HB 5153 — Civil procedure: foreclosure; distribution of proceeds from mortgage foreclosure auctions; modify. Amends secs. 3240 & 3252 of 1961 PA 236 (MCL 600.3240 & 600.3252). TIE BAR WITH: HB 5152'25

HB-5153, As Passed House, July 1, 2026 SUBSTITUTE FOR HOUSE BILL NO.

(1) A purchaser's deed under section 3232 is void if the mortgagor, the mortgagor's heirs or personal representative, or, subject to sections 3214 and 3240a, any person that has a recorded interest in the property lawfully claiming under the mortgagor or the mortgagor's heirs or personal representative redeems the entire premises sold by paying the amount required under subsection (2) and any amount required under subsection (4), CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 within the applicable time limit prescribed in subsections (7) to (12), to the purchaser or the purchaser's personal representative or assigns, or to the register of deeds in whose office the deed is deposited for the benefit of the purchaser.

(4) If, after a sale under section 3216, the purchaser, the purchaser's heirs or personal representative, or any person CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 lawfully claiming under the purchaser or the purchaser's heirs or personal representative pays taxes assessed against the property, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or premiums on an insurance policy covering any buildings located on the property that under the terms of the mortgage it would have been the duty of the mortgagor to pay if the mortgage had not been foreclosed and that are necessary to keep the policy in force until the expiration of the period of redemption, the property may be redeemed only on payment of the amount specified in subsection (2) plus the amounts specified in this subsection with interest on the amounts specified in this subsection from the date of the payment to the date of redemption at the interest rate specified in the mortgage.

(5) If the redemption payment in subsection (4) includes an CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 amount used to redeem a senior lien from a nonjudicial foreclosure, the mortgagor has the same defenses against the purchaser with respect to the amount used to redeem the senior lien as the mortgagor would have had against the senior lien.

(11) Subject to section 3238, for a mortgage of property that is used for agricultural purposes, the redemption period is 1 year CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 from the date of the sale.

(16) For the purposes of this section, there is a presumption that the property is used for agricultural purposes if, before the foreclosure sale under this chapter, the mortgagor provides the party foreclosing the mortgage and the foreclosing party's attorney proof that the mortgagor filed a schedule F to the mortgagor's federal income tax form 1040 for the year preceding the year in which the proceedings to foreclose the mortgage were commenced and records an affidavit with the register of deeds for the county in which the property is located stating that the proof has been delivered.

If the mortgagor fails to provide proof and record an affidavit as required by this subsection before the foreclosure CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 sale, there is a presumption that the property is not used for agricultural purposes.

(1) AnExcept as provided in subsection (7), an assignment or transfer of the mortgagor's right of redemption recognized by section 3240 is subject to the requirements and remedies of this section.

CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 (d) Any other assignment or transfer requires a notice of redemption rights that satisfies the requirements of subsection (2), provided to the assignor before execution of the instrument of assignment, but not before the cooling-off period under subsection (5) has elapsed.

(d) A copy of the fully executed notice, signed and dated by CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 all parties, must be provided to the assignor at the time of signing.

YOU SHOULD SEEK LEGAL COUNSEL OR CONTACT A MSHDA-HUD-CERTIFIED CERTIFIED HOUSING COUNSELOR BEFORE SIGNING ANY DOCUMENTS.

CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 ______________________________ (IF THIS PROPERTY CONSISTS OF MORE THAN ONE PARCEL, LIST EVERY PARCEL IDENTIFICATION NUMBER ABOVE.

$__________________ CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 6.

CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 WARNING:

(a) The measure of damages is the fair market value of the premises at the time of assignment,assignment less the redemption amount as stated in the purchaser's affidavit filed under subsection (2), less the consideration actually paid by the assignee to the assignor.

As used in this subdivision, "consideration actually paid" means the cash or cash equivalent actually received by the assignor at or before closing, not including any amounts paid by the assignee directly to satisfy the redemption amount or other obligations encumbering the premises.

(i) The assignee is a person other than an individual, and the CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 assignee's stated or apparent business purpose involves acquiring distressed or foreclosed properties.

(5) An assignee shall not present an instrument of assignment CCP H03787'25 (H-2)(H-4)_HB5153_APH_1 hrk8y12n1dqy 1 subject to this section to the assignor for execution before 7 days after the assignor has signed the notice of redemption rights required under subsection (1)(d).

For the 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.

(7) ItThis issection andoes affirmativenot defenseapply toif liabilitythe underassignee subsectionis (3)the forperson aforeclosing violation of subsection (2) that the assigneemortgage providedor theis assignor a noticeperson of redemption rights that containedhas allan completedinterest propertyin value disclosures required under subsection (2)(g), the assignorproperty signedthat andis datedsubordinate theto notice, the cooling-offinterest periodof under subsection (5) was observed, and the defectperson didforeclosing not mislead or prejudice the assignor.mortgage.

