Jonathan L. Engman, Esq.

Foreclosure By Advertisement Statutory Changes
The five-year saga of changes to Michigan’s foreclosure by advertisement statute may be finally ending. As this update is being written, enrolled house bill 5277 is sitting on Governor Synder’s desk awaiting his signature. The bill takes the statute back to almost its original form before the legislature started toying with it in 2009. In the last statutory change effective January 2014, the legislature did away with the pre-foreclosure modification process for all servicers, except the five that were party to the 2012 consent judgment in United States of America v Bank of America Corp. et al. This latest bill, HB 5277, repeals MCL 600.3206 ending the modification process requirement across the board including those five servicers. With the mandatory loss mitigation process now eliminated from Michigan’s statute, the timeline from referral to sale date is achievable in thirty-five days.

The other major change in the new bill deals with property inspections. In a previous amendment to the statute, the legislature added a provision to allow purchasers at sheriff sales to conduct interior inspections during the redemption period. The statute was vague and raised concerns about the reasonableness of inspections. The new bill adds specific provisions to address these concerns including written pre-inspection notification, limiting the number of interior inspections that can be performed and giving the occupants an opportunity to repair damage. If an inspection is unreasonably refused or if damage to the property has occurred and is not repaired, the purchaser may commence eviction proceedings for possession prior to redemption period expiring.

Condo Fees Assessable From The Date of Sheriff Sale
Regarding the issue of when condo dues are owed following a foreclosure sale, the condominium associations had a recent victory in the court of appeals.  In a recently published opinion, Wells Fargo Bank v Country Place Condominium Association, No. 312733 (2014), the Michigan Court of Appeals held that the purchaser at a sheriff’s sale is responsible for condominium fees from the date of the sheriff’s sale as opposed to the end of the redemption period (if the property is not redeemed). In making its ruling, the court analyzed MCL §559.158 which states, in part, that if a mortgagee of a first recorded mortgage obtains title as a result of foreclosure, the mortgagee is not liable for the assessments chargeable to the unit that became due prior to the acquisition of title to the unit. (Emphasis added). Citing a Michigan Supreme Court case from 1926, the court held that the purchaser at a sheriff’s sale becomes the owner of an equitable interest in the property that becomes absolute once the redemption period expires.  Since the statute only references “title” and does not delineate between what kind of title, the purchaser acquires title, albeit equitable, at the time of sale.