughout Ohio is not consistently accurate.
• Requires a mortgage to record a release of a mortgage evidencing its satisfaction within 90 days from the date of its satisfaction, regardless of whether it is a residential or commercial mortgage.
• Expands to a current owner of real property to which a mortgage pertains the provision permitting a mortgagor to bring a cause of action for damages of $250 for a mortgagee’s failure to record a satisfied mortgage.
• Requires a current owner of property to provide a notice to a mortgagee if the mortgagee fails to record a satisfied mortgage within the required time period.
• Creates a cause of action for the current owner to collect damages when a mortgagee fails to record the satisfied mortgage after the current owner provides notice.
• Provides requirements and damages for noncompliance with the requirements for a mortgagee, mortgagor, and property owner who are parties to an unreleased mortgage that has been satisfied, but not recorded, prior to the effective date of the bill.
Sub. H.B. 201 will now move to the Ohio Senate.