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Michigan: Post-Foreclosure Abandonment is all about Occupancy

Posted By USFN, Thursday, April 07, 2016
Updated: Thursday, April 07, 2016

April 7, 2016


by Caleb J. Shureb
Orlans Associates, P.C. – USFN Member (Michigan)

The vast majority of foreclosures in the state of Michigan receive a statutory six-month redemption period. During this period, the owner-occupants maintain all of the rights and privileges that they held prior to the foreclosure. In an effort to reduce blight and criminal activity, while simultaneously attempting to preserve the integrity of the local real estate market, the Michigan legislature provided MCL 600.3241a. This statute allows for a foreclosing mortgagee to reduce the typical statutory redemption period from six-months to 30 days (or until the required 15-day notice period expires, whichever is later).

Contrary to the belief of many real estate agents, the operative factor in determining abandonment is occupancy. While there are many definitions that can be applied to the term “abandoned,” MCL 600.3241a unambiguously states that there is a conclusive presumption that the premises have been abandoned if neither the mortgagor nor persons claiming under the mortgagor are presently occupying or will occupy the premises. (The reader will note that had the legislature intended to exempt the abandonment process from those properties that are listed for sale, or even simply secured, they certainly could have.)

In the event that a foreclosing mortgagee believes the property to be unoccupied, notification to their local counsel can result in a significant reduction in the redemption period. The abandonment process includes a notice that is posted at the time of making the official personal inspection; a copy of the notice is submitted by certified mail, return receipt requested, to the mortgagor at the mortgagor’s last-known address. This notice states that the foreclosing mortgagee considers the premises abandoned and provides the instructions by which a contest to the abandonment can be submitted.

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