Michigan: Rates,
Forms & Underwriting
Practices
Agency Webinar
Presented by:
Douglas G. Smith
Vice President, Associate Senior Underwriter
Michigan is a filed rate state

You must use the filed rates at ALL times.
 These
rates are contained in the Michigan
Residential and Commercial Rate Manuals
Forms are not pre-approved by the
Insurance Bureau (OFIR)
However, you must use the commitment,
policies, schedules and endorsements in
the Michigan forms package due to
potential audits by OFIR.
 All forms must use the form number
reflected on the bottom of the form.

Michigan Foreclosure Guaranty
and Commitment

Michigan has a unique product called the
Michigan Foreclosure Guaranty and
Commitment which has special schedules,
exceptions and has a special rate for the
product.
Entireties ownership


Entireties ownership is an ownership interest in both
husband and wife.
Any reference to the marital status between man and
woman creates a presumption of entireties ownership.


Example: “X conveys to Doug Smith and Dawn Smith, his wife”.
This is a single unit of ownership and a conveyance by
one spouse without the other is void unless the
conveyance is to the other spouse.
Tenancy in common


Tenancy in common is an ownership interest in
parties which interest reverts to the party’s heirs
upon death.
This form of ownership is legally presumed if
there is no recitation of tenancy on the
conveyancing instrument.
 Example:
Smith”.
“X conveys to Doug Smith and Dawn
Joint tenants and not tenants in
common (destructible)


Joint tenants and not tenants in common (destructible) is
a form of join ownership which, upon the death of one
tenant, reverts title to the remaining joint tenant(s).
It is destructible, however, in that the conveyance of one
joint tenant’s interest to a 3rd party destroys the joint
interest to the grantee and that grantee takes as a tenant
in common to the rest of the tenants.

Example: “X conveys to Doug Smith, Dawn Smith and Alyssa
Smith as joint tenants and not as tenants in common”. Doug
Smith conveys his interest to Y. Y takes as tenant in common in
relation to the other joint tenants.
Joint tenants with full rights of
survivorship (indestructible)




Joint tenants with rights of survivorship (indestructible) is a form of
join ownership which, upon the death of one tenant, reverts title to the
remaining joint tenants.
It is indestructible, however, in that a conveyance of one joint tenant’s
interest to a 3rd party conveys a “life estate interest” to the grantee for
the life of the grantor.
Upon the death of the grantor, the grantee acquires no interest as the
interest passes to the other joint tenants.
Only upon the death of all the “other” joint tenants first would title
then revert to the grantee upon the grantor’s death.

Example: “X conveys to Doug Smith, Dawn Smith and Alyssa Smith as
joint tenants with full right of survivorship”. Doug Smith conveys to Y.
Y has a life estate for the life of Doug Smith. If Doug Smith dies before the
other joint tenants, Y gets nothing.
Dower




Dower is the interest of the wife in and to 1/3rd of
the lands owned by the husband during
coverture (marriage).
The male equivalency “curtsey”, is not
recognized in Michigan.
Dower can vest only if the non-owning wife is a
resident of Michigan.
A voluntary non-resident can not claim a dower
interest in the lands of her husband.
Homestead


Homestead is the interest of a party in their
domicile (fact issue) and does not apply to
investment or recreational property.
The interest entitles the holder to claim a right to
live on the property for a year, claim a modest
sum, and the archaic right to a cow, a pig and a
chicken. [Noted for historical interest, only] May
be released by deed.
Non-purchase money mortgages



Non-purchase money mortgages must be
signed by both the owning spouse and the nonowning spouse to be effective in Michigan.
Purchase money mortgages do not require the
signature of the non-owning spouse to be
enforceable.
Mortgages on property owned by both husband
and wife must be signed by both husband and
wife.
Dower
Dower must be released by the wife on a
conveyance from a husband to a grantee
by the signature of the non-owning wife on
the deed.
 There is no requirement that a non-owning
male spouse sign a deed to release his
homestead interest.

Corporations
Corporations require evidence of good
standing and submission of a corporate
resolution identifying the appropriate party
to execute documents on behalf of the
organization.
 Corporations may “wind down” affairs
without being in good standing.

Limited Liability Companies (LLC)





LLC’s require the submission of the Articles of Organization
and the Operating Agreement to the Company to determine
the proper party or parties authorized to execute documents
on part of the Company.
If no managing member is identified, then the instruments
must be signed by all members.
Sole member LLC’s are not required to have Operating
Agreements.
Title work for sole member LLC’s must involve a name search
on the member, individually.
Must show all federal and state tax liens and judgment liens
against the individual.
Partnerships

Partnerships require submission of the
Partnership Agreement to determine the
proper party authorized to execute
documents on behalf of the general copartnership or limited partnership.
Sole Proprietorships/DBA’s

Treat Sole Proprietorships/DBA’s as
“individual ownership” and run a name
search on the principal and require a
release of all tax liens and judgment liens
against the individual.
Federal tax liens
Federal tax liens attach to all property, no
entireties shield.
 10 year limitation unless preserved by a
refilling of the lien.

State tax liens
State tax liens attach to all “tenant in
common” ownership.
 7 year limitation unless preserved by a
refilling of the lien.
 Lien does not attach to entireties
ownership unless the lien is against both
husband and wife.

Construction liens



Construction lien’s priority is established at the date of
first physical improvement to the property (first spade
into the ground) for all trades working on the project.
Liens are presumed to have priority over the construction
mortgage.
Insuring construction loans in Michigan is extremely
risky.

Must follow guidelines as articulated in Company Bulletins.


Legal Bulletin MI2009009
Legal Bulletin MI2010007
Judgment liens
Judgment liens are effective for 5 years,
with one right of renewal.
 They affect all after-acquired property in
the county of recordation.
 Discharged with a Discharge of Debtor
order in Bankruptcy Court.

Attorney’s liens

Attorney’s liens never expire and may be
found at the Register of Deeds or at the
courthouse in Property Settlements in
divorce cases.
Commercial Real Estate Broker’s
Liens

Commercial Real Estate Broker’s Liens,
effective October 5, 2010 have the right to
lien property to enforce collection of their
commission.
 MI2010008
Advertisement foreclosure

Generally, there is no personal service on
parties in interest.
 Exceptions:
federal tax liens and
condominium association liens which entitle
those parties to mailed notice.

SLS2010021
Redemption periods
Redemption periods vary in length
depending on the balance of the
indebtedness and amount of acreage
involved.
 Follow the statute for the appropriate time
frames.

 MCL
600.3240
Abandonment

Abandonment affidavits may be recorded
by the foreclosing lender [only] which will
reduce the redemption period to one
month. MCL 600.3241 and 600.3241a.
Vacant property arguably can’t be
abandoned.
Foreclosure Guarantee and
Foreclosure Commitments


Foreclosure Guarantee and Foreclosure
Commitments are a unique product available in
Michigan which is an insuring product to the
foreclosing entity as well as a commitment that
contemplates a REO sale out from the lender to
a new purchaser.
It has unique requirements and exceptions as
evidenced by the modified schedules.
Passage of title
Passage of title to the grantee on the
Sheriff’s deed occurs at date of deed for
purposes of Bankruptcy.
 Borrower filing a petition for bankruptcy
after recordation of the Sheriff’s deed
gives the Trustee only an equitable right of
redemption.

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Michigan: Rates, Forms & Underwriting Practices