130th Ohio General Assembly
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H. B. No. 201  As Introduced
As Introduced

130th General Assembly
Regular Session
2013-2014
H. B. No. 201


Representative Butler 

Cosponsors: Representatives Adams, J., Terhar, Thompson, Hayes 



A BILL
To amend section 5301.36 and to enact section 5301.234 of the Revised Code to make changes relative to mortgage subrogation and entries of satisfaction.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That section 5301.36 be amended and section 5301.234 of the Revised Code be enacted to read as follows:
Sec. 5301.234.  (A) A mortgage encumbering real property granted to secure funds that are used to satisfy a prior mortgage or lien on the real property shall be subrogated to the priority of the prior mortgage or lien that was satisfied, to the extent of the amount satisfied, if both of the following apply:
(1) The parties to the mortgage granted to secure funds that are used to satisfy a prior mortgage or lien intend that mortgage to have the priority of the satisfied mortgage or lien.
(2) At the time the holder of a subordinate mortgage or lien received its interest, the holder expected the interest to be junior to the satisfied mortgage or lien.
(B) A mortgagee seeking to be subrogated pursuant to division (A) of this section shall not be denied subrogation for the priority of the satisfied mortgage or lien for any of the following reasons:
(1) The mortgagee is engaged in the business of lending.
(2) The mortgagee had actual knowledge or constructive notice of a mortgage or lien over which the mortgagee would gain priority through subrogation.
(3) The mortgagee committed a mistake or was negligent or a third party committed a mistake or was negligent.
(4) The lien for which the mortgagee seeks to be subrogated was released.
(5) The mortgagee obtained a title insurance policy.
(C) Notwithstanding the application of division (A) of this section, the holder of a subordinate mortgage or lien shall retain the same subordinate position that the holder would have had if the prior mortgage or lien had not been satisfied.
Sec. 5301.36.  (A) Except in a county in which the county recorder has elected to require that all satisfactions of mortgages be recorded by separate instrument as allowed under section 5301.28 of the Revised Code, when recording a mortgage, county recorders shall leave space on the margin of the record for the entry of satisfaction, and record therein the satisfaction made on the mortgage, or permit the owner of the claim secured by the mortgage to enter such satisfaction. Such record shall have the same effect as the record of a release of the mortgage.
(B) Within ninety days from the date of the satisfaction of a residential mortgage, the mortgagee shall record a release of the mortgage evidencing the fact of the its satisfaction in the appropriate county recorder's office and pay any fees required for the recording. The mortgagee may, by contract with the mortgagor, recover the cost of the fees required for the recording of the satisfaction by the county recorder.
(C) If the mortgagee fails to comply with division (B) of this section, the mortgagor may recover, in a civil action, damages of two hundred up to fifty dollars for each day of noncompliance and reasonable attorneys' fees and costs incurred in such an action or otherwise to obtain the recording of a satisfaction of mortgage. This division does not preclude or affect any other legal remedies or damages that may be available to the mortgagor.
(D) As used in this section, "residential mortgage" means an obligation to pay a sum of money evidenced by a note and secured by a lien upon:
(1) "Mortgagee" includes the original mortgagee or any successor to or assignee of the original mortgagee.
(2) "Mortgagor" includes the original mortgagor and any successor to the interest of the original mortgagor in the real property located within this state containing two or fewer residential units or on which two or fewer residential units are to be constructed and shall include such an obligation on a residential condominium or cooperative unit.
(3) "Satisfaction" means that the obligation secured by a mortgage has been paid in full and the underlying obligation terminated, with no opportunities for future advancements.
Section 2. That existing section 5301.36 of the Revised Code is hereby repealed.
Section 3. With respect to an unreleased mortgage that has been satisfied, but not recorded, prior to the effective date of this act, the mortgagor shall provide the mortgagee written notice, addressed to the last address of public record for the mortgagee, of the failure to enter the release of the mortgage of record. The mortgagee shall have sixty days from the delivery of the notice to record the satisfaction and release of the mortgage in the appropriate county recorder's office. The mortgagee shall pay any fees required for the recording within one hundred eighty days after the effective date of this act. A mortgagor may institute an action and recover damages under division (C) of section 5301.36 of the Revised Code as amended by this act.
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