By Callie J. Channell, Esq.

Reimer Law Co.*

USFN Member (KY, OH, WV)

Ohio firms need to think twice before lumping all advances into one general request after a recent decision. In September 2024, the Ohio 8^th District Court of Appeals, in Lakeview Loan Servicing, LLC v. Soldat, 2024-Ohio-4676, clarified the process to recover reimbursement of condominium association dues advanced by a lender. By extension, the case would likely apply to recovery of homeowner association dues advances in Ohio. The case highlights the importance of specifically pleading the right to such reimbursements in foreclosure filings.

In Soldat, the mortgage included a condominium rider, which was incorporated into the mortgage and allowed for condominium dues and assessments to be paid by the lender, if not paid by the borrower. The rider called for such lender payments to become debt secured by the mortgage if a notice was sent to the borrower requesting payment and the borrower subsequently failed to make the payment.

Upon default under the terms of the loan, the loan servicer initiated a foreclosure action. The servicer successfully obtained a judgment and, having paid condominium dues and other advances, sought to be reimbursed by the sale proceeds for such advances. However, the servicer did not reference the condominium rider in the complaint, object to the magistrate’s decision, or appeal the final foreclosure decree, so none of these rulings specifically awarded reimbursement for the condominium dues advanced.

After the property sold, the servicer filed a motion to be reimbursed for all prior advances, including the condominium dues. It did so pursuant to the mortgage terms, which included the condominium rider, and R.C. 5301.233, which states:

In addition to any other debt or obligation, a mortgage may secure unpaid balances of advances made, with respect to the mortgaged premises, for the payment of taxes, assessments, insurance premiums, or costs incurred for the protection of the mortgaged premises, if such mortgage states that it shall secure such unpaid balances. A mortgage complying with this section is a lien on the premises described therein from the time such mortgage is delivered to the recorder for record for the full amount of the unpaid balances of such advances that are made under such mortgage, plus interest thereon, regardless of the time when such advances are made.

The trial court approved the servicer’s reimbursement for its other advances but denied the request for reimbursement of the payment of condominium association dues. The court’s order of confirmation followed, in which it reasoned in a footnote that neither the foreclosure decision in that case, nor Ohio law, provided for reimbursement of advances for condominium dues.

The Court of Appeals upheld the trial court’s decision, determining that reimbursement under Ohio law does not extend to condominium dues, citing R.C. 5311.18(B)(5), which only covers "common expenses" and not "dues."

The appellate court’s decision noted that the servicer failed to refer to the condominium rider in its complaint, and that the servicer should have objected to the magistrate’s recommendation or appealed the final judgment on the basis that neither ruling specifically called for the reimbursement of post-judgment association dues.

Applying the court’s reasoning to homeowner associations, it can be presumed that a court would rule the same way under similar facts, pursuant to R.C. 5312.12(C)(3), which also only covers an owner’s portion of the common expenses.

Therefore, for successful reimbursement of any condominium or homeowner association dues, language specifically including and pleading for such reimbursements must be included in Ohio foreclosure filings and corresponding judgments. Servicers and their counsel are cautioned against the one-lump-sum request for such advances. Instead, they must review legal documents, such as complaints, judgment motions, and proposed entries, to ensure compliance with this recent ruling. Firms are obtaining this information at referral, and servicers will freely provide more detailed information about their advances if needed, so partnering together to make this simple correction will be worthwhile.

There has been no subsequent appellate history.

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USFNews - May 7,2025

* Denotes firm is a 2024 USFN Award of Excellence recipient.