In a recent case, Rule v US Bank, the Michigan Court of Appeals declined to broaden the definition of “Owner” under MCL § 600.6023(1)(h). In 1999, the plaintiff, Wanda, became a quadriplegic after a snowmobile accident. Because of the accident, the plaintiff received an insurance payment and moved into her parents’ home. In order to make the home accessible to her, the family spent most of the insurance money on modifications to the home to accommodate the plaintiff’s needs. The family widened doors for easier wheelchair, installed a wheel chair lift, and remodeled a bathroom.
In 2006, the parents decided to give the bank a mortgage on the property. Three years later in 2009, the parents defaulted on the loan and lost the house to foreclosure. After the expiration of the redemption period, Wanda sued the bank and argued that the bank’s foreclosure was improper because she had a protected homestead interest in the property. Under Michigan’s homestead laws, property is protected from forced sales, like foreclosures, unless all owners of the property have signed a valid mortgage.
The protection under MCL § 600.6023(1)(h) “extends to any person owning and occupying any house on land not his or her own and which the person claims as a homestead.” Michigan courts have broadly interpreted what “owning” under the statute means. Owning includes fee simple, joint tenants, possessors of land under land contracts, and even a lessee who has erected and occupied a dwelling on property.
Although the plaintiff admitted that she did not meet the current definition of owner, the plaintiff argued that she had an equitable ownership interest in the property based on improving the land with the insurance money, as a tenant, and based on her special circumstances.
The Court of Appeals rejected her argument and declined to expand the already liberal construction of “owning” under the statute. Despite the harsh result, the court concluded that she had no protected homestead interest in the property. Rather, her parents were the owners of the property. The court noted that if she claimed an interest in the real property, then she should have recorded such interest with the Register of Deeds to give public notice of her interest.
