Introduction

In a recent case from the Court of Appeals of Ohio, the Court assessed the timeliness of a third-party’s motion to intervene in a foreclosure litigation. The court ultimately found that the intervention motion was untimely as the third party: (1) waited over six years before moving to intervene and (2) acquired its interest in the property at a time when the foreclosure action was pending and parties to foreclosure served and was thus subject to the doctrine of lis pendens in Ohio. The doctrine of lis pendens prevents parties who acquired an interest during the pendency of a foreclosure from challenging a trial court’s judgment. Nationstar Mortgage, L.L.C. v. Scarville, 2024-Ohio-1580, at ¶ 12.

Background

Ivelaw Scarville owned a property in Garfield Heights, Ohio that went into foreclosure in 2014. In November 2014, Nationstar Mortgage L.L.C. (Nationstar) was granted a judgment in foreclosure regarding this property. Though Nationstar proceeded to execute the judgment, in September 2015 they filed a motion to withdraw the sheriff’s sale and it was cancelled.

No action was taken until July 2022 when Nationstar filed a motion to substitute Real Time Resolutions, Inc. (Real Time Resolutions) as the plaintiff and Real Time Resolutions filed a motion to revive the judgment in foreclosure. Though the motion to revive was sent to the property in Garfield Heights by regular mail, it was not served by the Clerk of Courts to Scarville’s successors or assigns. The court granted the motion in August 2022, and Real Time Resolutions was the highest bidder on the property at the subsequent sale, which was confirmed in December 2022.

The Woodsons had purchased the property from Scarville in 2016. When the sheriff’s sale was confirmed in December 2022, the Woodsons filed a notice of appeal of the confirmation of sale. They moved to remand the case so they could intervene in the pending foreclosure action. Though the remand was granted, their motion to intervene was denied as untimely. The Woodsons then filed a notice of appeal to challenge the denial of their motion.

Appeal

In determining whether the Woodsons’ motion was untimely, the court relied on the factors set in  State ex rel. First New Shiloh Baptist Church v. Meagher, 82 Ohio St.3d 501, 503 (1998), to wit:

• How far the suit has progressed,
• The purpose for which the intervention is sought,
• The length of time preceding the application during which the proposed intervenor knew or reasonably should have known of his interest in the case,
• The prejudice to the original parties due to the proposed intervenor’s failure to promptly apply for intervention, and
• Any unusual circumstances weighing heavily against or in favor of the intervention.

Under this test, the court found that the Woodsons’ motion to intervene was untimely for a number of reasons.

First, the Court found that it would be unfairly prejudicial to the original parties as the litigation had already concluded and the property was sold before the Woodsons filed the motion to intervene. In that vein, the Court noted that the “Woodsons moved to intervene in the case more than eight years after the foreclosure judgment and six and one-half years after they acquired an interest in the property.” Nationstar Mortgage, L.L.C., 2024-Ohio-1580, at ¶ 11.

Second and critically, the Court reaffirmed that the Woodsons’ interest in the property was subject to the doctrine of lis pendens. That is, the doctrine of lis pendens prevents third parties who have acquired an interest in a property during pendency of a foreclosure action after service has been made from challenging a trial court’s final judgment in foreclosure. This was so even though the judgment laid dormant for over six years after it was rendered. The undisputable fact was that when the Woodsons bought the property, the foreclosure judgment was of record and thus should have put them on notice.

Finally, the equities weighed against the Woodsons. When they bought the property, the Woodsons did not conduct a title search and did not acquire title insurance. Had they done this, they would have known that another interest in the property had priority over theirs before they even made the purchase.

The Court therefore held that the Woodsons’ motion to intervene was untimely and they lacked any standing to challenge the trial court’s decision on its merits.

Takeaways

This case demonstrates the importance of the doctrine of lis pendens in Ohio as to foreclosures or any litigation affecting real estate. When buying a property, the history of litigation that the property was and may be involved in has to be examined. The surest way of doing that and protecting oneself from the doctrine of lis pendens is to order title insurance.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Matthews Florez at mflorez@riker.com, Kori Pruett at kpruett@riker.com or summer associate Keshav Agiwal, a law student at the University of Richmond School of Law.