District Court Possession Judgment Determining End of Redemption Period Cannot Be Collaterally Attacked in Circuit Court

In Bank of America v 5/3 Greenway Trust, an unpublished Michigan Court of Appeals opinion, Bank of America foreclosed a mortgage on a condominium unit.  During the redemption period, the condominium association recorded a lien and subsequently foreclosed the lien.  5-3 Greenway Trust purchased at the lien foreclosure sale, then attempted to shorten the redemption period in the district court because the property had a boarded-up window.  The Trust obtained a default judgment against the bank in the district court.  The bank did not appeal or try to set aside the judgment.

The bank filed a circuit court action seeking to quiet title against the Trust.  The circuit court entered a judgment against the Trust and the Trust appealed.  On appeal, the Michigan Court of Appeals held that the district court had subject matter jurisdiction and entered a valid judgment necessarily determining title to land.  The bank’s attempt to collaterally attack the district court judgment in the circuit court was invalid.  The appeals court remanded to the circuit court for entry of an order granting summary disposition to the Trust and dismissing the case.

This is one of the first reported decisions dealing with the recently enacted additions to the foreclosure statute allowing a sale purchaser to shorten the redemption period for, among other things, neglect or damage to the property.  Although the provision relied upon in this case has since been repealed, if the district court enters a valid judgment determining that the redemption period has ended, that judgment is binding and cannot be collaterally attacked.

© Steve Sowell 2018