Michigan Adopts New Non-Judicial Foreclosure Redemption Procedures

By Michael I. Rich, Esq. and David A. Wolfe, Esq.
Weltman, Weinberg & Reis Co., LPA

Michigan recently passed legislation amending MCL §600.3240, which affects only Oakland, Macomb and Kent counties and involves how parties in interest may redeem a non-Judicial Sheriff’s Deed.  While redemption has always been allowed to be made to either the Grantee on the Sheriff’s Deed (the foreclosing lender) or the Registrar, since 2005, most redemption payments are made to the Designee of the Grantee, (usually the law firm handling the foreclosure).   The new legislation allows a person entitled to redeem a Sheriff’s Deed to request the redemption amount either from the Designee on the Sheriff’s Deed or the Registrar of Deeds. 

Under the new legislation, if the person requests a redemption quote from the Registrar of Deeds, the Registrar will prepare the quote based on the Purchaser’s (lender’s) affidavit filed and recorded with the Sheriff’s Deed, and any affidavits evidencing disbursements for payment of taxes, insurance premiums, payments to senior lien holders or condo assessments or association fees.  The legislation allows the Register of Deeds to charge up to $50 for providing the redemption quote.   

This new procedure presents concerns for our clients as it is expected that more redemptions will be made through the Registrar’s office.  The Registrar’s administration of the redemption funds might delay payment of the funds to the Purchaser up to several weeks.  Interest only accrues to the date of redemption.  More importantly, the Purchaser may also find that it has improperly initiated an eviction due to the delay.  Further, Purchasers will find that they need to file their supporting affidavits for post-sale disbursements immediately, because if the redemption is made prior to recording the affidavit, the Purchaser will not be reimbursed. 

The results of an error in computing the redemption quote will also raise new issues.  Upon receipt of redemption funds, the Registrar is required to mark their record that the property has been redeemed and destroy the Sheriff’s Deed, while the Purchaser is not required to accept the redemption funds unless the full amount is tendered (including interest and permitted advances).  The statute specifically states that the Registrar is not liable for any errors, and the confusion whether the property has been properly redeemed might result in more actions to quiet title and contest evictions.
 
The law was passed at the request of the Oakland and Macomb County Registrar of Deeds to address concerns that the designees were not issuing the redemption payoff amounts timely enough and the fees charged for preparing the redemption quotes were excessive.  The new law was uniquely tailored to only apply to counties with populations between 750,000 and 1,500,000.  At this time, Oakland, Macomb and Kent are the only Michigan counties that fit that description.  Interestingly, the proposed legislation made the Registrar’s participation optional and the Kent County Registrar came out against the new legislation, but the final legislation requires all qualifying Registrars to participate.   One reason for Kent County’s objection is that the Michigan legislature is currently considering additional legislation that may replace or supplement this new procedure.  

Weltman, Weinberg & Reis Co., LPA will keep you advised of any further changes.

If you have any questions on this matter, please contact Mr. Michael I. Rich, Esq. or Mr. David A. Wolfe, Esq. Michael is an associate focused on title work and REO closing services for Thoroughbred Title Agency, an affiliate of Weltman, Weinberg & Reis Co., LPA (WWR). He can be reached directly at 248.786.3137 or via email at mrich@weltman.com. David is an associate practicing in Consumer Collections for WWR. He can be reached directly at 248.362.6142 or via email at dwolfe@weltman.com.