A real estate investor in Ohio purchases a property at a sheriff's sale following a tax foreclosure. The sale price is $80,000, but the delinquent taxes, penalties, and costs total $55,000, while the property had a first mortgage balance of $120,000. After the sale, what is the status of the mortgage?
Correct Answer
A) The mortgage is extinguished by the tax foreclosure sale, and the buyer receives clear title
In Ohio, a judicial tax foreclosure sale (under ORC Chapter 5721) extinguishes subordinate liens, including mortgages. Property tax liens are superior to mortgage liens, and a completed tax foreclosure sale conveys the property free and clear of the subordinate mortgage. The lender's remedy was to pay the delinquent taxes or participate in the foreclosure proceedings.
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