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» VISIT US ONLINE @ DSNEWS.COM 85 based on a claim made on real property. MCL §600.3252 simply provides that a claimant must prove to the Court its right to the proceeds. In fact, in the recent decision of Moon Lake Condominium Association v. RBS Citizens et al, unpublished opinion per curiam of the Court of Appeals, issued November 12, 2015 (Docket No. 323576), the Michigan Court of Appeals confirmed that a claimant is not required to provide notice to any other parties that would claim a right to the remaining sale proceeds. Once the claimant has provided proof sufficient for the Court, the Court will enter an order granting the claimant's request and release the funds to the claimant. Although MCL §600.3252 clearly does not apply in the situation where the foreclosing mortgagee has not been satisfied, it provides some guidance towards a remedy that can be claimed by an unsatisfied foreclosing mort- gagee where proceeds remain following a foreclosure sale. At the moment, the Courts seem to be allowing unsatisfied mortgagees to make claims based on the process outlined by MCL §600.3252, even though the claims are not technically made pursuant to the statute. Some firms, however, have taken the path of filing standard civil lawsuits naming the bor- rowers as the defendants, and pursuing judg- ments stating that the foreclosing mortgagee is entitled to the proceeds. Since the Legislature is silent regarding this situation, it cannot be said with certainty at this time which course of action is technically the most proper. With the rise of mortgage lenders and servicers considering fair market value in the amount they are willing to bid at a foreclosure sale, it may be time for mortgage lenders and servicers to lobby the Michigan Legislature to enact a clear procedure as to how foreclosure by advertisement proceeds are to be distrib- uted in an effort to ensure there is no longer uncertainty in these third-party purchaser situations. OHIO Ohio Supreme Court Closes Door on Mortgage Avoidance Actions By Rick D. DeBlasis On February 16, 2016, the Ohio Supreme Court closed the door on mortgage avoid- ance actions based on a defect in execution where the mortgage has been recorded. See, In re Messer, Slip Opinion 2016-Ohio-510. Effectively reversing 200 years of Ohio jurisprudence, a unanimous Court held that a new Ohio statute, R.C. 1301.401: (1) applies to all recorded mortgages in Ohio; and (2) acts to provide constructive notice to the world of the existence and contents of a recorded mortgage that was deficiently executed. Compare John- ston v. Haines, 2 Ohio 55 (1825) ("…the mere fact of recording a deed, without the legal requisites, gives it no validity."); Citizens National Bank v. Denison, 165 Ohio St. 89, 133 N.E.2d 329 (1956) ("A mortgage by two persons is not properly executed in accordance with the provisions of R.C. 5301.01, and is not entitled to record under R.C. 5301.25, and the record- ing thereof does not constitute constructive notice to subsequent mortgagees, where there is a failure to follow the statutory require- ments…"). e Messer case began, as defective mortgage cases often do, in the bankruptcy court. Daren and Angela Messer are owners of a home located in Canal Winchester, Ohio, which they bought with the help of a mortgage loan. e Messers initialed each page and signed the mortgage. It is recorded with the county recorder. But, there is no notary signa- ture following the acknowledgement clause. e Messers filed a Chapter 13 bankruptcy and instituted an adversary proceeding to remove the mortgage from their home due to the execution defect. e mortgagee moved to dismiss arguing that R.C. 1301.401 enacts a change in Ohio law, such that an interest holder can no longer claim bona fide purchaser status and can no longer seek to avoid a defec- tive, but recorded, mortgage. Upon reviewing the briefing of both Par- ties and the arguments made at the hearing on Defendant's Motion to Dismiss, this Court determined that its interpretation of O.R.C. §1301.401 would be dispositive of the case. Upon research, this Court found no interpretation of O.R.C. §1301.401 by the Supreme Court of Ohio – or any other court. ere is no dispute in this case that the Mortgage was improperly executed under O.R.C. §5301.01, and there is no dispute that prior to the enactment of O.R.C. §1301.401 the Plaintiffs could have avoided the mortgage. e questions concern whether the new statute changes the result. e bankruptcy court asked the Ohio Supreme Court for the answer. e Supreme Court focused entirely on the language of R.C. 1301.401, which it found to be unambigu- ous. If the mortgage is of record, defects in its execution will not render it subject to attack by an erstwhile "bona fide purchaser." Minnesota www.MinnesotaREO.com 612-669-6324 952-829-2938 763-432-7640 612-821-7500 952-844-1511 763-533-9133 651-209-8444 507-424-6026 Bruce McAlpin Jeff Detloff Long H. Doan Maribel Garcia Garth Johnson Craig Murphy Michael Olsen Brian Rossow Ohio's delinquency rate (percentage of mortgage loans 30 days or more past due but not in foreclosure) of 5.6 percent for January 2016 was a half of a percentage point higher than the national average for the month (5.1 percent). The foreclosure rate in Ohio in January was 2.0 percent, about a third higher than January's national average of 1.3 percent). Ohio's non-current inventory in January, which includes all residential mortgage loans 30 days or more overdue and in foreclosure, was 7.6 percent— which was more than a percentage point higher than the national average for the month of 6.4 percent, but still a year- over-year decline of 13.4 percent, according to Black Knight Financial Services. KNOW THIS

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