Home > Uncategorized > Real Estate Law Update: A Holdover after Foreclosure Sale Is Not a Tenant.

Real Estate Law Update: A Holdover after Foreclosure Sale Is Not a Tenant.

Happy Friday!

 

Today I am posting about a Court of Appeals case decided on November 1st – Seymore v Adams Realty, et al

Foreclosed Property = high risk/high reward.

Real estate investors are always wary of the many pitfalls when purchasing property at foreclosure.

The Adams Realty Case provides an example of what happens when someone is still occupying the Property after foreclosure.

Should you just change the locks?  

Should you take matters into your own hands?

 

FACTS:

  • Plaintiff, Seymore was allegedly locked out of a house located in Detroit after Adams Realty and Michael Regan allegedly changed the locks on or about October 9 or 10, 2014.
  • Defendant Michael Regan purchased the house on or about October 2, 2014, from Bank of America.
  • Bank Of America purchased the property on December 19, 2013, by way of a sheriff’s sale.
  • Seymore sued Regan and Adams Realty claiming that by changing the locks Regan violated the “Anti-Lockout Statute” MCL 600.2918.

 

Anti-Lockout Statute – MCL 600.2918 

Any landlord who has gone through the process of evicting a tenant knows that, in the residential leasing context, there are heightened duties of landlords, and heightened rights of tenants.  Tenants have the right not to have their possessory interest in the property interfered with, without the proper court procedure being complied with (Summary Proceeding Action in District Court).

 

Here, Seymore claimed that she was in possession of the Property after foreclosure and by changing the locks, the purchaser had unlawfully interfered with her right to possess the Property.

 

The Anti-Lockout statute provides damages for forcible ejectment from property or unlawful interference with a possessory interest in property.

 

Subsection (1) (forcible ejection) applies to any person. 

Subsection (2) (unlawful interference) applies to any tenant in possession.

Violating the statute can cause a property owner/landlord to be liable for statutory damages (3 times the amount of actual damages or $200.00 whichever is greater.)

In this case…

Seymore claimed that she was was basically a “hold over tenant” after foreclosure and had rights under the anti-lockout statute.

The Court of Appeals said – no. The Anti-Lockout statute applies to “tenants”. Seymore did not not show any facts that would say she was a tenant. The anti-lockout statute does not apply.

“MCL 600.2918(2) does not provide relief for a person, such as [Seymore] who remained in possession of property after a foreclosure but who had no contractual relationship with the owner of the property.” Seymore, id at Page 3, citing Nelson v Grays, 209 Mich App 661  (1995).

 

Conclusion:

Just changing the locks after redemption has expired is not “unlawful interference with a possessory interest” under MCL 600.2918(2) if you, purchaser, do not have a contract with the occupier of the Property.

However, the anti-lockout statute enforces penalties against a property owner who takes “forcible actions” that, as the court in Shaw v Hoffman, 25 Mich 162 (1872) noted “in some way inspire terror or alarm in the person evicted.”

To avoid any unfounded claims by holdovers, it always makes sense after purchasing property at foreclosure, when there are any occupants present, to go through the lawful channels for a court proceeding to extinguish any possessory rights.

You don’t want to expose yourself to undue liability.

 

Questions? Comments?

E-mail: Jeshua@dwlawpc.com

http://www.dwlawpc.com

Twitter: @JeshuaTLauka

Advertisements
Categories: Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: