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Patricia Paruch, Kemp Klein Law Firm
Foreclosing on a Condo Project
By Glen Zatz, Comerica Bank
How many notices are enough when foreclosing on a condo project? In Pine Hollow Estates, LLC v. Citizens Bank (Mich App No. 303600, June 19, 2012; unpublished), the mortgage filed prior to development included a legal description of the entire 97 acres. Later, a portion was parceled into condos; some of the lots were sold and released from the mortgage. The lender later foreclosed by advertisement and posted notices using the 97 acre legal description at seven project locations, but not on all 24 vacant condo sites. The notice also stated ". . . these properties will be sold separately with the Condominium Units being first offered for sale individually after which the balance of the property not subject to the condominium . . . will be offered for sale." The borrower claimed that notice was not properly posted per MCL 600.3208. The Pine Hollow panel disagreed, holding that MCL 600.3208 simply requires posting "upon any part of the premises described in the notice."
The borrower also contended that the sale violated MCL 600.3224 which mandates that "distinct farms, tracts, or lots not occupied as 1 parcel . . . shall be sold separately . . . ." The court found that the property should be treated as separate lots at foreclosure, since a portion had been subdivided and certain lots were released. The court also found that the sheriff violated MCL 600.3224 by selling the property as one parcel at the foreclosure sale. Nonetheless, the court upheld the foreclosure, finding that the borrower received the same protection it would have received had the sheriff properly sold the property by lots, since the sheriff's deed enumerated individual prices for each lot and the borrower had notice that it could redeem the entire property or only that portion it could afford. So for this court, like in horseshoes, close counts.
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January 17, 2013
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New DPOA Requirements for Real Estate Transactions
By Patrick McVeigh, Liberty Title
Earlier this year the Michigan Legislature amended the Estates and Protected Individuals Code (EPIC) to require that for any Durable Powers of Attorney (DPOA) executed after October 1, 2012, the designated agent must execute an "Acknowledgment of Responsibility" before exercising any powers under the DPOA. The Acknowledgment requires the agent to acknowledge the significance of the agent's fiduciary duties.
This change in the Statute has implications not only for a DPOA executed as part of a comprehensive estate plan, but also for transaction-specific powers of attorney in a real property transaction. Some title insurers require that a transaction-specific power of attorney be exercisable despite the principal's disability or incapacity. This allows a title insurer to protect against unforeseen events between when the power of attorney is executed and closing. Under EPIC, the inclusion of these provisions makes a transaction-specific power of attorney a DPOA. Consequently, a title insurer will require that the Acknowledgment be part of a power of attorney used in a real property transaction.
EPIC contains a suggested form of Acknowledgment at MCL 700.5501. The suggested form in the statute calls merely for the signature of the agent. When drafting an Acknowledgment of Responsibility for a DPOA that will be used in a real property transaction, the document should contain a complete jurat and acknowledgment section for a notary public. Some title insurers will require the Acknowledgment be recorded with the Register of Deeds to create a marketable chain of title. See a copy of a suggested form which includes this.
Although EPIC initially appears to apply only to estate planning, its impact clearly expands beyond this area. Careful planning and drafting of a transaction-specific DPOA with an Acknowledgment will help to ensure a smooth and timely closing.
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.