Michigan Legislative Update

Michigan Legislative Update

The Michigan legislature recently amended its laws governing foreclosures and property inspections, effective May 20, 2014.

MICHIGAN HOUSE BILL 5277

 

After a foreclosure sale, if the purchaser at the sale intends to conduct an interior inspection of the property during the redemption period, the purchaser must provide an initial notice to the borrower and any other person that has possession of the property in writing that contains all of the following:

  • The identity of the purchaser.
  • The residence or business address, mailing address, telephone number, and, if applicable, email address at which the purchaser may be contacted.
  • The date of the sale, the amount of the sale, and the estimated date the redemption period expires.
  • The details of the purchaser’s rights of inspection.
  • One or more alternative methods for surrendering control of the property.
  • A statement that if the borrower intends to vacate the property at any time after the sale, he or she must notify the purchaser, and that if the borrower does not do so, he or she may risk heightened liability for damage to the property.

 

The purchaser must provide notice above by certified mail, physical posting on the property, or any other method reasonably calculated to achieve actual notice.

 

The purchaser may conduct an initial inspection of the interior of any structures on the property.  In addition to the notice provided above, the purchaser must provide notice to the borrower 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 must set the time of the inspection at a reasonable time of day, in coordination with the borrower if possible.

 

The purchaser may conduct any number of exterior inspections of the property and any structures on the property during the redemption period.

 

After the initial inspection, the purchaser may request by certified mail, physical posting on the property, or in any manner reasonably calculated to achieve actual notice that the borrower 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 must 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.

 

If the borrower refuses to provide information or evidence requested 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 borrower may schedule an inspection of the interior of any structures on the property.  For an inspection, the purchaser must provide notice of the purchaser’s intent to inspect the property at least 72 hours in advance, and must set the time of the inspection at a reasonable time of day, in coordination with the borrower if possible.  If the borrower provides the information or evidence requested and damage has not occurred or does not appear imminent, the purchaser must not conduct an interior inspection related to that request.

 

If a purchaser commences an action for possession or any other relief, the purchaser may also name as a party to the action any person who may redeem the property.

 

Before commencing summary proceedings for possession of the property, the purchaser must provide notice to the borrower 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.

 

A purchaser must not commence summary proceedings for possession if either of the following conditions exists:

  • 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 described above; or
  • The borrower 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 borrower and purchaser or by an extended date that is agreed to by the borrower and purchaser.

 

In determining whether to enter judgment for possession in favor of the purchaser in summary proceedings, the judge will consider the totality of the circumstances surrounding the damage or condition that threatens imminent damage, including, but not limited to, all of the following:

  • The cause of the damage or condition.
  • Whether the borrower has taken appropriate steps to repair the damage or correct the condition and to secure the property from further damage.
  • Whether the borrower has promptly contacted the purchaser and any property insurer regarding the damage or condition.
  • Whether any delay in repairs or corrections is affirmatively caused by the purchaser or the property insurer.

 

“Damage” includes, in addition to the current definition, any of the following:

  • An exterior condition that presents a significant risk to the security of the property or significant risk of criminal activity occurring on the property.
  • Missing or destroyed structural aspects or fixtures, including, but not limited to, a countertop, cabinetry, flooring, wall, ceiling, roofing, toilet, or any other fixtures.

 

If the purchaser has provided notice to the borrower as described above and the borrower intends to move from the property at any time after the foreclosure sale of property, the borrower must inform the purchaser by email, certified mail, or any other method reasonably calculated to achieve actual notice, at least 10 days before vacating the property so that the property may be secured.

 

If the purchaser has provided the notice above to the borrower, both of the following apply:

  • There is a rebuttable presumption that the borrower is liable to the purchaser at the foreclosure sale for all damage to the property that occurs before the expiration of the redemption period if the borrower does any of the following:
    • Fails to consent to an initial inspection, comply with a request for information on the condition of the property, or consent to an inspection of the property after the initial inspection, if requested;
    • Fails to provide timely notice to the purchaser; or
    • Fails to surrender control of the property in a manner that reasonably provides the purchaser with the opportunity to secure it; and
  • There is a rebuttable presumption that the borrower is not liable for damage to the property that occurs after the borrower surrenders control of the property if the borrower does all of the following:
    • Consents to an initial inspection, complies with a request for information on the condition of the property, and consents to inspections of the property after the initial inspection, if requested;
    • Provides timely notice to the purchaser; and
    • Surrenders control of the property in a manner that reasonably provides the purchaser with the opportunity to secure it.

 

For purposes of the paragraph above, the purchaser must designate 1 or more alternative methods for surrender of control of the property

 

The following provisions have been deleted from Michigan law:

 

A court must not enter a judgment for possession if, before the hearing for possession, the borrower repairs any damage to the property that was the basis for the action. “Damage” includes, but is not limited to, any of the following:

o       A boarded up or closed off window or entrance;

o       Multiple broken and unrepaired window panes;

o       A smashed through, broken off, or unhinged door; and

o       Accumulated rubbish, trash, or debris.