HB 5152

substitute for
House BILL NO. 5152
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
by amending section 3208 (MCL 600.3208) and by adding
sections 3214 and 3222.
the peoplE of the state of michigan enact:
Sec. 3208. Notice that the a mortgage
will be foreclosed under this chapter by a sale
of the mortgaged premises, or some part of them, shall the premises,
must be given by publishing doing all of the following:
(a) Publishing the
same notice for
4 successive weeks at least once in each week , in a newspaper published in the county where the
premises included in the mortgage and intended to be sold, or some part of them, the premises, are situated.
located. If no newspaper is published in
the county, the notice shall must be published in a newspaper published in an
adjacent county. In every case within
(b) For
residential property described in section 3214(9), before the first publication
of the notice under subdivision (a), recording a true copy of the notice with
the register of deeds for the county or counties in which the premises are
located.
(c) Not later than 15 days after the first publication of the notice under subdivision (a), posting
a true copy shall be posted of the notice in a conspicuous place upon on any part
of the premises described in the notice.
Sec. 3214. (1) Except
as provided in subsection (10), if a mortgagor, the mortgagor's heirs or
personal representative, or any person that has a recorded interest in the mortgaged
premises that was obtained before a notice of foreclosure is recorded under
section 3208(b) conveys the mortgaged premises after the notice of foreclosure is
recorded and before the foreclosure sale is conducted under section 3216, the
grantee is liable to the grantor for damages as provided in this section unless
the grantee provides a notice of rights that satisfies all of the requirements
of subsection (2) to the grantor before execution of the instrument of
conveyance, but not before the cooling-off period under subsection (3) has
elapsed.
(2) All of the following apply to a notice of rights required under
subsection (1):
(a) The notice must be a separate document from the instrument of
conveyance and any other document.
(b) The notice must be printed in not less than 14-point boldfaced type.
(c) The notice must be signed and dated by each grantor.
(d) A copy of the fully executed notice, signed and dated by all
parties, must be provided to each grantor at the time of signing.
(e) Before presenting the notice to the grantor for signature, the
grantee must complete all blanks in the notice, including all property value
disclosures required by the notice language under subsection (8). A notice
presented with any required blank unfilled does not satisfy the requirements of
this section.
(f) The notice must identify the property by street address and by each
tax parcel identification number assigned to the property. If the property
consists of more than 1 parcel, the notice must list every parcel
identification number. If no street address or parcel identification number has
been assigned, the notice must include the legal description of the property. A
good-faith error in, or omission of, a parcel identification number does not,
by itself, make the notice noncompliant or give rise to liability under
subsection (5) if the property is otherwise reasonably identified in the
notice.
(3) A grantee shall not present an instrument of conveyance subject to
this section, or an agreement, option, or contract to convey an interest
subject to this section, to the grantor for execution before 7 days after the
grantor signed the notice of rights required under subsection (1). An
instrument of conveyance, or an agreement, option, or contract to convey an
interest, executed in violation of this 7-day cooling-off period is a per se
willful violation under subsection (5)(c). This 7-day cooling-off period is
mandatory and cannot be waived.
(4) The existence of a notice signed under this section is not a defense
against a claim of fraud, duress, misrepresentation, or unconscionability, and
does not preclude any other remedy at law or equity available to the grantor.
(5) A grantee who fails to provide a notice of rights as required under
subsection (1) is liable to the grantor for damages as follows:
(a) The measure of damages is the fair market value of the premises at
the time of conveyance less the outstanding mortgage balance as stated in a notice
of foreclosure recorded under section 3208(b) less the consideration actually
paid by the grantee to the grantor. As used in this subdivision,
"consideration actually paid" means cash or cash equivalent actually
received by the grantor at or before closing, not including any amounts paid by
the grantee directly to satisfy the mortgage or other liens encumbering the
premises.
(b) The grantor bears the initial burden of establishing a reasonable
estimate of the fair market value of the premises at the time of conveyance by
competent evidence. Competent evidence includes, but is not limited to, a
retrospective appraisal by a licensed appraiser and comparable sales data for
similar properties in the same area within a reasonable time of the conveyance.