(8) NotIt lateris thanan 30affirmative daysdefense afterto executionliability ofunder ansubsection instrument(3) offor assignmenta subjectviolation toof thissubsection section,(2) that the assignee shallprovided record the instrument,assignor witha the fully executed notice of redemption rights that contained all completed property value disclosures required under subsection (1)(d)(2)(g), attached,the withassignor thesigned registerand ofdated deedsthe fornotice, the countycooling-off orperiod countiesrequired inunder whichsubsection (5) was observed, and the premisesdefect aredid located.not mislead or prejudice the assignor.

CCP H03787'25 (H-2) hrk8y1 1 (9) AnNot assigneelater whothan fails30 todays complyafter withexecution subsectionof (8)an isinstrument liableof toCCP theH03787'25 assignor(H-4)_HB5153_APH_1 for2n1dqy a1 civilassignment penaltysubject ofto $50.00this forsection, each day the failureassignee continues,shall beginningrecord on the 31stinstrument, daywith after execution and ending on the datefully theexecuted instrumentnotice andof attachedredemption noticerights arerequired recorded,under notsubsection to(1)(d) exceedattached, $25,000.00with forthe eachregister instrument,of anddeeds liable for reasonablethe attorneycounty feesor andcounties costsin ifwhich the assignorpremises prevails.are located.

(10) An assignee who fails to comply with subsection (9) is liable to the assignor 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 assignor prevails.

(10)(11) The period of limitations for an action under subsection (3) does not begin to run until both the instrument of assignment and the notice of redemption rights required under subsection (1)(d) are recorded as required under subsection (8).(9).

(11)(12) 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 assignor.

(1) If Except as otherwise provided in this section, if, after any a sale of real estate , made as herein prescribed, there shall remain in the hands of under this chapter, the officer or other person making the sale , has any surplus money after satisfying the mortgage on which the real estate was sold , and payment of paying the costs and expenses of the foreclosure and sale, the surplus officer or person making the sale shall be paid over by the officer or other person pay the surplus on demand , to the mortgagor , his or the mortgagor's legal representatives or CCP H03787'25 (H-4)_HB5153_APH_1 2n1dqy 1 assigns.

, unlessunlessThe (2)demand Subsectionto (1)pay does not apply if, at the time of the sale , or before the surplus shallmay not be ismade soless paidthan over,90 somedays aafter claimant or claimants , shall file with the officer or person so making the CCP H03787'25 (H-2) hrk8y1 1 sale , a claim or claims, in writing , duly and verified by the oath of the claimantreal ,estate hisunless or the claimant's agent , or attorney, that the claimant has a subsequentclaim mortgageis orfiled lienunder encumberingsubsection the(2). real estate, or some part thereof, and of the real estate, stating the amount thereof unpaid on the mortgage or lien, and setting forth the facts and nature of the same, in which case mortgage or lien.

If(2) aSubsection claim(1) does not apply if, at the time of the sale , or before the surplus shall be so is filedpaid underover, thissome subsection,a claimant or claimants , shall file with the officer or person so making the sale , shall,a forthwithclaim uponor onclaims, receivingin writing , duly and verified by the claim,oath payof the surplusclaimant to, his or the claimant's agent , andor fileattorney, that the writtenclaimant claimhas witha subsequent mortgage or lien encumbering the clerkreal estate, or some part thereof, and of the circuitreal courtestate, stating the amount thereof unpaid on the mortgage or lien, and setting forth the facts and nature of the countysame, in which thecase salemortgage isor solien. made.

andIf thereupona (3)claim Afteris afiled surplusunder isthis paidsubsection, the officer or person so making the sale , shall, forthwith upon receiving the claim, pay the surplus to, and afile claimthe iswritten filedclaim with the court clerk underof subsectionfile (2),a anycomplaint personin orinterpleader personsunder interestedMCR 3.603 in the surpluscircuit ,court mayof applythe tocounty movein which the courtsale foris anso ordermade, toattach takea proofscopy of the factswritten claim to the complaint, and circumstancesdeposit containedthe insurplus with the claim.court in accordance with MCR 3.603(B).

and thereupon any (3) After a complaint in interpleader is filed and the surplus is deposited under subsection (2), a person or persons interested in the surplus , may apply to move the court for an order to take proofs of the facts and circumstances contained in the claim.

Thereafter, After a motion is filed under this subsection, the court shall summon the claimant or claimants , and the party , or parties interested in the surplus , to appear before him the court at a time and place to be by him named , and attend the taking of the proof, and the claimant or claimants or and any interested party interested who shall appear that appears may CCP H03787'25 (H-4)_HB5153_APH_1 2n1dqy 1 examine witnesses and produce such proof as they or either of them may see fit.

(4) The mortgagor's right to surplus money recognized by this section is not assignable or transferable after the first CCP H03787'25 (H-2) hrk8y1 publication of the notice of foreclosure under section 3208, except by testate or intestate succession.

(5) The state court administrative office shall develop and make available a standardized form for use as a complaint in interpleader that can be used for the procedure authorized under subsection (2).

Use of the form developed under this subsection satisfies the requirements of subsection (2) and the pleading requirements for a claim under MCR 6.302.

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