February 4, 2014, Introduced by Rep. Callton and referred to the Committee on Financial Services.
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
by amending sections 3204, 3240, and 3278 (MCL 600.3204, 600.3240,
and 600.3278), section 3204 as amended by 2013 PA 103, section 3240
as amended by 2013 PA 104, and section 3278 as added by 2011 PA
301, and by adding sections 3237 and 3238; and to repeal acts and
parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec.
3204. (1) Subject to subsections (4) and (6), a A party
may foreclose a mortgage by advertisement if all of the following
circumstances exist:
(a) A default in a condition of the mortgage has occurred, by
which the power to sell became operative.
(b) An action or proceeding has not been instituted, at law,
to recover the debt secured by the mortgage or any part of the
mortgage ; or, if an action or proceeding has been instituted,
either
the action or proceeding has been
discontinued ; or an
execution
on a judgment rendered in an the
action or proceeding has
been returned unsatisfied, in whole or in part.
(c) The mortgage containing the power of sale has been
properly recorded.
(d) The party foreclosing the mortgage is either the owner of
the indebtedness or of an interest in the indebtedness secured by
the mortgage or the servicing agent of the mortgage.
(2) If a mortgage is given to secure the payment of money by
installments, each of the installments mentioned in the mortgage
after the first shall be treated as a separate and independent
mortgage. The mortgage for each of the installments may be
foreclosed in the same manner and with the same effect as if a
separate mortgage were given for each subsequent installment. A
redemption of a sale by the mortgagor has the same effect as if the
sale for the installment had been made upon an independent prior
mortgage.
(3) If the party foreclosing a mortgage by advertisement is
not
the original mortgagee, a record chain of title shall must
exist
prior to before the date of sale under section 3216
evidencing the assignment of the mortgage to the party foreclosing
the mortgage.
(4)
A party shall not commence proceedings under this chapter
to
foreclose a mortgage of property claimed as a principal
residence
exempt from tax under section 7cc of the general property
tax
act, 1893 PA 206, MCL 211.7cc, if 1 or more of the following
apply:
(a)
Notice has not been mailed to the mortgagor as required by
section
3205a.
(b)
After a notice is mailed to the mortgagor under section
3205a,
the time has not expired for the mortgagor to request,
either
directly or through a housing counselor, a meeting under
section
3205b with the person designated under section 3205a(1)(c).
(c)
Within 30 days after a notice is mailed to the mortgagor
under
section 3205a, the mortgagor has requested a meeting under
section
3205b with the person designated under section 3205a(1)(c)
and
90 days have not passed after the notice was mailed. This
subdivision
does not apply if the mortgagor has failed to provide
documents
as required under section 3205b(2).
(d)
Documents have been requested under section 3205b(2) and
the
time for producing the documents has not expired.
(e)
The mortgagor has requested a meeting under section 3205b
with
the person designated under section 3205a(1)(c), the mortgagor
has
provided documents as required under section 3205b(2), and the
person
designated under section 3205a(1)(c) has not met or
negotiated
with the mortgagor under this chapter.
(f)
The mortgagor and mortgagee have agreed to modify the
mortgage
loan and the mortgagor is not in default under the
modified
agreement.
(g)
Calculations under section 3205c(1) show that the
mortgagor
is eligible for a loan modification and foreclosure under
this
chapter is not allowed under section 3205c(7).
(5)
Subsection (4) applies only to proceedings under this
chapter
in which the first notice under section 3208 is published
after
July 5, 2009 and before January 10, 2014.
(6)
After January 9, 2014, a party to which section 3206
applies
shall not commence proceedings under this chapter to
foreclose
a mortgage of property claimed as a principal residence
exempt
from tax under section 7cc of the general property tax act,
1893
PA 206, MCL 211.7cc, unless the party has complied with
section
3206.
(7)
Subsections (4) and (6) do not apply to a mortgage of
property
used for agricultural purposes if the mortgage is subject
to
borrower's rights under the federal acts and is subject to the
restructuring
of distressed loans or the debt restructuring and
loan
servicing provisions of the federal acts, if the applicable
period
to apply for a restructuring required under the federal acts
is
longer than the period within which a borrower may request a
meeting
under section 3205b, and if compliance with the federal
acts
will not result in proceedings being commenced under this
chapter
within 90 days after a default under the mortgage. As used
in
this subsection, "federal acts" means the farm credit act of
1971,
Public Law 92-181, as amended, or the consolidated farm and
rural
development act, Public Law 87-128, and rules and regulations
promulgated
under those acts.
Sec. 3237. After a sale under section 3216, if the purchaser
at the sale intends to inspect the property under section 3238, the
purchaser shall notify the mortgagor and any other person that has
possession of the property in writing of all of the following:
(a) The identity of the purchaser.
(b) The residence or business address, mailing address,
telephone number, and, if applicable, electronic mail address at
which the purchaser may be contacted.
(c) The details of the purchaser's rights of inspection under
section 3238.
Sec. 3238. (1) After a sale under section 3216 and
periodically throughout the redemption period, the purchaser at the
sale may inspect the property, including the exterior and interior
of any structures on the property. Subject to subsection (3), the
purchaser shall not enter any structure to inspect the interior of
the structure more often than once in a calendar month and not more
often than 3 times in any 6 months of the redemption period.
(2) Subject to subsection (3), the purchaser shall give the
mortgagor at least 72 hours' notice before an inspection of the
interior of a structure under subsection (1) and conduct the
inspection at a reasonable time of day as prearranged with the
mortgagor.
(3) Subsection (2) and the restrictions on frequency of
inspections under subsection (1) do not apply if the purchaser has
reasonable cause to believe that damage to the property is imminent
or has occurred.
(4) If an inspection under this section is unreasonably
refused or if damage to the property is imminent or has occurred,
the purchaser may immediately commence summary proceedings for
possession of the property under chapter 57 or file an action for
any other relief necessary to protect the property from damage.
(5) Before commencing summary proceedings for possession of
the property under subsection (4), the purchaser shall provide
notice to the mortgagor by certified mail, physical posting on the
property, or in any other manner reasonably calculated to achieve
actual notice, that the purchaser intends to commence summary
proceedings if the damage or condition causing reasonable belief
that damage is imminent is not repaired or corrected within 7 days.
(6) A purchaser shall not commence summary proceedings for
possession under subsection (4) if either of the following
conditions exists:
(a) The damage or condition causing reasonable belief that
damage is imminent is repaired or corrected within the 7-day period
described in the notice of intent under subsection (5).
(b) The mortgagor and the purchaser agree on procedures and a
timeline to repair the damage or correct the condition causing
reasonable belief that damage is imminent and the procedures are
completed by the original date agreed to by the mortgagor and
purchaser or by an extended date that is agreed to by the mortgagor
and purchaser.
(7) In determining whether to enter judgment for possession in
favor of the purchaser in summary proceedings under subsection (4),
the judge shall consider the totality of the circumstances
surrounding the damage or condition that threatens imminent damage,
including, but not limited to, all of the following:
(a) The cause of the damage or condition.
(b) Whether the mortgagor has taken appropriate steps to
repair the damage or correct the condition and to secure the
property from further damage.
(c) Whether the mortgagor has promptly contacted the purchaser
and any property insurer regarding the damage or condition.
(d) Whether any delay in repairs or corrections is
affirmatively caused by the purchaser or the property insurer.
(8) If a judgment for possession is entered in an action under
subsection (4) in favor of the purchaser, the right of redemption
under section 3240 is extinguished and full title to the property
vests in the purchaser.
(9) As used in this section, "damage" includes, but is not
limited to, any of the following:
(a) The failure to comply with local ordinances regarding
maintenance of the property or blight prevention, if the failure is
the subject of enforcement action by the appropriate governmental
unit.
(b) A boarded-up or closed-off window or entrance.
(c) Multiple broken and unrepaired window panes.
(d) A smashed-through, broken-off, or unhinged door.
(e) Accumulated rubbish, trash, or debris.
(f) Stripped plumbing, electrical wiring, siding, or other
metal material.
(g) Missing or destroyed structural aspects or fixtures,
including, but not limited to, a furnace, water heater, air-
conditioning unit, countertop, cabinetry, flooring, wall, ceiling,
roofing, toilet, or any other fixtures. As used in this
subdivision, "fixtures" means that term as defined in section 9102
of the uniform commercial code, 1962 PA 174, MCL 440.9102.
