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Michigan Court of Appeals: Filing Suit Does Not Toll Right of Redemption Period

Written by Admin on May 2, 2012 Category: Banking, Financial Institutions

The Michigan Court of Appeals has held that, after foreclosure proceedings and a sheriff’s sale, filing suit against a mortgage company does not serve to toll the six-month statutory right of redemption period.

The Court of Appeals announced today its unpublished decision in Nadia Awad v. GMAC and Wayne County Board of Commissioners. The court affirmed the holding of the Wayne County Circuit Court, which held that the plaintiff did not have standing to claim an interest in her foreclosed upon property due to the expiration of the statutory right of redemption period soon after she filed suit. Contrary to the plaintiff’s arguments, the filing of suit had not stopped the redemption period from expiring.

The plaintiff, Awad, originally received a loan in the amount of $283,500 to buy a Dearborn Heights property in 2007. GMAC, which had been assigned the loan, commended foreclosure proceedings on March 31, 2010, after the homeowner had defaulted on the mortgage obligations. Fannie Mae was the successful bidder at the sheriff’s sale held on May 26, 2010. Awad filed suit on November 8, 2010 – 18 days before the expiration of the statutory right to redeem expired on November 26, 2010. She sought to quiet title in her name, asked for a declaratory judgment and a temporary restraining order, and also claimed slander of title.

GMAC was awarded summary disposition in the circuit court on the grounds that Awad did not redeem the property during the six-month statutory right of redemption, and therefore Awad no longer had standing to claim an interest in the property after November 26, 2010. On appeal, Awad argued that the redemption period had not expired because she filed suit 18 days before the redemption deadline. In other words, Awad believed that filing suit served to toll, or stop, the clock on the redemption period and therefore she still had an interest in the property.

The appellate court disagreed, relying in part on two prior Court of Appeals opinions to find that that the lawsuit Awad filed on November 8, 2010, did not serve to toll the statutory right of redemption. Therefore, upon the expiration of the redemption period on November 26, 2010, Awad no longer had an interest in the property. As a result, she no longer had standing to bring any of her claims against the defendants.

“Although she filed suit before expiration of the redemption period, Awad made no attempt to stay or otherwise challenge the foreclosure and redemption sale. Upon the expiration of the redemption period, all of Awad’s rights in and title to the property were extinguished, and she no longer had a legal cause of action to establish standing.”

The experienced attorneys of Dalton Tomich, PLC regularly represent lending institutions throughout Michigan and the nation in foreclosures and related matters. For more information on foreclosure and other lending matters, please feel free to contact us.

For the full opinion in Nadia Awad v. GMAC and Wayne County Board of Commissioners, click here.

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