Michigan Modifies Provisions Regarding Foreclosures
by: Zachary Pearlstein
Michigan has revised various regulations concerning the redemption of foreclosed property. The revised bill, which is effective immediately, contains the following provisions:
1) A purchaser’s deed is void if the mortgagor (or their heirs or personal representative), or any person lawfully claiming under the mortgagor, redeems the sold premises by paying the required amount, within the applicable time limit, to the purchaser (or their personal representative or assigns), or to the register of deeds where the deed has been deposited for the purchaser.
2) The amount to be paid for a redemption is the amount that was bid for the entire premises, interest from the date of the sale (at the interest rate provided for by the mortgage), the amount of the sheriff’s fee paid by the purchaser, and an additional $5.00 fee for the care and custody of the redemption money if the payment is made to the register of deeds. The purchaser must provide an affidavit with the deed that states the exact amount required to redeem the property.
3) If a separate parcel of a larger foreclosed lot is redeemed, the deed is void only to the redeemed parcel.
4) If after a sale, the purchaser pays either- taxes assessed against the property, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or premiums on an insurance policy covering any buildings located on the property- redemption shall be made only upon payment of the sum specified in subsection 2) plus those amounts, with interest. The following must be filed with the register of deeds where the deed is deposited:
a) An affidavit by the purchaser or someone on their behalf who has knowledge of the facts of the payment showing the amount and items paid;
b) The receipt or copy of the canceled check showing the payment of the taxes, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or insurance premiums; and
c) An affidavit of an insurance agent of the insurance company stating that the payment was made and what portion of the payment covers the premium for the period before the expiration of the period of redemption.
The bill sets forth the following redemption periods:
- For a mortgage executed on or after January 1, 1965, of commercial or industrial property, or multifamily residential property in excess of 4 units, the redemption period is 6 months from the date of the sale.
- For a mortgage executed on or after January 1, 1965, of residential property not exceeding 4 units, if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66-2/3% of the original indebtedness secured by the mortgage, the redemption period is 6 months.
- For a mortgage of residential property not exceeding 4 units, if the property is abandoned as determined under section 3241, the redemption period is 1 month.
- If the property is abandoned as determined under section 3241a, the redemption period is 1 month or until the time to provide the notice required by section 3241a(c) expires, whichever is later.
- For a mortgage of property that is used for agricultural purposes, the redemption period is 1 year from the date of the sale.
During the redemption period, the purchaser may inspect the exterior and interior of the property. If inspection is unreasonably refused or if damage has occurred, the purchaser may immediately commence summary proceedings for possession of the property or file an action for any other relief necessary to protect the property from damage. If a judgment for possession is entered in favor of the purchaser, the right of redemption is extinguished and full title to the property vests in the purchaser.
About the Author:
Zachary Pearlstein is Associate Counsel and Compliance Specialist at Bankers Advisory. He is a graduate of Brandeis University and earned his Juris Doctor at Suffolk Law School. He is admitted to the Massachusetts Bar. Zachary can be reached at zachary@bankersadvisory.com
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