Ohio House Introduces HB 626 to Help Residential Tenants Facing “Foreclosure Eviction”

As you may recall from our post last week entitled “Don’t forget the “ND” and the “A” in SNDA’s”, Ohio law generally provides that unless the parties have signed a “Non-Disclosure Agreement”, a foreclosure (resulting from a Landlord defaulting on a mortgage filed before the lease) extinguishes that lease, even if there is time left in the lease term, and the tenant did not default.

As the law in Ohio stands now, tenants don’t even have to be notified of, or joined in the foreclosure action. For residential tenants, this literally means being “thrown out on the sidewalk”, with little warning.

H.B. 626 was introduced by the Ohio House of Representatives on October 7, 2008 to help soften the blow of these unfortunate, and lately, frequent occurrences.

First, the House Bill proposes to amend Ohio Revised Code Sec. 2329.26 such that a judgment creditor would need to serve a minimum thirty (30) day notice of the sale of the property, on any tenant residing in residential property that was not made a party to the creditor’s action. Proof of service of the thirty (30) day notice would need to be shown to the Court at least 7 days before the scheduled sale or the sale would not go through.

Second, House Bill 626 would enact new Ohio Revised Code Sec. 5321.20 which, as a general rule, would effectively convert any existing rental agreement to a Month to Month tenancy, after a foreclosure sale (terminable by either party upon thirty (30) days notice) instead of extinguishing the lease on the day of the sale. An exception to this new general rule (if enacted) applies if the lease is entered into after a foreclosure action is filed, and no notice of the foreclosure is given to the Tenant. In that situation, the new owner after the sale must offer the tenant the same lease deal entered into after the foreclosure was filed.

It seems that the net effect of this House Bill is first, “notice of the humane kind”. A residential tenant would get thirty (30) days notice of the sale, and a minimum thirty (30) days afterwards (if the new owner exercises its thirty (30) day right to terminate the lease on the date of sale) to find alternate housing. Second, the House Bill would thwart those trying to take advantage of the less fortunate by getting rent money from a clueless tenant during the foreclosure action, and then getting rid of the tenant after the sale.

Hopefully, House Bill 626 will go quickly through the legislative process to prevent faithful tenants who pay their rent, from ending up on the sidewalk, with little or no warning, just because they made an unfortunate choice of Landlord.

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