(h) Deterioration below, or being in imminent danger of
deteriorating below, community standards for public safety and
sanitation that are established by statute or local ordinance.
(i) A condition that would justify recovery of the premises
under section 5714(1)(d).
Sec. 3240. (1) A purchaser's deed under section 3232 is void
if the mortgagor, the mortgagor's heirs or personal representative,
or any person lawfully claiming under the mortgagor or the
mortgagor's heirs or personal representative redeems the entire
premises sold by paying the amount required under subsection (2)
and any amount required under subsection (4), within the applicable
time limit prescribed in subsections (7) to (12), to the purchaser
or the purchaser's personal representative or assigns, or to the
register of deeds in whose office the deed is deposited for the
benefit of the purchaser.
(2) The amount required to be paid under subsection (1) is the
amount that was bid for the entire premises sold, 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 under section
2558(2)(q), and an additional $5.00 as a fee for the care and
custody of the redemption money if the payment is made to the
register
of deeds. Except as provided in subsection (15), (14), the
register of deeds shall not determine the amount necessary for
redemption. The purchaser shall provide an affidavit with the deed
to be recorded under this section that states the exact amount
required to redeem the property under this subsection, including
any daily per diem amounts, and the date by which the property must
be redeemed shall be stated on the certificate of sale. The
purchaser may include in the affidavit the name of a designee
responsible on behalf of the purchaser to assist the person
redeeming the property in computing the exact amount required to
redeem the property. The designee may charge a fee as stated in the
affidavit and may be authorized by the purchaser to receive
redemption money. The purchaser shall accept the amount computed by
the designee.
(3) If a distinct lot or parcel separately sold is redeemed,
leaving a portion of the premises unredeemed, the deed is void only
to the redeemed parcel or parcels.
(4)
If, after a sale under section 3220, 3216, the purchaser,
the purchaser's heirs or personal representative, or any person
lawfully claiming under the purchaser or the purchaser's heirs or
personal representative pays 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 that under
the terms of the mortgage it would have been the duty of the
mortgagor to pay if the mortgage had not been foreclosed and that
are necessary to keep the policy in force until the expiration of
the period of redemption, redemption shall be made only upon
payment of the sum specified in subsection (2) plus the amounts
specified in this subsection with interest on the amounts specified
in this subsection from the date of the payment to the date of
redemption at the interest rate specified in the mortgage. This
subsection does not apply unless all of the following are filed
with the register of deeds with whom the deed is deposited:
(a) An affidavit by the purchaser or someone in his or her
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 evidencing the
payment of the taxes, amounts necessary to redeem senior liens from
foreclosure, condominium assessments, homeowner association
assessments, community association assessments, or insurance
premiums.
(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.
(5) If the redemption payment in subsection (4) includes an
amount used to redeem a senior lien from a nonjudicial foreclosure,
the mortgagor has the same defenses against the purchaser with
respect to the amount used to redeem the senior lien as the
mortgagor would have had against the senior lien.
(6) The register of deeds shall indorse on documents filed
under subsection (4) the time they are received. The register of
deeds shall record the affidavit of the purchaser only and shall
preserve in his or her files the recorded affidavit, receipts,
insurance receipts, and insurance agent's affidavit until
expiration of the period of redemption.
(7)
Subject to subsection (13), section
3238, 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.
(8)
Subject to subsections (9) to (11) and (13), section 3238,
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.
(9) 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.
(10) 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.
(11)
Subject to subsection (13), section
3238, for a mortgage
of property that is used for agricultural purposes, the redemption
period is 1 year from the date of the sale.
(12) If subsections (7) to (11) do not apply, and subject to
subsection
(13), section 3238, the redemption period is 1 year from
the date of the sale.
(13)
After the sale under section 3220 and periodically
throughout
the redemption period, the purchaser at the sale may
inspect
the exterior and interior of the property and all ancillary
structures.
