Bill Text: MI HB5794 | 2013-2014 | 97th Legislature | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Civil procedure; foreclosure; property inspections during redemption period; correct procedural requirement. Amends secs. 3238 & 3241a of 1961 PA 236 (MCL 600.3238 & 600.3241a).

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2014-12-31 - Assigned Pa 431'14 With Immediate Effect 2014 Addenda [HB5794 Detail]

Download: Michigan-2013-HB5794-Engrossed.html

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HB-5794, As Passed Senate, December 16, 2014

 

 

 

 

 

 

 

 

 

 

 

SENATE SUBSTITUTE FOR

 

HOUSE BILL NO. 5794

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending sections 3238, 3240, and 3241a (MCL 600.3238, 600.3240,

 

and 600.3241a), section 3238 as added and section 3240 as amended

 

by 2014 PA 125 and section 3241a as amended by 2006 PA 579.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3238. (1) After a foreclosure sale under this chapter and

 

providing notice under section 3237, the purchaser at the sale may

 

inspect the property, including the exterior and interior of any

 

structures on the property, as provided in this section.

 

     (2) The purchaser may conduct an initial inspection of the

 

interior of any structures on the property. In addition to the

 

notice provided in section 3237, the purchaser shall provide notice

 

to the mortgagor by certified mail, physical posting on the

 

property, or in any manner reasonably calculated to achieve actual

 

notice of the purchaser's intent to inspect the property at least

 

72 hours in advance and shall set the time of the inspection at a

 

reasonable time of day, in coordination with the mortgagor if

 

possible.

 

     (3) The purchaser may conduct any number of exterior

 

inspections of the property and any structures on the property

 

during the redemption period.

 

     (4) After the initial inspection described in subsection (2),

 

the purchaser may request by certified mail, physical posting on

 

the property, or in any manner reasonably calculated to achieve

 

actual notice that the mortgagor provide information on or evidence

 

of the condition of the interior of any structures on the property,

 

in any form reasonably necessary to assess the condition of the

 

property. The purchaser shall not make such a request more than

 

once in a calendar month or more often than 3 times in any 6 months

 

of the redemption period, unless the purchaser has reasonable cause

 

to believe that damage to the property is imminent or has occurred.

 

     (5) If the mortgagor refuses to provide information or

 

evidence requested under subsection (4) within 5 business days

 

after receipt of the request, or if the information or evidence

 

provided reveals that damage has occurred or is imminent, the

 

mortgagor purchaser may schedule an inspection of the interior of

 

any structures on the property. For an inspection under this

 

subsection, the purchaser shall provide notice as described in

 

subsection (2) of the purchaser's intent to inspect the property at

 

least 72 hours in advance, and shall set the time of the inspection

 

at a reasonable time of day, in coordination with the mortgagor if

 

possible. If the mortgagor provides the information or evidence

 

requested under subsection (4) and damage has not occurred or does

 

not appear imminent, the purchaser shall not conduct an interior

 

inspection under this subsection related to that request.

 

     (6) 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. If

 

a purchaser commences an action for possession or any other relief

 

under this section, the purchaser may also name as a party to the

 

action any person who may redeem the property under section 3240.

 

     (7) Before commencing summary proceedings for possession of

 

the property under this section, 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

 

after receipt of the notice.

 

     (8) A purchaser shall not commence summary proceedings for

 

possession under this section 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 (7).

 

     (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.

 

     (9) In determining whether to enter judgment for possession in

 

favor of the purchaser in summary proceedings under this section,

 

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.

 

     (10) If a judgment for possession is entered in favor of the

 

purchaser in an action under chapter 57 as described in subsection

 

(6), the right of redemption under section 3240 is extinguished and

 

title to the property vests in the purchaser as provided in section

 

3236 as to all persons against whom judgment was entered.

 

     (11) 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) An exterior condition that presents a significant risk to

 

the security of the property or significant risk of criminal

 

activity occurring on the property.

 

     (c) Stripped plumbing, electrical wiring, siding, or other

 

metal material.

 

     (d) 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.

 

     (e) 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.

 

     (f) 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 that has a recorded interest in the property 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 (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 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 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 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 30 days or until the time

 

to provide the notice required by section 3241a(c) expires,

 

whichever is later.

 

     (11) Subject to 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

 

section 3238, the redemption period is 1 year from the date of the

 

sale.

 

     (13) 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) 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) A register of deeds may charge not more than $50.00 for

 

determining the amount necessary for redemption under this section.

 

     (16) 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. 3241a. For purposes of this chapter, if foreclosure

 

proceedings have been commenced under this chapter against

 

residential property not exceeding 4 units, abandonment of there is

 

a conclusive presumption that the premises shall be conclusively

 

presumed upon satisfaction of have been abandoned if all of the

 

following requirements are satisfied before the end of the

 

redemption period:

 

     (a) The mortgagee has made a personal inspection of the

 

mortgaged premises and the inspection does not reveal that the

 

mortgagor or persons claiming under the mortgagor are presently

 

occupying or will occupy the premises.

 

     (b) The mortgagee has posted a notice at the time of making

 

the personal inspection and has mailed by certified mail, return

 

receipt requested, a notice to the mortgagor at the mortgagor's

 

last known address, which notices state that the mortgagee

 

considers the premises abandoned and that the mortgagor will lose

 

all rights of ownership 30 days after the foreclosure sale or when

 

the time to provide the notice required by subdivision (c) expires,

 

whichever is later, unless the mortgagor; the mortgagor's heirs ,

 

executor, or administrator; or personal representative; or a person

 

lawfully claiming from or under 1 of them provides the notice

 

required by subdivision (c).

 

     (c) Within 15 days after the notice required by subdivision

 

(b) was posted and mailed, the mortgagor; the mortgagor's heirs ,

 

executor, or administrator; or personal representative; or a person

 

lawfully claiming from or under 1 of them has not given written

 

notice by first-class mail to the mortgagee at an address provided

 

by the mortgagee in the notices required by subdivision (b) stating

 

that the premises are not abandoned.