Michigan’s Foreclosure by Advertisement statute was recently amended to provide a right of inspection to the foreclosure sale purchaser, and a way to shorten the redemption period if the right of inspection is unreasonably refused or if the occupant causes damage to the property.
The revision to MCLA §600.3240, effective January 10, 2014, provides that after the sale and periodically during the redemption period the purchaser has the right to inspect the interior and exterior of the premises and all ancillary structures. If the inspection is refused, or if damage to the property is imminent or has occurred, the purchaser may immediately commence eviction proceedings for possession of the property. If the damage is repaird before the hearing, no judgment shall be entered. However, if a judgment is entered, the right of redemption “is extinguished and full title to the property vests in the purchaser.”
Damage includes, but is not limited to:
- Failure to comply with local ordinances regarding maintenance of the property, if the failure is the subject of an enforcement action by the appropriate governmental unit.
- Boarded up or closed off windows or doors.
- A smashed, broken off, or unhinged door.
- Accumulated rubbish, trash, or debris.
- Stripped plumbing, wiring, siding, or other metals.
- Missing fixtures, including furnace, water heater, or air conditioning unit.
- Deterioration below communit standards for public safety and sanitation
- Conditions that would consitute a health hazard or injury to premises under the Michigan Summary Proceedings Act.
This new section is a subtantial change from prior law, which did not provide adequate redress to a foreclosure sale purchaser when the occupant was trashing the property. Purchasers should demand an inspection immediately upon completion of the sale to document the condition of the property as of the sale, and should periodically inspect during the redemption period to assure their investment is not being degraded.
This chang may provide a method for non-mortgagee foreclosure sale purchasers, who currently cannot shorten a redemption period by the abandonment process, to shorten a redemption period.