Upon the grantor establishing a reasonable estimate of fair market value, the
burden shifts to the grantee to rebut that estimate by a preponderance of the
evidence.
(c) If the court finds that the violation was willful, the court shall
award 2 times the damages calculated under subdivision (a). A violation is
presumed willful if any of the following apply:
(i) The grantee is
a person other than an individual, and the grantee's stated or apparent
business purpose involves acquiring distressed or foreclosed properties.
(ii) The grantee, or
a beneficial owner or controlling person of the grantee, has acquired more than
1 interest in mortgaged premises during a foreclosure gap period within the 3
years preceding the conveyance at issue.
(iii) The notice of
rights was backdated, as established by any evidence, including, but not
limited to, document metadata, witness testimony, or inconsistency with other
transaction documents.
(iv) The grantee
took affirmative steps to prevent the grantor from seeking legal counsel,
including, but not limited to, requiring same-day signing, misrepresenting the
nature of the documents, or representing that the notice of rights was not
required.
(v) The grantee
failed to record the instrument of conveyance and the notice of rights not
later than 120 days after execution.
(d) In addition to damages under subdivision (a) or (c), the court shall
award the grantor reasonable attorney fees and costs if the grantor prevails.
(6) An individual who is a beneficial owner of, or who exercises control
over the management or operations of, an entity that is subject to this section
is jointly and severally liable with the entity for all damages and attorney
fees awarded under this section. A beneficial owner or controlling person is
presumed to have had actual knowledge of the recorded notice of foreclosure at
the time of the conveyance. This presumption may be rebutted by clear and
convincing evidence.
(7) It is an affirmative defense to liability under this section that
the grantee had no actual knowledge of the recorded notice of foreclosure at
the time the instrument of conveyance was executed. For purposes of this
subsection, a grantee who conducted a bona fide search of the register of deeds
index before closing and found no recorded foreclosure notice is presumed to
have had no actual knowledge of the pending foreclosure.
(8) A notice of rights required under subsection (1) must contain the
following language:
NOTICE TO SELLER: READ THIS DOCUMENT CAREFULLY.
YOU ARE SELLING YOUR HOUSE WHILE IT IS IN FORECLOSURE. THIS IS A LEGAL
AND FINANCIALLY SIGNIFICANT DECISION. YOU SHOULD SEEK LEGAL COUNSEL OR CONTACT
A HUD-CERTIFIED HOUSING COUNSELOR BEFORE SIGNING ANY DOCUMENTS.
PROPERTY THIS NOTICE CONCERNS
STREET ADDRESS: ______________________________
TAX PARCEL IDENTIFICATION NUMBER(S): ______________________________
(IF THIS PROPERTY CONSISTS OF MORE THAN ONE PARCEL, LIST EVERY PARCEL
IDENTIFICATION NUMBER ABOVE. THIS NOTICE COVERS ALL PARCELS LISTED.)
LEGAL DESCRIPTION (REQUIRED ONLY IF NO STREET ADDRESS OR PARCEL NUMBER
HAS BEEN ASSIGNED; MAY BE ADDED IN ANY CASE): ______________________________
PROPERTY VALUE DISCLOSURE (TO BE COMPLETED BY THE BUYER)
1. CURRENT STATE EQUALIZED VALUE (SEV): $__________________
(This amount is a matter of public record available from the local
assessor.)
2. APPROXIMATE MARKET VALUE (SEV x 2): $__________________
(Multiplying the SEV by 2 provides an estimate of the property's market
value. This figure is an estimate only and may not reflect actual market value.
You are encouraged to obtain an independent appraisal before signing.)
3. PURCHASE PRICE OFFERED: $__________________
4. OUTSTANDING MORTGAGE BALANCE FROM FORECLOSURE NOTICE:
$__________________
(Amount claimed to be due on the mortgage at the date of the notice, as
published under section 3208 of the revised judicature act of 1961, 1961 PA
236, MCL 600.3208.)
