Real Property Notes Blog
No claim and delivery action for possessions left in foreclosed home
In Tambs v Jennings, an unpublished Michigan Court of Appeals opinion, the Plaintiffs lost their home to mortgage foreclosure. After the redemption period, the mortgagee started and eviction and obtained a judgment of possession, then sold the property to Defendants. Plaintiffs moved out of the home by the date provided in the possession judgment, but left personal property behind. The furnace was not working, the doors were unlocked and unsecured, and there was a dead dog under the porch. Defendants gave Plaintiffs one last chance to retrieve their personal property, but Plaintiffs failed to show up at the appointed time. When further attempts were rebuffed, Plaintiffs filed a claim and delivery action against the defendants. The trial court found that Plaintiffs had not abandoned the property left behind and entered a judgment against defendants for unlawfully retaining Plaintiff’s property. Plaintiffs appealed.
The Michigan Court of Appeals reversed, holding that the evidence established that Plaintiffs had abandoned the personal property. A claim and delivery action cannot be maintained if the defendants did not “unlawfully” detain the Plaintiff’s property. Having abandoned the property, their desire later to reclaim some of it did not revive the abandonment.
“Demand” vs. “Claim” for surplus proceeds at foreclosure sale
In Trustlink Equities, LLC v St. Clair County Sheriff Sale Surplus, an unpublished Michigan Court of Appeals opinion, Trustlink obtained a quitclaim deed and an assignment of their right to surplus proceeds from the property owner the day before a sheriff’s sale in foreclosure of the first mortgage on the property. Trustlink bid on the property; the bid was an overbid, resulting in over $77,000 in surplus proceeds over the balance needed to pay the first mortgage. Trustlink received a deed to the property. On the day after sale, Trustlink filed a document entitled a “claim” seeking payment of the surplus proceeds. Seven days later, a second mortgagee filed a competing “claim” for the surplus proceeds. After hearing, the trial court awarded the surplus proceeds to the second mortgagee. Trustlink then appealed.
The court first had to decide whether Trustlink’s document was a “demand” or a “claim” under the statute, MCL 600.3252. A mortgagor may file a “demand,” while junior mortgagees or lien holders may file a “claim.” The court ultimately found that, despite its title, Trustlink’s document was in fact a demand under the statute. However, the court found that, once the competing claim had been filed, the court was correct in deciding between the competing claims to the surplus and awarding the surplus to the second mortgagee.
The court noted that, had the sheriff paid over the surplus to Trustlink prior to the junior mortgagee’s demand, the junior mortgagee likely would have been without a remedy. Much like discussed previously, it is important to act quickly when there are surplus foreclosure proceeds.
Co-owner liable for $12,875 in fines, $14,900 in attorney fees
In Oak Valley Estates Homeowners Assn v Livingstone, an unpublished Michigan Court of Appeals opinion, the co-owner made alterations to her condominium unit by installing solar panels, a wind turbine, and a generator without obtaining written permission from the association as required by the condominium bylaws. The association began fining the owner for the violations on a daily basis and eventually filed suit seeking an injunction for removal of the unauthorized installations. The appeal in this case concerned only the fines and attorney fees due from the co-owner.
The court applied the “lode-star” method of determining attorney fees. The court first determines a reasonable hourly rate for the attorney based upon surveys or other reliable evidence. The court then determines the amount of time that was reasonably expended in the case. The multiplication of the rate times the hours expended determines the base fee due, which can then be adjusted up or down for certain enumerated factors. This is the first case applying the lode star method to the determination of attorney fees in a condominium case.
The court also upheld the assessment of $12,875 in fines against the co-owner for the unauthorized installations. The court did not have to rule on the issue, but the court appeared ready to uphold daily fines for the violations, as the court upheld the levying of a fine for each day that the association received a complaint regarding the installations.
Will homeowner association restrictions become unenforceable because of an amendment to the Marketable Title Act?
The 2018 lame duck session of the Michigan Legislature passed Public Act 572 of 2018, which was signed by the governor on December 28, 2018. The Act amends the Michigan Marketable Title Act and may be problematic for homeowner associations.
The Marketable Title Act was first enacted in 1945 in an effort to improve the marketability of real property in Michigan by eliminating interests in land more than 40 years old (20 years for mineral interests) unless the interest is kept alive by the filing of a notice of the claim of interest. Prior to the passage of Public Act 572, a general statement in a deed or other conveyance that the transfer was “subject to restrictions of record” was deemed sufficient to keep a declaration of restrictions in force against the property. However, the new Act now requires that a conveyance "specifically refer[s] by liber and page or other county-assigned unique identifying number to a previously recorded conveyance or other title transaction.
While a conveyance of a lot in a platted subdivision will refer to the liber and page where the plat was recorded (and thus, keep alive any restrictions stated in the plat), other restrictions on the use of a lot in a subdivision (or restrictions on the use of unplatted land) may be contained in a “Declaration of Restrictions” or similar document recorded separately from the plat. If a conveyance of property does not specifically mention, by liber and page or other number, the Declaration, arguably the property is no longer subject to those restrictions after 40 years. For subdivisions established prior to March 29, 1979, that can be problematic.
There is a provision in the Act allowing an affidavit of claim to be recorded to keep the restrictions in effect; however, it is unclear under the Act who is entitled to record such an affidavit, and whether the affidavit will affect only the affiant’s property, or will affect all property subject to the restrictions. Can a member of the board of directors of a homeowner’s association record such an affidavit and keep alive the restrictions as to all lots in a subdivision?
The Act requires the affidavit to be recorded within 2 years after adoption of the Act. Lot owners and homeowner associations should seek counsel to determine whether they should file an affidavit.
Condominiums will not be affected by the Act; title to, and deeds conveying, a unit in a condominium project always references the recording information for the original Master Deed for the condominium project, thus satisfying the Act’s requirements.