Michigan Laws 565.360 – Nonmortgaging vendor or vendee; rights or remedies affected; duties; payments; conditions; duties of third party
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(1) A land contract mortgage shall not, absent voluntary subordination as provided by law, encumber or otherwise affect the rights or remedies of the nonmortgaging vendor or the nonmortgaging vendee except as otherwise provided in subsection (2) or (3).
(2) If the vendee‘s interest is encumbered by a recorded land contract mortgage, the nonmortgaging vendor shall do all of the following:
Terms Used In Michigan Laws 565.360
- Assignee: means assignee of the vendor named in a land contract, a succeeding assignee, or a land contract mortgagee who became the absolute holder of the land contract as a result of security enforcement procedures. See Michigan Laws 565.356
- Contract: A legal written agreement that becomes binding when signed.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Land contract mortgage: means a mortgage granted by a vendor or a vendee. See Michigan Laws 565.356
- Land contract mortgagee: means the holder of a land contract mortgage granted by a vendor or vendee, or his or her heirs, successors, or assigns. See Michigan Laws 565.356
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Nonmortgaging vendee: means a vendee who has not entered into a land contract mortgage granted by his or her vendor. See Michigan Laws 565.356
- Nonmortgaging vendor: means a vendor who has not entered into a land contract mortgage granted by his or her vendee. See Michigan Laws 565.356
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Vendee: means the vendee named in the land contract and the vendee's heirs, successors, or assigns. See Michigan Laws 565.356
- Vendor: means the vendor named in the land contract and the vendor's heirs, successors, or assigns. See Michigan Laws 565.356
(a) Provide the same notices with respect to the remedies of forfeiture and foreclosure to the land contract mortgagee as are required to be provided to the vendee.
(b) Name the land contract mortgagee as a party in interest in any legal proceeding, the effect of which would be to terminate the vendee’s interest, and thus the land contract mortgagee’s lien.
(c) Accept from the land contract mortgagee any cure of any default that the nonmortgaging vendor would be obligated to accept from the vendee.
(3) A nonmortgaging vendee, when the vendor’s interest has been subjected to a land contract mortgage, shall continue to make payments in accordance with the land contract’s terms to the vendor or assignee until any of the following occur:
(a) Notice to the vendee of the completion of foreclosure and the expiration, without redemption, of the applicable redemption period with respect to the land contract mortgage, after which all payments shall be made to the successful bidder at the foreclosure, or the successful bidder’s heirs, successors, and assigns. However, if the vendee has actual notice of the foreclosure sale, installment payments shall be made during the redemption period as provided in section 6058 of the revised judicature act of 1961, 1961 PA 236, MCL 600.6058.
(b) If the land contract mortgage contains a collateral assignment of the payments of the vendee under the land contract, delivery to the vendee of a notice of default signed under oath by the land contract mortgagee asserting that a default exists under the land contract mortgage together with a copy of the recorded land contract mortgage containing the collateral assignment and a demand that all further payments under the land contract be made to the land contract mortgagee, after which all payments shall thereafter be made in accordance with that notice.
(4) A third party asserting a prior lien or interest to that of a land contract mortgagee whose land contract mortgage has been recorded shall do all of the following:
(a) Provide to the land contract mortgagee copies of all notices that must be provided to the vendor or vendee as a prerequisite to the assertion or enforcement of the third party rights or remedies, but only to the extent that those notices would be required to be provided if the vendor or vendee were the fee owner of the real property and the land contract mortgage were a mortgage upon the fee.
(b) Name the land contract mortgagee as a party in interest in any legal proceeding, the effect of which would be to terminate, assert, or enforce a prior lien or encumbrance upon the vendor’s or vendee’s interest that is subject to the land contract mortgage.
(c) Accept from the land contract mortgagee any payment, performance, or cure that the third party would be obligated to accept from the vendor or the vendee.