OHIO CASE LAW UPDATE
Wilmington Sav. Fund Soc'y FSB as Trust v. Woods, 2020-Ohio-4599, (2nd District 2020)
This case is of particular interest to lenders as it is the first decision in Ohio where a Court of Appeals acknowledged the right of a lender to pursue foreclosure of an equitable mortgage where the borrower is deceased, the mortgage was lost and never recorded and title to the property was transferred. The trial court judge granted a Motion for Summary Judgment filed by the heirs of the deceased borrower and held that under Ohio law, a mortgage becomes operative as to third parties only when it is recorded. Lender’s counsel argued on appeal argued that the case law relied upon by the trial court applied to bona fide purchasers for value and the heirs could not inherit an interest greater than what the decedent held. The Court of Appeals agreed and held that the heirs of a decedent do not inherit a greater interest in the estate's property than the interest held by the decedent. Therefore, the lender is entitled to pursue its foreclosure on the equitable mortgage theory.
INDIANA CASE LAW UPDATE
Blair v. EMC Mortgage, LLC, 139 N.E.3d 705, 2020 Ind. LEXIS 96, 101 U.C.C. Rep. Serv. 2d (Callaghan) 291, 2020 WL 762592
The Indiana Supreme Court addressed the statute of limitations in Blair v. EMC Mortg., LLC. The Superior Court granted the foreclosure but held that EMC was entitled to recover only payments and interest that accrued after July 3, 2006 due to the six-year statute of limitations in Indiana Code section 34-11-2-9. The Indiana Court of Appeals reversed the decision and held that by failing to make demand within a reasonable time, EMC was not entitled to recovery. The Indiana Supreme Court heard the case and rejected the reasonableness standard applied by the Court of Appeals. In addition, the Indiana Supreme Court held that Indiana has two statutes of limitations that would apply to a promissory note and mortgage, Indiana Code section 34-11-2-9 and Indiana Code section 26-1-3.1-118. The two statutes provide for three events that could trigger the statute of limitations. First, a lender can sue for a missed payment within six years of a borrower’s default. Second, a lender can exercise its option to accelerate the promissory note’s maturity date and call the full balance due. In that situation the lender must file their foreclosure case within six years of that acceleration date. Third, a lender can decide not to accelerate upon default and instead sue for the entire amount owed within six years of the note’s date of maturity.