Redemption is the period after a foreclosed home has been sold at a foreclosure sale, when the homeowner can still reclaim their home. Currently, Michigan law provides different redemption periods depending on whether the foreclosed property is occupied or abandoned, as well as how much is still owed on the original mortgage. If a homeowner occupies the foreclosed property, the redemption period is 6 months if the homeowner owes two-thirds or more of the original mortgage, and 12 months if the homeowner owes less than two-thirds of the original mortgage. If the foreclosed property is abandoned, the redemption period is reduced to 3 months or even down to 1 month depending on how much is still owed on the original mortgage.
A new redemption statute that takes effect January 10, 2014 could have a dramatic effect on the length of a homeowner’s current redemption period. First, this new statute shortens the redemption period for all abandoned residential properties to 1 month. Second, and more importantly, it provides purchasers of a foreclosed property a right of inspection during the homeowner’s redemption period. If the inspection is “unreasonably refused or if damage to the property is imminent or has occurred”, the purchaser of the property may seek a judgment for possession of the property and, if granted, the homeowner’s right of redemption is immediately extinguished. Damage that would entitle a purchaser to immediate possession include things like “a boarded up or closed off window or entrance”, “accumulated rubbish, trash or debris”, and “failure to comply with local ordinances regarding maintenance of the property”.
Although the new redemption statute “protect[s] lenders against property destruction by foreclosees who reside in the homes”, it comes at a cost to good faith homeowners of foreclosed properties who now lack the full security of the redemption period to try and save their homes.
See the text of the new law here: http://legislature.mi.gov/doc.aspx?mcl-600-3240-amended
This post was written by law clerk Lisa Okasinski. Please contact the attorneys of Demorest Law Firm if you would like more information.
