To the Council of Delegates:
The OSBA Real Property Law Section respectfully requests your favorable consideration of the following legislative proposal. The proposal would modify the provisions of ORC §3929.18 with respect to the duration of a lien of a mutual insurance company upon a building insured by such company. Current law does not limit the duration of the lien. The proposal would impose a period of five years from the date of filing a certificate with the county recorder.
Charles F. Allbery,Dayton
Proposal to limit the duration of a lien of a mutual insurance company to five (5) years.
The OSBA Real Property Law Section Board of Governors has approved a modification to Section 3929.18, Ohio Revised Code, which is captioned "Lien of mutual companies for premium notes." The statute authorizes a lien of perpetual duration. The statute was last amended in 1963. Several members of the Board of Governors have experienced practical difficulties in clearing title of such liens that had been of record for longer than a decade. In some cases the company was no longer in existence.
Unlike other statutory liens upon real property, a lien of mutual companies does not arise by action of a state or federal agency, nor does it arise out of a court’s judgment entry. Rather, it is merely filed by the entity that asserts the lien, without an adjudication as to the validity of the claim (i.e., that a premium is past due). Moreover, there is no provision to "bond off" this lien as there is for a mechanic’s lien. Therefore, this lien appears most analogous to Section 5311.18, Ohio Revised Code, which provides for a lien of a condominium unit owners association.
The proposal amends Section 3929.18, Ohio Revised Code, by adding the following sentence (similar to the language used in Section 5311.18, Ohio Revised Code):
The lien is valid for a period of five years from the date of filing, unless sooner released or satisfied in the same manner provided by law for the release and satisfaction of mortgages on real property or discharged by the final judgment or order of a court of competent jurisdiction.
The Real Property Law Section proposes that the five year period is a reasonable duration, as it will be consonant with the analogous statute for condominium association liens and the duration of civil judgment liens. The proposal will serve to benefit property owners and financial institutions and should not unreasonably impair the lien now afforded to mutual insurance companies.
The statute would thus be amended as follows:
Ohio Revised Code
Title 39: Insurance
Chapter 3929: Regulation of insurance companies other than life
ORC §3929.18 Any building insured by a mutual company must be pledged to such company, together with the right and title of the insured in the land upon which it is situated, to the amount of the premium note or contingent liability, and the company shall have a lien on such building and land to the amount of such note or liability. Such lien shall not take effect until the company files, with the county recorder of the county in which the property insured is located, a certificate stating the date, number, and amount of the premium note or contingent liability, and such a description of the property insured as will enable a person readily to identify it. The lien is valid for a period of five years from the date of filing, unless sooner released or satisfied in the same manner provided by law for the release and satisfaction of mortgages on real property or discharged by the final judgment or order of a court of competent jurisdiction.
The recorder must record and index such certificate in his book of liens, for which he shall receive a fee as provided in section 317.32 of the Revised Code.