• Changes to Ohio Law Impact Dormancy and Execution Rules for Judgment Creditors
  • June 2, 2017 | Author: Thomas R. Kendall
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Cincinnati Office
  • A lawsuit is filed, judgment is awarded and the defendant still fails to pay the creditor. This scenario is all too common; it can sometimes take years and require multiple strategies to collect a judgment. In Ohio, a judgment eventually becomes dormant, unless steps are taken to keep it active. Recent changes to Ohio law have updated creditors' rights regarding dormancy. In addition, when a judgment creditor seeks to attach a defendant's property, streamlined procedures are now available if a third party claims ownership of that property. 

    Ohio Senate Bill Updates Judgment Dormancy Rules
    Under longstanding Ohio law, a judgment is active for a period of five years, unless a creditor takes certain action to extend it.1 Without taking such action, a judgment becomes dormant, and a creditor may not execute on it. There are many pitfalls to a dormant judgment: a lien securing it expires and cannot be enforced until the underlying judgment has been revived; and subsequent judgment creditors can step ahead of a dormant judgment.2 Judgment interest accrual is also suspended during the period of dormancy.3 Therefore, it's in the best interest of a judgment creditor to prevent the judgment from going dormant.

    Traditionally, issuing an "execution" or filing a certificate of judgment (judgment lien) staved off dormancy. In the past there has been confusion as to when or whether a judgment became dormant. The word "execution" was not defined in Ohio Revised Code Chapter 2329. Did a wage garnishment or bank account count as an execution? How about a debtor's exam? To clear up any confusion, Ohio Senate Bill 227 was passed into law last year, to amend ORC 2329.07. The changes took effect April 6, 2017. 

    The amendment defines "execution," effectively limiting its meaning to writs for the levy and sale of a judgment debtor's property.4 However, the revised law also adds to the list of methods to defer dormancy. The new language makes it clear the issuance, or continuation, of a wage or bank garnishment order will keep the judgment active for another five years.5 Also, a proceeding in aid of execution, including a judgment debtor examination, can prevent dormancy.

    These amendments should clear up any misunderstanding as to when or whether an Ohio judgment becomes dormant. The amended law should also reduce the occurrence of dormancy by expressly adding garnishments and debtor's exams to the list of actions which keep a judgment active. Any reduction in judgment dormancy benefits creditors and conserves court, clerk, and attorney resources. 

    Ohio House Bill Partially Streamlines Judgment Execution Procedures
    Ohio's judgment execution statutes have changed little since the 19th century. One of those statutes addresses attaching personal property of a defendant, through a levy. The result is a procedure for the levy of execution which imposes requirements for appraisal, notice, handling of exemptions and ownership disputes, and manner of sale - which are out of step with modern customs. Although last year's House Bill 390 modernized many provisions for the sale of real property after foreclosure, its scope was limited.

    Fortunately, Ohio lawmakers did give judgment creditors and courts partial relief with House Bill 347, which amended ORC 2329.84, effective April 6, 2017. That section outlines procedures for ownership dispute resolutions over levied property. Traditionally, if property levied upon was claimed by a third party, the court was required to immediately summon a jury of five "men" to appear within three days and conduct a trial on the property's ownership.7 The requirement for a jury trial within such a short time was impractical, given the volume of collection cases passing through Ohio's modern court system. 

    As a result, this procedure was not widely followed. Moreover, the risk that any property levy could result in the need to conduct a trial on short notice likely had a chilling effect on the use of writs of executions by creditors and their attorneys. The amended law instead requires a hearing on the issue of ownership "as soon as is practicable" after a dispute is raised.8 At the hearing, the judge sits as the trier of fact, instead of a jury.9  

    Taken together, these recent Ohio law revisions are a common-sense reform of Ohio's levy of execution statute. They give both parties their day in court, without unduly burdening the parties and the legal system. Additional questions regarding this update to judgment creditor law in Ohio can be answered by an attorney within the Consumer and Commercial Collections unit at Weltman, Weinberg & Reis Co., L.P.A.

    1 R.C. §2329.07(A) (eff. until 4-6-17)
    2 R.C. §2325.15, et seq.
    3 R.C. §2325.18(B)
    4 R.C. §2329.07(A) (eff. 4-6-17)
    5 Id. at (B)(2)(c)
    6 Id. at (B)(2)(d)
    7 R.C. §2329.84 (eff. until 4-6-17)
    8 R.C. §2329.84 (eff. 4-6-17)
    9 Id.