Recording Saurman affidavit did not void mortgage foreclosure sale

In Trademark Properties of Michigan, LLC v Fannie Mae, a published Court of Appeals decision, the original owner granted a mortgage on a condominium unit.  The mortgagor defaulted and the mortgage was foreclosed.  Fannie Mae was the successful purchaser at the sale.  The condominium association subsequently recorded a lien for nonpayment of assessments and foreclosed the lien by advertisement.  Trademark was the successful purchaser.  Before the redemption period on the lien foreclosure expired, the attorney for Fannie Mae recorded an affidavit claiming that, pursuant to the decision in Residential Funding Co., LLC v Saurman, 292 Mich.App. 321; 807 N.W.2d 412 (2011), the sale was void ab initio.

However, the Court of Appeals decision was reversed by the Michigan Supreme Court.  Residential Funding Co, LLC v Saurman, 490 Mich. 909; 805 N.W.2d 183 (2011). Trademark sued to quiet title, claiming that the affidavit was not sufficient to set aside the sheriff’s sale.  The trial court granted summary disposition for Fannie Mae, but the Court of Appeals reversed.

The Court of Appeals did not specifically address whether an affidavit to expunge a sheriff’s sale was effective to do so.  Instead, the court held that, since the Supreme Court decision held that Saurman-type foreclosures were not void, the affidavit was ineffective because the sale was valid.

The author hopes that the Court of Appeals eventually squarely address the issue of whether an affidavit is sufficient to expunge a sheriff’s sale validly held.  Mortgagees use these frequently to set aside foreclosures for a multitude of reasons; however, prior Michigan case law has held that a validly held sheriff’s sale cannot be set aside absent fraud or some irregularity in the sale process.  For Michigan condominiums, the difference between a sale set aside and a valid sale can mean years of assessments that are collectible from a solvent bank rather than uncollectible from an insolvent co-owner.

© Steve Sowell 2017