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Changes to Redemption Period Rights in Michigan Foreclosure Law

February 21, 2014 Update:

Our office has been fielding a number of calls about the changes to the redemption rights in Michigan’s foreclosure laws described below, which became effective on January 10, 2014. Despite Governor Snyder’s letter to the legislature asking for follow up clarifying legislation, nothing has been changed as of late February. It is our understanding that multiple work-groups have been convened, bill drafts are being developed and we should see some movement in the next couple of months. West Michigan law will continue to update this post as changes are finalized.

July 5, 2013 Original Post:

On July 3, 2013, Michigan Gov. Rick Snyder signed a series of bills that made significant changes to a property owner’s redemption period rights after a foreclosure sale occurs, but he also wrote a letter to the Michigan legislature asking for additional legislation to help clarify the new redemption rules. The new law (which is not effective until January 10, 2014) keeps in place the six month redemption period for a residential property after it has been foreclosed, but provides a way for the foreclosure sale purchaser to obtain possession of the property sooner if there is a threat of damage to the property.

The foreclosure sale purchaser now has the right during the redemption period to reasonably inspect both the interior and exterior of the property at any time without notice. If inspection 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. Examples in the new law of what types of “damage” could lead to termination of the redemption rights include: a boarded up or closed off window or entrance; multiple broken and unrepaired window panes; a smashed through, broken off, or unhinged door; accumulated rubbish, trash, or debris; stripped plumbing, electrical wiring, siding, or other metal material; or missing fixtures, including a furnace,water heater or air conditioning unit.

Even though he signed the legislation, Gov.  Snyder did acknowledge the concerns that many groups have had with the new inspection rights granted to foreclosure sale purchasers. In his letter, Governor Snyder said, “I believe that follow-up legislation must be more specific on a number of points to protect foreclosees, lenders, and the community. For instance, the new legislation should clearly state what constitutes a reasonable inspection, including what notice must be given and how frequently such inspections can occur. In addition, the bill should ensure that measures that responsible Michiganders may take to protect their property (for instance, boarding up a window broken by vandals) are distinguished from malicious damage, which requires a swift and decisive response.” (Click here for a copy of the letter.)

Gov.  Snyder will be convening a work group in the next week to find solutions to these legislation issues. West Michigan Law will continue to provide updates as additional changes are made to Michigan foreclosure law redemption rights through the remainder of 2013.

If you have any questions regarding these changes, I would be happy to talk to you.