SBM Real Property Law Section eNewsletter

December 2013

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Co-Editors:
Howard A. Lax, Bodman PLC

Patricia Paruch, Kemp Klein Law Firm

New Redemption Inspection Provisions May Shorten Some Redemptions

By Matthew B. Theunick, Trott & Trott PC

Amendments to Michigan's foreclosure by advertisement redemption statute (MCL 600.3240) become effective on January 10, 2014, providing sheriff's sale purchasers a potent new tool to review real property during the redemption period, and possibly shortening certain redemptions.

As noted in MCL 600.3240(13), "After the sale . . . and periodically throughout the redemption period, the purchaser at the sale may inspect the exterior and interior of the property and all ancillary structures. 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 . . . ."

MCL 600.3240(13) notes that "damage" includes, but is not limited to: (a) failure to comply with local ordinances regarding maintenance of the property; (b) a boarded up or closed off window or entrance; (c) multiple broken and unrepaired window panes; (d) a smashed through, broken off, or unhinged door; (e) accumulated rubbish, trash, or debris; (f) stripped plumbing, electrical wiring, siding, or other metal material; (g) missing fixtures, including, but not limited to, a furnace, water heater, or air conditioning unit; (h) deterioration below, or being in imminent danger of deteriorating below, community standards for public safety and sanitation; and/or (i) a condition that would justify recovery of the premises under section 5714(1)(d).

Practitioners advising clients facing foreclosure should note that while the sheriff's sale purchaser is allowed a right of inspection, MCL 600.3240(13) provides a mortgagor the opportunity to repair any damage to the property that was the basis for the action. If repaired, a judgment of possession shall not issue. However, a judgment of possession entered on behalf of the purchaser extinguishes the right of redemption and title to the property vests in the purchaser.

Editor's note: Gov. Snyder issued a signing letter requesting clarification of "reasonable inspection," form of appropriate notice, allowable frequency of inspections, and impact of an owner's measures to protect property. No introduced bill yet, but discussions and draft bills are underway.

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Clohset Court Reaffirms Jurisdiction

By Lawrence Shoffner, Lawrence Shoffner & Associates

In May, 2012, the Michigan Court of Appeals upheld the district court's jurisdiction to enter a $222,102.09 consent money judgment in a summary proceedings action. Clohset v. No Name Corp., (Mich App No 301681, May 5, 2012). In July, 2013, the Michigan Supreme Court vacated the judgment and remanded the case to the Court of Appeals "for reconsideration in light of MCL 600.5739(1) and MCR 4.201(G)(2)(b)." The statute provides that "[a] claim or counterclaim for money judgment shall not exceed the amount in controversy that otherwise limits the jurisdiction of the court." The court rule states that "[i]f a money claim or counterclaim exceeding the court's jurisdiction is introduced" and "sufficiently shown to exceed the court's jurisdictional limit" then it must be removed to the circuit court.

On remand, the Court of Appeals reaffirmed its prior decision, distinguishing "judgments" from "pleadings" (as defined by MCR 2.110) and determining that the entry of a consent money judgment does not constitute the "introduction" of a "claim or counterclaim for money judgment." Clohset v. No Name Corp., (Mich App No 301681, Oct 1, 2013). If the "pleadings" request a money judgment in excess of the court's jurisdiction, then the claim must be removed, but consent judgments are treated differently. Defendant has filed for reconsideration.

Clohset's long-term impact remains unclear. The Court of Appeals repeatedly stressed the case's "unusual" circumstances: the decade between entry and challenge of the judgment; stipulated renewal of the judgment; no money claim being filed; the two amendments of the settlement agreement. As it currently stands, a consent money judgment in excess of the court's general jurisdiction may be entered under certain circumstances. The opinion on remand, however, does clarify that the district court does not have unfettered jurisdiction to adjudicate money claims in the summary proceedings context.

Interested in writing a future article for the e-Newsletter?
Please contact co-editors:
Howard Lax at HLax@bodmanlaw.com or Patricia Paruch at Pat.Paruch@kkue.com.


The views and opinions expressed in these articles are those of the authors, and they do not reflect in any way the positions of the State Bar of Michigan or the Real Property Law Section. These columns are meant for informational purposes only and should not be construed as legal advice.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding tax-related penalties or (ii) promoting, marketing, or recommending to another person any transaction or matter addressed in this communication.