Proposed Legislation Would Create New Protections for Michigan Residential Borrowers and Tenants During States of Emergency

In response to the ongoing COVID-19 crisis and its resulting adverse effects on the income levels of Michigan residents, a package of bills (2020 SB 912 through 2020 SB 917) was introduced earlier this month to provide additional protections for residential tenants and owner-occupants during a declared state of emergency. The proposed bills would amend existing laws or enact new legislation to restrict the ability of landlords, mortgagees, and taxing authorities to pursue evictions or foreclosures during a declared state of emergency.

Under the proposed legislation, new protections for residential tenants during a declared state of emergency will include the following: 

• Landlords are prohibited from attempting to recover possession of residential property subject to a lease, whether by nonjudicial action, summary proceedings, or other legal action. State courts are similarly prohibited from advancing an action for summary proceedings or entering any judgment for possession, order for eviction, or writ of restitution (2020 SB 912; 2020 SB 914).
• Landlords are prohibited from charging, collecting, or seeking to collect penalties for late payments or non-payments of rent during declared emergencies, and similarly, State courts are prohibited from entering judgments which include such penalties or other charges (2020 SB 912).
• Residential tenants are granted the right to unilaterally declare a lease terminated and vacate the property (2020 SB 912; 2020 SB 913). 

The proposed legislation also offers protections to residential owner-occupants during declared states of emergency, whether ownership of the property is subject to a traditional mortgage or an executory land contract: 

• Mortgagees, or vendors under land contracts, are prohibited from charging, collecting, or seeking to collect penalties for late payments or non-payment during declared emergencies, and similarly, State courts are prohibited from entering judgments which include such penalties or other charges (2020 SB 912; 2020 SB 915).
• Persons entitled to foreclose a mortgage by advertisement are prohibited from taking any action to proceed with the foreclosure (2020 SB 912; 2020 SB 914; 2020 SB 915).
• State courts are prohibited from entering a judgment for sale or from advancing an action to foreclose on a mortgage or land contract (2020 SB 912; 2020 SB 914; 2020 SB 915).

Lastly, the proposed bills also provide flexibility and relief from certain real property tax deadlines and procedures:

• During a declared state of disaster or state of emergency, foreclosing governmental units will be permitted to temporarily suspend strict compliance with normal tax foreclosure procedures and may extend the tax redemption period deadline to allow homeowners behind on tax payments to redeem principal residences forfeited to county treasurers as late as 30 days after the termination of a declared state of disaster or emergency (2020 SB 916).
• For principal residences that have already been forfeited and are under an order of foreclosure, during an aforementioned extension of the tax redemption period, foreclosing governmental units may also motion for courts to amend orders of foreclosure to extend deadlines for redemption if the order of foreclosure was made while conditions leading up to the declared state of disaster or emergency existed or while the governor’s declaration of the same was in effect (2020 SB 916).
• For petitioners submitting tax appeals, filing deadlines during the 2020 calendar year for any petition under the Tax Tribunal Act or other laws shall be extended for an additional 90 days beyond the initial filing deadline (2020 SB 917).

If enacted into law, the bills will have a significant impact on the ability of residential mortgage holders, land contract vendors, and landlords to enforce their typically available statutory and contractual remedies during declared states of disaster or emergency. Dykema will continue to monitor these issues and provide further updates if and when these bills are signed into law. If you have questions about the matters raised in this alert, please contact Michael Vogt at 248-203-0739 (mvogt@dykema.com), Laura Baucus at 248-203-0796 (lbaucus@dykema.com), or your regular Dykema contact.

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