A mortgage holder had the right to take back a Coshocton property that was the subject of a tax foreclosure when the owners did not pay taxes on the land, according to a decision today from the Ohio Supreme Court.

Under state law, “any person entitled to redeem the land” includes “any owner or lienholder of, or other person with an interest in” the subject property, Chief Justice Maureen O’Connor wrote in the court’s unanimous decision.

The ruling reverses the judgment of the Fifth District Court of Appeals.

Vanderbilt Mortgage and Finance became the holder of a promissory note and mortgage on a mobile home and land purchased by Brandi L. Wagner and Troy Wagner in June 2003. The Wagners did not pay taxes on the property, so the Coshocton County treasurer began a tax foreclosure proceeding for $825.84 in delinquent taxes. The county clerk of court notified Vanderbilt of the tax foreclosure, as required by state law.

Because the Wagners did not respond to the foreclosure complaint, the trial court issued a default judgment and ordered the sheriff to sell the property.

At one sale, Vanderbilt bought the mobile home. At a second sale, the highest bidder won the land and then deeded the property to Alan and Janette Donaker, Brandi’s father and stepmother. (Janette Donaker is also the Coshocton County treasurer, which the court found not relevant to the issues in this case.)

Before the sale of the land was confirmed, Vanderbilt filed a notice to redeem the property and deposited money with the county clerk to cover the delinquent taxes, other charges, and the costs of the foreclosure action.

In December 2011, the trial court found that Vanderbilt was a “person entitled to redeem” the land under R.C. 5721.25. Alan Donaker and the county treasurer appealed. The Fifth District reversed the trial court’s decision, and Vanderbilt filed an appeal with the Ohio Supreme Court.
R.C. 5721.25 allows “any person entitled to redeem the land” to do that after a tax foreclosure action has begun but before the confirmation of a sale has been filed if the person pays the taxes and costs and shows that the property complies with certain regulations.

In today’s opinion, the court considered the legislature’s intent in enacting the statute.

“In R.C. Chapter 2329, which governs judicial foreclosure proceedings such as mortgage foreclosure, the General Assembly specifically limited the right of redemption to ‘the debtor,’” Chief Justice O’Connor wrote. “But in R.C. 5721.25, the legislature instead utilized broader language by granting the right of redemption in a tax foreclosure proceeding to ‘any person entitled to redeem.’ Given the General Assembly’s use of the phrase ‘any person’ in R.C. 5721.25, we hold that it did not intend to restrict the right of redemption in a tax foreclosure proceeding to only the property owner as it did for mortgage foreclosure proceedings.” (Emphasis added.)

In addition, another section of the tax foreclosure law spells out the language to be used in notices of proceedings and states that “any owner or lienholder of, or other person with an interest in, a parcel listed in the complaint may redeem the parcel.”

“The statutory provisions demonstrate that the legislature recognized multiple competing interests at a sheriff’s sale, including those of the owner,” the chief justice reasoned. “The purchaser at a sheriff’s sale is on notice that the sale is not final until confirmation. Before confirmation, the owner can redeem the property just as a lienholder or other person with an interest in the property can ….  Any perceived inequity caused by our holding to purchasers or property owners like the Wagners must be balanced against the rights of others with competing interests, including those of a mortgagee, or lienholder, to protect its interest in the property where a mortgagor, or property owner, has fallen delinquent in tax payments. This tension presents a public-policy concern that is the purview of the legislature. Our role is to apply the language of the statute that is the legislature’s expression of public policy.”

The court noted that the record is unclear, though, whether Vanderbilt paid enough to redeem the property and whether the county clerk paid the treasurer, so the case will be sent back to the trial court to make that determination.

2013-0713. In re Foreclosure of Liens for Delinquent Land Taxes v. Parcels of Land Encumbered with Delinquent Tax Liens, Slip Opinion No. 2014-Ohio-3656.

View oral argument video of this case.

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