5. ESTIMATED EQUITY FORFEITED (Line 2 MINUS Line 4 MINUS Line 3):
$__________________
(This is the approximate net amount of equity you are giving up, after
accounting for the purchase price you are receiving.)
This document serves as a formal notice of certain rights that will be
forfeited upon the sale of this property. By signing a deed and completing the
sale of the property, you will be waiving and relinquishing rights you may have
under statute, as follows:
1. Right of Redemption: By selling the property, you permanently waive
any and all rights to redeem or reclaim the property. The right of redemption
allows a mortgagor, the property owner, to reclaim a foreclosed property by
paying off the outstanding debt within a legally specified redemption period.
This right is irrevocably forfeited upon your completion of the sale.
2. Right to Occupancy During the Redemption Period: You further
acknowledge that any rights to remain in the property during the redemption
period will no longer be available to you. Once the conveyance is complete, you
forfeit any and all rights to continue occupying the property.
3. Right to Surplus Proceeds: Your home may be worth more than the
outstanding balance of your mortgage. If the home is sold at public auction,
and the sale price is greater than the balance of the mortgage, you may be
entitled to collect the remaining sale proceeds. By selling the property before
the public auction, you will have no right to collect the surplus proceeds that
may have resulted from the auction sale.
By signing a deed or instrument of conveyance, which by law may not be
presented to you for signature until at least 7 days after the date you sign
this notice, you will be waiving all of the above rights provided to you by
statute.
YOU HAVE A 7-DAY COOLING-OFF PERIOD.
BY LAW, YOU CANNOT BE ASKED TO SIGN THE DEED OR INSTRUMENT OF SALE UNTIL
7 DAYS AFTER YOU HAVE SIGNED THIS NOTICE. THIS PERIOD IS TO GIVE YOU TIME TO
UNDERSTAND YOUR RIGHTS AND SEEK HELP.
WARNING: THIS DOCUMENT MAY NOT BE BACKDATED. SIGNING THIS DOCUMENT WITH
A FALSE DATE IS FRAUD UNDER MICHIGAN LAW AND MAY RESULT IN CRIMINAL PROSECUTION
AND CIVIL LIABILITY.
(9) This section applies only to residential property that does not
exceed 4 units. For purposes of this section, property that is used in part for
nonresidential purposes is residential property only if the residential use is
the principal use of the property.
(10) This section does not apply if the grantee is the person
foreclosing the mortgage or is a person that has an interest in the property
that is subordinate to the interest of the person foreclosing the mortgage.
(11) It is an affirmative defense to liability under subsection (5) that
the grantee provided the grantor a notice of rights that contained all
completed property value disclosures required under subsection (8), the grantor
signed and dated the notice, the cooling-off period under subsection (3) was
observed, and the defect did not mislead or prejudice the grantor.
(12) Not later than 30 days after execution of an instrument of
conveyance that is subject to this section, the grantee shall record the
instrument, with the fully executed notice of rights required under subsection
(1) attached, with the register of deeds for the county or counties in which
the premises are located.
(13) A grantee that fails to comply with subsection (12) is liable to
the grantor for a civil penalty of $50.00 for each day the failure continues,
beginning on the thirty-first day after execution and ending on the date the
instrument and attached notice are recorded, not to exceed $25,000.00 for each
instrument, and liable for reasonable attorney fees and costs if the grantor
prevails. A penalty under this subsection is in addition to, and not instead
of, any liability under subsection (5).
(14) The period of limitations for an action under subsection (5) does
not begin to run until both the instrument of conveyance and the notice of
rights required under subsection (1) are recorded as required under subsection (12).
Sec. 3222. If a
notice of foreclosure is recorded under section 3208(b) and a sale scheduled in
a notice under section 3212 is cancelled by the party foreclosing the mortgage,
a notice cancelling the notice of foreclosure must be recorded with the
register of deeds for the county or counties in which the premises are located not
later than 30 days after the sale is canceled.
Enacting section 1.
This amendatory act does not take effect unless House Bill No. 5153 of the
103rd Legislature is enacted into law.