This question concerns a notice of mortgage foreclosure for a commercial property. Just so you know, commercial property, like residential property, can also be foreclosed upon.
The question comes from Scott S. of Shelby Township, who owns a restaurant and the building as well. He states: “I received my notice of foreclosure from the bank 3 months ago but the building has already gone to foreclosure sale. I don’t think that the balance as stated at the sheriff sale is correct – it is higher than the figures I calculated. Much more than I thought I owed. What can I do to bring this to the attention of my bank? Who do I speak with? Is it too late?”
Your question has multiple issues.
Request Evidence of Debt
It is very important that when you initially receive your notice of foreclosure, also known as a notice of default or NOD, that you verify the amount due and owing. You also have the opportunity to demand from the lender or the lender’s attorney, a validation of the mortgage obligation — a validation of debt. This means that you have a legal right to request the evidence to show that the lender conducting the foreclosure in the legal chain of title as your lender.
But since the property has already gone to sale, it is usually a bit too late to get the attention of the lender or the lender’s agent to recalculate their figures and stop your sale.
Address Problem During Redemption
If there are serious problems or legal concerns that you have and the property does in fact go to sale, you MUST address the problem during the redemption period. Don’t wait until it expires.
The redemption period is the time that you have to pay off the entire balance due so that you don’t lose your property. In Michigan, the redemption period generally is six months. There are exceptions that will extend the period out further or even shorten it–you need to meet with a real estate attorney to determine these exceptions. But six months is pretty standard.
Bring Lawsuit Before Redemption Expiry
Here’s the thing, if you don’t legally challenge, in other words, bring a lawsuit before the redemption period expires, you will have very little chance or legal opportunity to prevail in court – this is because Michigan courts hold that a mortgage is extinguished after the time for redemption expires. Courts have ruled that without a mortgage left, the property owner does not have any rights to bring their matter at court because there is no longer an underlying mortgage contract. No mortgage, no legal foundation to be in court.
So, Scott, if you can show problems with the lender’s calculations, you could get the sale set aside, but it is not likely without bringing an action. That is why it is so important to respond and challenge the allegations contained in the notice of default within 30 days of receiving the notice and before the foreclosure sale. I hope this helps.