Ohio Appeals Court: Failure To Give Delinquent Borrower Notice Of Acceleration Of Amounts Due Sinks Lender's Foreclosure Attempt

An Ohio appeals court recently reversed a lower court ruling and held that a lender was not entitled to summary judgment in a foreclosure action where it failed to plead and establish that it provided a delinquent homeowner/borrower a notice of acceleration before commencing a foreclosure action, as required by the terms contained in paragraph 22 of the subject mortgage.(1)

The court rejected the lender's claim that the homeowner/borrower, by failing to raise this issue in its answer to the foreclosure complaint, constituted a waiver of an affirmative defense. It addressed the lender's claim as follows (bold text is my emphasis, not in the original text of the ruling):

• The notice requirement set forth in paragraph 22 is not an affirmative defense. Rather, "[w]here prior notice of default and/or acceleration is required by a provision in a note or mortgage instrument, the provision of notice is a condition precedent," and it is subject to the requirements of Civ.R. 9(C). First Financial Bank v. Doellman, 12th Dist. No. CA2006-02-029, 2007-Ohio-222, ¶20.

• Pursuant to Civ.R. 9(C), "[i]n pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity." In the instant case, LaSalle did not allege in its complaint, even generally, that it complied with the requisite condition precedent. Doellman, supra, at ¶21. "Under these circumstances, the [Kellys] were not required to plead with specificity that the bank failed to provide them with notice of default. Rather, it was sufficient that the [Kellys] alleged that the bank failed to state a claim upon which relief may be granted. Consequently, the [Kellys] appropriately raised the lack of notice in their opposition to the motion for summary judgment." Id.

For the ruling, see LaSalle Bank, N. A. v. Kelly, 9th Dist. No. 09CA0067-M, 2010-Ohio-2668 (June 14, 2010).

(1) According to the court ruling, paragraph 22 of the mortgage provided as follows:

• "Lender shall give notice to Borrower prior to acceleration following Borrower's breach of any covenant or agreement in this Security Instrument ***. The notice shall specify: (a) the default; (b) the action required to cure the default; (c) a date, not less than 30 days from the date the notice is given to Borrower, by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by this Security Instrument, foreclosure by Judicial proceeding and sale of the Property."