Do I have to move out of my home before the sheriff sale?

Homeowners can stay in their homes after the sheriff sale, usually 6 months.

A common misconception for homeowners in foreclosure is that they have to move out of their house before the sheriff sale. When a county deputy or appointed county official posts a notice with the sale date near their door, they think that is the last date they can stay. Michigan law says they have rights to occupy the house for six more months. We have heard of many lately cases where homeowners abandon their property early, and my news article from May 2012 is worth repeating.

Many homeowners are still struggling in our economy. Foreclosure rates in Michigan have been slightly decreasing during the past few months, but the crisis is not over. The Michigan legislature is currently debating laws about foreclosure. For the past year, redemption period has been 6 months for non-agricultural properties.

Homeowners do have rights during foreclosure. After a property is sold at a sheriff’s sale (foreclosure sale), there is a redemption period. For most properties it is a six month period; for some properties it is a year where more than two thirds of the loan has been paid, or if the property is used for agricultural purposes. If the property has been declared abandoned, the redemption period can be shortened to one month. Learn more by reading a fact sheet from Legal Aid of West Michigan 

During the six month redemption period, the homeowner(s) can continue to live in the property and are not required to make any mortgage payments. They can use this time to save funds and plan their next steps. They also have the right to sell the property (short sale) to another person, avoiding foreclosure.

If the homeowner can find funds to buy back the property, then they can keep it. That is why this time is called a redemption period. At the sheriff’s sale, the purchaser pays a certain amount of money to purchase the property. Often the purchaser will be the homeowner’s mortgage company, although it could also be another third party. The amount necessary for the homeowner to buy back, or redeem, the property is the amount the purchaser paid, plus some allowable costs and a daily interest rate based upon your mortgage loan interest rate. A homeowner can learn the sale price for the property by obtaining a copy of the sheriff’s deed from the Register of Deeds in the county where the property is located.

It is possible that the sheriff’s sale purchaser, even if it was the mortgage company, paid less than the amount due on the loan. If the homeowner(s) want to redeem, or buy back, the property they do not have to pay the whole loan amount. They only have to pay the purchase price from the sheriff’s sale even if it is substantially less than the loan amount.

Before moving, if that is the choice, the homeowner should check with their county Register of Deeds office to be sure the property was actually sold. We have had several clients recently who moved out when they thought a sheriff sale had happened, paid rent for two years, and then found out the lender never actually allowed the sale to occur. These homeowners could have continued to live in the house rent free.

Going through foreclosure is the right option for some Michigan homeowners. Knowing that they can continue living in their house with no mortgage payments for six months after the sheriff sale can keep a roof over their head and provide the time to plan next steps.

For more information about foreclosure in Michigan, go to the Housing link at www.mimoneyhealth.org or www.michigan.gov/mshda. Michigan State University Extension offices in many counties have certified foreclosure counselors you can talk to for free about your rights and assist you to think about your options in the foreclosure process. In other areas, find a housing counselor at http://www.mshda.info/counseling_search/.

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