March 23, 2015
Mortgage lenders in Ohio have one more reason to keep their customers “satisfied”. The Ohio legislature has revised the statutory provisions regarding satisfaction of mortgages. The revised statute, which takes effect on March 23, 2015, provides for stiff penalties against lenders who fail to timely file a release of mortgage upon satisfaction by the borrower.
Under the current statute, which applies only to residential mortgages, a lender may be liable for civil damages of $250 for its failure to record a release of mortgage within 90 days of satisfaction by the borrower.
The revised statute covers both residential and commercial mortgages and adds additional remedies for borrowers when a lender fails to timely record a release. Under the revised statute, if a lender fails to record a release of mortgage within 90 days of satisfaction, the borrower may send the lender a notice, which operates as a “last warning” for the lender to hurry up and record a release. If the lender fails to record a release within 15 days of receiving the notice, the borrower may file a civil action and recover from the lender damages of $100 per day for each day of noncompliance (up to $5,000), as well as attorneys’ fees and costs.
The revisions were borne out of title searching problems caused by mortgages which had been satisfied but not released. Perhaps unfazed by the relatively small penalty imposed by the current statute for failure to timely record a release, many Ohio lenders delayed in filing releases until several months after satisfaction. Consequently, mortgages which had been paid in full appeared as valid liens in title searches. The revised statute gives lenders a strong incentive to timely record releases, which will hopefully increase the accuracy of title searching.
If you are a borrower or lender with questions regarding the revised statute or mortgage lending in general, please contact an attorney in RCO Law’s Business Group.