The Ohio Supreme Court has ruled that an unusual foreclosure process that can result in people’s homes being sold without compensation for their equity should remain legal in the Buckeye State.
However, in a recently released opinion, the state justices couldn’t agree on the reasoning behind it.
Three justices joined the majority opinion, but they declined to comment on the constitutional issues presented by the case involving what are called “administrative foreclosures,” saying that they would not stop the process because the law governing these procedures was not “patently and unambiguously” unconstitutional.
Not to be confused with expedited foreclosures, administrative foreclosures send abandoned properties to a county’s board of revision, a committee that usually considers home values for property owners wanting to contest their taxes. The board can then give foreclosed properties to the local land bank, which can clear any debts on the property and give them to local businesses to revamp and resell.
Eye on Ohio previously reported on thousands BOR foreclosures in Montgomery and Cuyahoga Counties in 2019. In those cases, local land banks wiped out at least $11.2 million in tax liens. Homeowners and banks lost up to $77 million in home equity.
Elliot Feltner, a Cleveland landowner, sued the board in 2018 arguing that the process was an unconstitutional government seizure without compensation. The board had foreclosed upon his property, worth $144,500 in county records. In a sheriff’s sale, the state would have recovered the $68,089 owed to taxpayers and he would have received the rest. But under the BOR foreclosure, both he and the state got nothing.
Though they lost, Feltner’s counsel, former Ohio Attorney General Marc Dann, filed the opinion as a Notice of Supplemental Authority in both federal cases where he is litigating similar issues, one in Montgomery County and one in Cuyahoga County.
“One of the things we have to prove is that there’s no adequate remedy under state law. And I think the fact that Mr. Feltner was turned down demonstrates that people who have their properties taken who have equity, and have their properties given to government entities without payment, they don’t have any good remedies under law in the state courts because of the way the statute was structured,” Dann said.
Opposing Counsel Gus Frangos said the administrative foreclosure process was an important way to prevent blight.
“At what point does it become a harm to all the surrounding neighborhoods, these properties?” he continued. “So No. 1, it applies to them. And No. 2, these cases don’t just happen when a person wakes up and loses his property. They get letters. They get served with notice. They get an opportunity to appear. And they ignore it all.”
At the Ohio Supreme Court, Justice Sharon Kennedy agreed to the judgment, but not the reasoning behind it.
Justice Pat DeWine also ruled for the county, but in a concurring opinion he laid out very different reasons: He said that the court should have addressed the constitutional issues, but that administrative foreclosures were very similar to normal taxing practices in the nineteenth century.
Justice Patrick Fischer and Chief Justice Maureen O’Connor also agreed on the outcome, but they wrote a concurring opinion explaining their reasoning. They said the case should have been dismissed for procedural reasons, but the constitutional issues “cannot and should not be avoided” and that the majority opinion used “circular reasoning” to avoid getting to the heart of the issue.
“The whole scheme is unsettling and just seems wrong,” Fischer wrote.