by Peg Ritenour
Vice President
Legal Services and Administration
As Ohio brokers struggle with the challenges of selling the large inventory of lender owned properties, a continuing issue has been the point at which brokers can take such listings, place them in the MLS and begin the marketing process. The Ohio Division of Real Estate and Professional Licensing has recently clarified this point for REALTORS.
Lenders usually acquire title to foreclosed properties by purchasing them at the sheriff’s sale. Following the auction, the court must confirm the sale. The purpose of this is to confirm that proper procedures were followed. If the sale is confirmed, the court will issue a confirmation order and a sheriff’s deed will be issued.
Unfortunately, this is the point at which the process often gets bogged down. Because of the high volume of sheriff’s sales, it is currently taking several weeks for the sheriff to issue the deed in the lender’s name. However, lenders usually want to list these “REO” properties for sale with a broker and have the broker get them in the MLS as soon as possible.
This has posed a problem for Ohio brokers who have not wanted to run afoul of Ohio license law. Ohio Revised Code Section 4735.18(A)(20) prohibits a licensee from offering property for sale without the knowledge and consent of the owner or the owner’s authorized agent. Historically, the Division has advised licensees that for purposes of this section it interprets the owner to be the person or entity that is indicated on the deed. Thus, licensees were cautioned that they should not take a listing from a lender on an REO property until the sheriff’s deed is issued in the lender’s name.
Because so many REALTORS are under pressure from lenders to list their properties prior to issuance of the sheriff’s deed, OAR asked the Division to clarify this issue. After researching this issue, the Division has indicated that licensees can list a property after confirmation of the sale by the court, but prior to issuance of the deed. According to the Division, for their protection licensees listing an REO property should ask the lender for a copy of the order from the court confirming the sale and ordering the sheriff to issue a deed to the lender.
Licensees are also reminded that the fair housing language and logo are required to be included in the listing agreement. If the lender is using its own listing form, the licensee will need to attach the fair housing language as an addendum. Also, lenders must be provided with the broker’s Consumer Guide to Agency Relationship before the broker markets or shows the property.
A bill that is currently pending in the Ohio legislature is designed to speed up the process of having the sheriff’s deed issued and recorded. HB 138 would require confirmation of the sale within 30 days of the sale and recording of the deed within 14 days of payment of the purchase price. This legislation has been passed by the Ohio House and is expected to have been passed by the Senate at the time of publication of this article.