Michigan Laws 554.1054 – Assignment of rents; enforceable security interest; discharge; foreclosure; applicability
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Terms Used In Michigan Laws 554.1054
- Assignee: means a person entitled to enforce an assignment of rents. See Michigan Laws 554.1052
- Assignment of rents: means a transfer of an interest in rents in connection with an obligation secured by real property located in this state and from which the rents arise. See Michigan Laws 554.1052
- Assignor: means a person that makes an assignment of rents or the successor owner of the real property from which the rents arise. See Michigan Laws 554.1052
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Document: means information that is inscribed on a tangible medium or that is stored on an electronic or other medium and is retrievable in perceivable form. See Michigan Laws 554.1052
- 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
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government, or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Michigan Laws 554.1052
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Rents: means any of the following:
(i) Sums payable for the right to possess or occupy, or for the actual possession or occupation of, real property of another person. See Michigan Laws 554.1052Security instrument: means a document, however denominated, that creates or provides for a security interest in real property, including a land contract, whether or not it also creates or provides for a security interest in personal property. See Michigan Laws 554.1052 Security interest: means an interest in property that arises by agreement and secures performance of an obligation. See Michigan Laws 554.1052
(1) An assignment of rents is created by an assignment in either an enforceable security instrument that grants a security interest in rents or a document that grants a security interest in rents which is signed in connection with an enforceable security instrument as to any real property described in the document creating the assignment of rents.
(2) Except as provided in subsection (5), an assignment of rents creates a presently effective security interest in all accrued and unaccrued rents arising from the real property described in the document creating the assignment, regardless of whether the document is in the form of an absolute assignment, an absolute assignment conditioned upon default, an assignment as additional security, or any other form. The security interest in rents is separate and distinct from any security interest held by the assignee in the real property.
(3) A discharge of a security instrument discharges by operation of law any assignment of rents made in connection with the discharged security instrument.
(4) Upon a foreclosure of the security instrument, all of the following apply:
(a) The assignment of rents made in connection with the security instrument continues to be effective to the extent of the remaining secured obligation and transfers to the purchaser at the foreclosure sale by operation of law whether or not the foreclosure notice makes reference to the assignment of rents. Any transfer of the foreclosure deed by the holder of the deed also transfers the assignment of rents to the transferee by operation of law.
(b) The assignment of rents made in connection with the security instrument automatically terminates upon the earlier of the following:
(i) Redemption from the foreclosure sale.
(ii) Expiration of the redemption period without redemption. For purposes of this subparagraph, the assignment of rents in connection with any subordinate security instrument automatically terminates.
(5) This act does not apply to an assignment of rents regarding an interest in real property improved by 1 to 4 dwelling units unless 1 or more of the following apply:
(a) The interest is used for agricultural, commercial, industrial, or mineral-extraction purposes, other than incidental uses by an assignor occupying the property as the assignor’s primary residence.
(b) The interest secures an obligation incurred at a time when the property was used or planned for use for agricultural, commercial, industrial, or mineral-extraction purposes.
(c) The assignor planned or is planning to develop the property into 1 or more dwelling units to be sold or leased in the ordinary course of the owner’s business.
(d) The assignor is collecting or has the right to collect rents or other income from the property from a person other than an affiliate of the assignor.