Rule 3.410.Foreclosure of Mortgages and Land Contracts

MCR 3.410 is a short overlay on ordinary practice. Subrule (A) says so directly: except as prescribed in this rule, the general rules of procedure apply to actions to foreclose mortgages and land contracts. What follows is the set of departures — two pleading provisions, a timing floor for the sale, a route for surplus money, and a provision on mortgage trusts.

Pleading

Subrule (B)(1) requires a plaintiff seeking foreclosure or satisfaction of a mortgage on real estate or a land contract to state in the complaint whether an action has ever been brought to recover all or part of the debt secured by the mortgage or land contract, and whether part of the debt has been collected or paid. The disclosure is affirmative; the complaint has to address it either way.

Subrule (B)(2) works in the opposite direction and lightens the pleading. It is not necessary to set out in detail the rights and interests of defendants who are purchasers of, or who have liens on, the premises subsequent to the recording of the mortgage or land contract. After setting out his or her own interest, the plaintiff may state generally that those defendants have or claim some interest in the premises as subsequent purchasers, encumbrancers, or otherwise. The relief is about description, not joinder: the subrule speaks of defendants who already hold those junior interests and excuses only a detailed account of what each one holds.

Timing of the sale

Subrule (C) puts two separate limits on the sale, and both have to be satisfied:

• a sale under a judgment of foreclosure may not be ordered on less than 42 days' notice; and
• publication may not begin until the time set by the judgment for payment has expired, and then not until 6 months after an action to foreclose a mortgage is begun, or 3 months after an action to foreclose a land contract is begun.

The waiting periods run from the start of the action, not from the judgment, so the clock is already running while the case is litigated. A land contract foreclosure moves on the shorter of the two schedules.

Surplus

Subrule (D) handles what is left when the sale brings more than the debt. Where money remains after paying the amount due the plaintiff, a party to the action may move for disposition of the surplus in accordance with the rights of the parties entitled to it. The rule creates a motion practice rather than an automatic distribution, and it gives the right to move to a party to the action.

Mortgage trusts in equity

Subrule (E) is narrow. Proceedings of the kind described in MCL 600.3170 are governed by the procedures in MCL 451.401-451.405, except as the subrule modifies them. The modification is a counting rule. A bond, other obligation, or beneficial interest held by or for the benefit of the mortgagor or the mortgagor's successor in estate, or subject to an agreement or option by which the mortgagor or that successor may acquire it or an interest in it, may not be counted in determining a majority of such obligations or beneficial interests. It is excluded both from the majority and from the whole number of which the majority is required, which keeps the mortgagor's own holdings out of both sides of the fraction.