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.

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 of the unrecorded satisfaction and the current owner of the real property to which the mortgage pertains may recover, in a civil action, damages of two hundred fifty dollars. This division does not preclude or affect any other legal remedies or damages that may be available to the mortgagor.

(D)(1) If upon the expiration of the ninety-day period described in division (B) of this section, the satisfaction of mortgage remains unrecorded, the current owner of the real property shall provide the mortgagee written notice, in accordance with the Rules of Civil Procedure, of the failure to enter the release of the mortgage of record. The notice shall be in substantially the following form:

"OHIO LAW REQUIRES A MORTGAGEE, WHETHER THE ORIGINAL MORTGAGEE OR ANY SUCCESSOR TO THE INTEREST OF THE ORIGINAL MORTGAGEE, TO RECORD A RELEASE OF A MORTGAGE EVIDENCING ITS SATISFACTION IN THE APPROPRIATE COUNTY RECORDER'S OFFICE AND TO PAY ANY FEES REQUIRED FOR THE RECORDING WITHIN A CERTAIN TIME PERIOD. (Name of mortgagor)'S MORTGAGE LOAN, (loan number or other loan identification), FOR PROPERTY LOCATED AT (property address), WAS SATISFIED ON (date of satisfaction). IT APPEARS YOU HAVE YET TO RECORD A RELEASE OF THIS MORTGAGE. FAILURE TO RECORD THE RELEASE WITHIN 15 DAYS OF RECEIVING THIS NOTICE MAY RESULT IN A CIVIL ACTION FILED AGAINST YOU TO RECOVER REASONABLE ATTORNEYS' FEES AND COSTS INCURRED IN SUCH AN ACTION OR OTHERWISE TO OBTAIN THE RECORDING, PLUS DAMAGES OF $100 FOR EACH DAY OF NONCOMPLIANCE NOT TO EXCEED $5,000 IN TOTAL DAMAGES."

(2) Within fifteen days after delivery of the notice described in division (D)(1) of this section, the mortgagee shall record a release of the mortgage evidencing the fact of 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 or current owner of the real property, recover the cost of the fees required for the recording of the satisfaction by the county recorder.

(E) If the mortgagee fails to comply with division (D)(2) of this section after receiving the notice in accordance with division (D)(1) of this section, the current owner of the real property may recover, in a civil action, reasonable attorneys' fees and costs incurred in such an action or otherwise to obtain the recording of a satisfaction of mortgage plus damages of one hundred dollars for each day of noncompliance, not to exceed five thousand dollars in total damages.

This division does not preclude or affect any other legal remedies or damages that may be available to the current owner.

(F) A mortgagee that records a release of a mortgage evidencing the fact of its satisfaction within the time periods required by this section shall not be in violation of this section, or subject to damages or fees, due to the failure of a county recorder to timely process that release of mortgage.

(G) A current owner may combine the civil actions described in divisions (C) and (E) of this section by bringing one action to collect for both damages, or may bring separate actions.

(H) 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) 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 "Satisfaction" means that the obligation on a residential condominium or cooperative unit 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. (A)(1) With respect to an unreleased commercial mortgage that has been satisfied more than ninety days prior to the effective date of this act, but not recorded, the mortgagee shall not be subject to a civil action or damages as described in division (C) of section 5301.36 of the Revised Code.

(2) The current owner of the real property to which such a mortgage pertains shall provide the mortgagee the written notice described in division (D)(1) of section 5301.36 of the Revised Code not sooner than on the effective date of this act and may recover damages in a civil action for failure to comply with division (D)(2) of that section pursuant to division (E) of that section.

(B)(1) With respect to an unreleased commercial mortgage that has been satisfied less than ninety days prior to the effective date of this act, but not recorded, the mortgagee shall not be subject to a civil action or damages as described in division (C) of section 5301.36 of the Revised Code.

(2) The current owner of the real property to which such a mortgage pertains shall provide the mortgagee the written notice described in division (D)(1) of section 5301.36 of the Revised Code not sooner than on the ninetieth day after the mortgage was satisfied and may recover damages in a civil action for failure to comply with division (D)(2) of that section pursuant to division (E) of that section.

(C)(1) With respect to an unreleased residential mortgage that has been satisfied, but not recorded, prior to the effective date of this act, the mortgagee shall be subject to a civil action or damages as described in division (C) of section 5301.36 of the Revised Code for failure to comply with division (B) of that section.

(2) If such a mortgage was satisfied more than ninety days prior to the effective date of this act, the current owner of the real property to which the mortgage pertains shall provide the mortgagee the written notice described in division (D)(1) of section 5301.36 of the Revised Code not sooner than on the effective date of this act and may recover damages in a civil action for failure to comply with division (D)(2) of that section pursuant to division (E) of that section. If such a mortgage was satisfied less than ninety days prior to the effective date of the act, the current owner shall provide the mortgagee the written notice described in division (D)(1) of section 5301.36 of the Revised Code not sooner than on the ninetieth day after the mortgage was satisfied and may recover damages in a civil action for failure to comply with division (D)(2) of that section pursuant to division (E) of that section.

(D) As used in this section, "mortgagee" has the same meaning as in section 5301.36 of the Revised Code, as amended by this act.