Foreclosed Property That Appears Abandoned – Does the Purchaser “Stand in the Shoes” of the Mortgagee for Purposes of Accelerating Redemption?

It is a practice of some purchasers at foreclosure sales to attempt to speed up the redemption period if the Property appears abandoned. Unless they are the mortgagee – they cannot do so under Michigan law.

 

The Michigan Court of Appeals, in an unpublished decision, Leggio v Huffer, No. 301821, 2012 WL 2605926 (Mich Ct App July 3, 2012) addressed the issue of who is entitled to accelerate the redemption period when property that appears abandoned has been foreclosed on. The Leggio Court held that under the plain meaning of the abandonment statute, MCL 600.3241a, only the mortgagee is entitled to accelerate the redemption period for abandoned property.

 

Facts of the Case:

In Leggio, the plaintiff, homeowner, defaulted on a mortgage with CitiMortgage, Inc. (the “Bank”). The Bank foreclosed on its mortgage and, at the sheriff’s sale the property was sold to the defendant Michael Huffer (“Purchaser”).  The sheriff’s deed was then recorded and indicated that the property may be redeemed 6 months after the sheriff’s sale.

Thereafter, the Purchaser went to the property and it appeared abandoned. The Purchaser then advised his agent, defendant Ralph Roberts (“Agent”), to take action required by the abandonment statute  in order to shorten the redemption period. Id. The Agent went to the property and posted a notice of presumptive abandonment and apparently mailed a copy to plaintiff’s last known address, which was the foreclosed property. Thereafter, an affidavit of abandonment was apparently recorded with the register of deeds on July 23, 2010, which indicated that the redemption period was shortened to 30 days from the date of the sheriff’s sale pursuant to MCL 600.3241 a.

 

The Lawsuit:

Homeowner then filed suit against Purchaser and his Agent, claiming that the affidavit of abandonment failed to comply with MCL 600.3241a and was, therefore, null and void because neither defendant was the “mortgagee.”

Conversely, The Purchaser and Agent argued that a purchaser at a sheriff’s sale “stands in the shoes of the mortgagee” and, thus, has the same rights as the mortgagee under MCL 600.3241a.

 

The Abandonment Statute – MCL 600.3241a

MCL 600.3241a provides:

 

…if foreclosure proceedings have been commenced…against residential property not exceeding 4 units, abandonment of premises shall be conclusively presumed upon satisfaction of all of the following requirements before the end of the redemption period:

 

(a)    The mortgagee has made a personal inspection of the mortgaged premises and the inspection does not reveal that the mortgagor…are presently occupying or will occupy the premises.

 

(b)   The mortgagee has posted a notice at the time of making the personal inspection and has mailed by certified mail…a notice to the mortgagor at the mortgagor’s last known address, which notices state that the mortgagee considers the premises abandoned and that the mortgagor will lose all rights of ownership 30 days after the foreclosure sale…unless the mortgagor…provides the notice required by subdivision (c).

 

(c)    Within 15 days after the notice required by subdivision (b) was posted and mailed, the mortgagor…has not given written notice by first-class mail to the mortgagee at an address provided by the mortgagee in the notices required by subdivision (b) stating that the premises are not abandoned.

 

In a concise analysis, the Court applied the plain language of the statute. Simply put, “mortgagee” meant “mortgagee”. The Court further reasoned: “[w]e decline defendants’ invitation to re-write the plain and unambiguous language so as to grant those same rights to third-party sheriff sale purchasers” Id.

 

 

Application:

 

Third parties who purchase property at foreclosure sales and are looking to capitalize on a bargain property cannot speed up the redemption period simply because the property is abandoned.  They do not stand in the shoes of the mortgagee.  Such purchasers are left to simply wait out the redemption period or, alternatively, negotiate with the property owners for a waiver of their redemption rights.