Avoid Increased Fines and Litigation for Untimely Mortgage Satisfactions
McGlinchey AlertOn December 17, 2014, the Ohio General Assembly amended Ohio’s mortgage satisfaction statute, Revised Code 5301.36. Residential and commercial mortgages continue to require a release of a mortgage to be recorded within ninety days. However, the penalty for noncompliance increases to $100 per day (for each day the mortgage release in not recorded), not to exceed $5,000, along with reasonable attorney’s fees. This amount exceeds the former $250 penalty cap. This bill became effective on March 23, 2015.
Prior to March 23, 2015, Ohio required a mortgagee to record a release of mortgage within ninety days of satisfaction with respect to residential mortgages; the statute did not contemplate damages for noncompliance for commercial mortgages. If the ninety day deadline was not met, a mortgagee faced potential damages of only $250. In the past, some mortgagees allowed the ninety day timeframe to elapse either due to internal processing delays or the nominal amount of damages imposed.
The additional sanction is assessed only after the current owner of the property sends a Notice to the mortgagee advising it has failed to timely record the release of mortgage. The Notice must also include the loan number or other identifying information of the loan, the property address, and the date the mortgage was satisfied. The mortgagee has fifteen days after delivery of this Notice to record the release or be subject to $100 for each day the release is not recorded; the mortgagee will also be required to pay reasonable attorney’s fees and costs incurred through a civil action enforcing the amended statute and/or in the attempt to procure the release.
Under the amended statute, commercial mortgages that have been satisfied but not recorded within ninety days are not subject to the $250 penalty, but current property owners can still recover the damages described above for failure to record the release after delivery of the Notice. Conversely, residential mortgages that have been satisfied but the release not recorded prior to the March 23, 2015 effective date are subject to both levels of damages under the amended statute.
Based on these changes, we recommend our clients review their internal policies and procedures to ensure compliance with this amendment. In some cases, clients are implementing new policies and procedures. It is important to act now to avoid additional sanctions.