If inspection is unreasonably refused or if damage to
the
property is imminent or has occurred, the purchaser may
immediately
commence summary proceedings for possession of the
property
under chapter 57 or file an action for any other relief
necessary
to protect the property from damage. A court shall not
enter
a judgment for possession in an action under chapter 57 if,
before
the hearing for possession, the mortgagor repairs any damage
to
the property that was the basis for the action. 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. As used in this subsection, "damage" includes, but
is
not limited to, any of the following:
(a)
The failure to comply with local ordinances regarding
maintenance
of the property, if the failure is the subject of
enforcement
action by the appropriate governmental unit.
(b)
A boarded up or closed off window or entrance.
(c)
Multiple broken and unrepaired window panes.
(d)
A smashed through, broken off, or unhinged door.
(e)
Accumulated rubbish, trash, or debris.
(f)
Stripped plumbing, electrical wiring, siding, or other
metal
material.
(g)
Missing fixtures, including, but not limited to, a
furnace,
water heater, or air conditioning unit.
(h)
Deterioration below, or being in imminent danger of
deteriorating
below, community standards for public safety and
sanitation.
(i)
A condition that would justify recovery of the premises
under
section 5714(1)(d).
(13) (14)
The amount stated in any affidavits
recorded under
this section shall be the amount necessary to satisfy the
requirements for redemption under this section.
(14) (15)
The register of deeds of a county
with a population
of more than 750,000 and less than 1,500,000, at the request of a
person entitled to redeem the property under this section, shall
determine the amount necessary for redemption. In determining the
amount, the register of deeds shall consider only the affidavits
recorded under subsections (2) and (4). A county, register of
deeds, or employee of a county or register of deeds is not liable
for damages proximately caused by an incorrect determination of an
amount necessary for redemption under subsection (2).
(15) (16)
A register of deeds may charge not
more than $50.00
for determining the amount necessary for redemption under this
section.
(16) (17)
For purposes of this section, there
is a presumption
that the property is used for agricultural purposes if, before the
foreclosure sale under this chapter, the mortgagor provides the
party foreclosing the mortgage and the foreclosing party's attorney
proof that the mortgagor filed a schedule F to the mortgagor's
federal income tax form 1040 for the year preceding the year in
which the proceedings to foreclose the mortgage were commenced and
records an affidavit with the register of deeds for the county in
which the property is located stating that the proof has been
delivered. If the mortgagor fails to provide proof and record an
affidavit as required by this subsection before the foreclosure
sale, there is a presumption that the property is not used for
agricultural purposes. The party foreclosing the mortgage or the
mortgagor may file a civil action to produce evidence to rebut a
presumption created by this subsection. An action under this
section shall be filed before the expiration of the redemption
period that would apply if the property is determined not to be
used for agricultural purposes.
Sec. 3278. (1) During the period of redemption following a
foreclosure sale of property under this chapter, the mortgagor and
any other person liable on the mortgage is liable to the purchaser
at the sale, or the mortgagee, payee, or other holder of the
obligation secured by the mortgage if the mortgagee, payee, or
other holder takes or has taken title to the property at the sale
either directly or indirectly, 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.
(2) If the mortgagor intends to move from the property at any
time after the foreclosure sale of property under this chapter, the
mortgagor shall inform the purchaser at least 10 days before
vacating the property so that the property may be secured.
(3) 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 during the redemption period if the
mortgagor does any of the following:
(a) Fails to consent to an inspection of the property, subject
to section 3238.
(b) Fails to provide timely notice to the purchaser under
subsection (2).
(c) Fails to surrender control of the property in a manner
that reasonably provides the purchaser with the opportunity to
secure it.
(4) 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:
(a) Consents to inspections of the property, subject to
section 3238.
(b) Provides timely notice to the purchaser under subsection
(2).
(c) Surrenders control of the property in a manner that
reasonably provides the purchaser with the opportunity to secure
it.
(5) (2)
In an action for damages under this
section, the
amount of damages may be determined by any measure of damages
applicable under law, including, but not limited to, the method
provided under section 5739(2).
(6) (3)
An action for damages under this
section may be joined
with an action for possession of the premises under chapter 57.
Enacting section 1. Sections 3205, 3205e, and 3206 of the
revised judicature act of 1961, 1961 PA 236, MCL 600.3205,
600.3205e, and 600.3206, are repealed.