Real Estate Blog
Kalamazoo - Real Estate Law Blog

Liability for Damage During Redemption Period

Posted January 5, 2017

The mortgagor and any other person liable on the mortgage is liable to the purchaser or any other holder of the title to the property for any physical injury to the property beyond wear and tear resulting from the normal use of the property if the physical injury is caused by or at the direction of the mortgagor or other person liable on the mortgage. MCL 600.3278(1). Moreover, if the purchaser provided notice pursuant to MCL 600.3237 (notice regarding interior inspection) and the mortgagor intends to move from the property, the mortgagor must inform23 the purchaser at least 10 days before vacating the property so that the property may be secured. MCL 600.3278(2).

If the purchaser provided notice under MCL 600.3237, two different rebuttable presumptions apply depending on the circumstances. There is a rebuttable presumption that the mortgagor is liable to the purchaser at the foreclosure sale for all damage to the property that occurs before the expiration of the redemption period if the mortgagor does any of the following:

  • Subject to MCL 600.3238, fails to consent to an initial inspection, comply with a request for information on the condition of the property, or consent to an inspection of the property after the initial inspection, if requested.
  • Fails to provide timely notice to the purchaser under this subsection.
  • Fails to surrender control of the property in a manner that reasonably provides the purchaser with the opportunity to secure it.

There is a rebuttable presumption that the mortgagor is not liable for damage to the property that occurs after the mortgager surrenders control of the property if the mortgagor does all of the following:

  • Subject to MCL 600.3238, consents to an initial inspection, complies with a request for information on the condition of the property, and consents to inspections of the property after the initial inspection, if requested.
  • Provides timely notice to the purchaser under this subsection. This information may be conveyed by electronic mail, certified mail, or any other method reasonably calculated to achieve actual notice.

MCL 600.3278(2).

 

Redemption

Posted December 20, 2016

After the foreclosure sale, the mortgagor, his or her heirs or personal representative, or persons with a recorded interest in the property claiming under any of those individuals have a specific period of time in which to redeem the property by paying the sum that was bid for the premises, with interest at the rate set by the mortgage, plus other costs for which the mortgagor would have been responsible if the mortgagee had not foreclosed on the property, including interest on those costs. MCL 600.3240(1)‐(2); MCL 600.3240(4).

The length of the redemption period varies depending on the type of property. Where no other period is specified for the property, and subject to the inspection requirements and prohibition against damage to the property as outlined in MCL 600.3238 the period of redemption is one year from the date of the foreclosure sale. MCL 600.3240(12). Redemption periods specific to certain properties are as follows: Subject to the inspection requirements and prohibition against damage to the property as outlined in MCL 600.3238, six months for commercial or industrial property or multifamily residential property with more than four units. MCL 600.3240(7). Subject to the inspection requirements and prohibition against damage to the property as outlined in MCL 600.3238, six months for residential property with not more than four units if:

  • The amount due on the mortgage is more than 66‐2/3 percent of the original debt,
  • The property has not been abandoned, and
  • The property is not used for agricultural purposes. MCL 600.3240(8).
  • One month for residential property with not more than four units that was abandoned (as determined under MCL 600.3241) before the initiation of foreclosure proceedings. MCL 600.3240(9).

One month30 days or until the expiration of the time period for providing notice in MCL 600.3241a(c), whichever is later, for residential property with not more than four units that was abandoned (as determined under MCL 600.3241a) after the initiation of foreclosure proceedings. MCL 600.3240(10).

Subject to the inspection requirements and prohibition against damage to the property as outlined in MCL 600.3238, one year for property used for agricultural purposes. MCL 600.3240(11).

 

Mortgage Foreclosures by Advertisement

Posted November 15, 2016

A power of sale is a clause written into a mortgage that authorizes the mortgagee (lender) to foreclose on the mortgage without court involvement in the case of nonpayment of the debt or other sufficient default by the mortgagor (buyer). See Black’s Law Dictionary (9th ed). The mortgagee forecloses by advertising its intentions to foreclose and then having the property sold at a public sale for the outstanding debt. MCL 600.3201. A power of sale is strictly a contractual arrangement to remove the prohibition against foreclosure by advertisement when the property is claimed as a tax‐exempt principal residence and certain other conditions exist.

A power‐of‐sale clause is invalid unless it complies with the statutory notice requirements in MCL 600.3208 and MCL 600.3212.MCL 600.3201 states that a mortgage with a power of sale may be foreclosed by advertisement when there has been a default in any of the mortgage’s conditions. However, statutory foreclosures are a matter of contract, authorized by the mortgagor, and ought not to be hampered by an unreasonably strict construction of the law.

MCL 600.3201

Gherke v Janowitz, 55 Mich App 643, 646‐647 (1974).

 

Forfeiture of Land Contracts

Posted October 6, 2016

If the terms of a land contract expressly provide for termination or forfeiture of the contract following nonpayment of moneys due or any other material breach of the contract, summary proceedings under MCL 600.5726 may be appropriate. Default alone is not forfeiture; notice of intent to forfeit is necessary. Purchasers of real property by land contract generally do not willingly surrender possession or forfeit their equity, and most sellers of real property by land contract seek payment not possession.

If a vendee does agree to forfeit his or her equity and return possession of the property to the vendor in response to a vendor’s notice of forfeiture, the vendor is then required to decide whether to accept possession or to seek a deficiency judgment. Unless the parties have a written agreement for a longer time, a vendee or person holding possession under him or her has 15 days from the date he or she was served with a notice of forfeiture to pay the moneys required under the contract and to cure any material breaches, or to surrender possession of the property. MCL 600.5728(1). Under MCL 600.5728(2), a notice of forfeiture must:

  • state the names of the contracting parties,
  • state the date the contract was executed,
  • provide the address of the premises (or a legal description),
  • specify the amount of money required to be paid under the contract that remains unpaid,
  • specify the dates on which the unpaid payments were due,
  • indicate whether any other material breaches of the contract occurred, and
  • declare the contract forfeited no less than 15 after the notice was served, unless the amount of money owed is paid and any other material breaches are cured within that time.

 

 

 

 

 

 

 

 

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