October 7, 2015
by Jessica Rice
Trott Law, P.C. – USFN Member (Michigan)
Michigan law provides a mortgagor with the right to use and possess the property during the redemption period, which is typically six months following the foreclosure sale. However, the mortgage instrument usually contains a provision that allows the mortgagee to protect its interest in the property when the property is in jeopardy. As such, it may be necessary for mortgagees to consider taking some measures to protect their interest in the property during the redemption period by securing and winterizing the property.
When faced with the possibility of a property being damaged during the redemption period, always begin by reading the terms of the mortgage and ensure that there is a provision that allows for the mortgagee to protect its interest in the property. It is best to do as little as possible to interfere with the mortgagor’s redemption rights while, at the same time, doing what is necessary to protect the mortgagee’s interest in the property. This means mitigating the risks that may be encountered in securing and winterizing by keeping detailed records and notes, taking pictures of the property, and posting — in a conspicuous place — a sign with information as to whom the mortgagor can contact in order to obtain access, if necessary. If contacted by a mortgagor to gain access to the property after it has been secured and/or winterized, access should immediately be granted in order to avoid wrongful lockout claims or other similar issues.
It is also important to keep in mind state-specific foreclosure statutes. In Michigan, the foreclosure statute provides foreclosing lenders with the right to shorten the redemption period if a property is deemed abandoned via a specific process outlined in the statute. Bear in mind, there is a distinct difference between a property being vacant and a property being abandoned. If the property is truly abandoned, there is a legal process that can be implemented and, if successful, will result in a shortened redemption period. This is a very useful tool — especially in the winter months — as it may enable the foreclosing lender to take title to the property sooner than the statutorily-set redemption expiration date and, therefore, allow for measures to be taken to secure and winterize the property without the risk of claims that the mortgagor’s rights have been violated during the redemption period.
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