If a Michigan resident misses mortgage payments, foreclosure proceedings will begin on their home if they can't make the payments or come to an agreement with the lender within 120 days. At that point, the sheriff's department announces the date of the public auction of the property.
After a property sells through a sheriff's sale, the new owner receives the sheriff's deed and records it with the Register of Deeds in the county of the property's location, where anyone can view it. Fees for recording deeds, transfer taxes and payment options differ from county to county.
What Is a County Sheriff's Sale?
When a homeowner cannot pay their mortgage, the property returns to the lien holder or lender who can sell it to pay off all or some of the overdue mortgage in what is known as a sheriff's sale. Sheriff's sales occur once a month or each week, depending upon the county. For example, Grand Traverse County holds "open-type" auctions monthly.
A variety of real properties are on the auction block at sheriff's sales, including single-family houses, multi-family homes, apartment complexes, mixed-use properties and commercial properties. Auctions are open to the public, with many counties conducting them on the front steps of the county courthouse. Bidders interested in a property must have certified funds before participating in an auction.
Process of a Michigan Sheriff's Sale
All counties in Michigan hold sheriff's sales. Once a sheriff's department schedules a sale date, it publishes an announcement of the sale in an area newspaper for four consecutive weeks and posts notice of the sale date on the property within two weeks of it appearing in the publication. The plaintiff, or lender, submits an opening bid on the property, after which anyone attending the auction can enter a third-party bid.
The third-party bidder needs only to bid a dollar more than the plaintiff or any other bidder to be the highest bidder. Most counties accept offers on the property for up to an hour after the auction ends and may extend a sale if there is more than one bid on it.
Sheriff's Deed Recorded With the County
After a successful bidder has won the property, the deed is amended to include their name. It will then be recorded with the county Register of Deeds in the property's location. After the deed is recorded, it is available to the public and can be copied or reviewed by anyone.
Recording fees, transfer taxes and payment options differ from county to county. For example, in Wayne County, the fee is $15 to record the first page of a deed, and $3 for each additional page with a $4 remonumentation fee. In Monroe County, registering a deed is a $30 flat fee.
What Is the Homeowner Redemption Period?
A property's former owner can get it back during the redemption period. The sheriff's deed lists the last date of redemption. Typically, the former property owner has until the sheriff's sale to submit a loss mitigation application.
The property owner usually has six months to move out or regain their ownership of the property. If the amount they owe is less than two-thirds of their debt, they have a period of redemption of up to one year.
The owner can live on the property during the redemption period, but does not have to make payments toward it. However, they must allow the lien holder to inspect it and the accompanying structures during the redemption period.
Inspection and Payment for a Foreclosed Property
The most successful bidder in a sheriff's sale must pay the winning bid amount in a bank-certified check within one hour in the amount of the bid price to the lender on the note. In the event they bid more than what is owed on the mortgage (a surplus amount), they will make out a separate check to the county of the auction's location. The sheriff's department may cancel sales without notice due to adjournment or settlement.
When a sheriff's office conducts a mortgage foreclosure sale, bidders do not know if anyone occupies a property. A law enforcement agency will not permit bidders to inspect a property before the auction.
All foreclosed properties are sold "as is," meaning the agency will not have any information regarding a property's condition. The new owner is responsible for removing a property's occupants legally and must also pay any outstanding property taxes.
Research Foreclosed Properties and Sheriff's Sales
A person interested in buying foreclosed Michigan properties can research them by performing a full title search. This is the only way they can be confident that it is a foreclosure for the first mortgage holder. The cost of the search can save them from issues that may arise from not investigating the title.
Individuals can also search for properties going to auction by searching for foreclosure sales, sheriff's sales or auctions in their area's newspaper, through real estate periodicals or by contacting the county clerks in their area.
In the state of Michigan, local law enforcement agencies will usually list foreclosure auctions on their websites. Interested parties can also go to the sheriff's department and ask for a list of properties.
The list will include the location and dates of auctions, the minimum payments that must be rendered immediately following a property's sale, and the acceptable forms of payment. Local laws, the length of the redemption period and fees will also be listed.
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.