When it comes to mortgage foreclosure, Michigan law grants a farmer a bit more time than it does the average homeowner to save a property from the hands of a lender. Currently, Michigan farmers have one year from a foreclosure sale to pay off a mortgage.
For most homeowners, this extra time wouldn't matter: If they can't make mortgage payments, it would be unlikely that they could come up with the full amount owed. But for farmers, who often make most of their annual income in a short time period, it can matter greatly. A little more time to bring in a harvest or get livestock to market can save the farm from the bank. But just because you've been farming doesn't mean you'll automatically be granted a year to come up with the money.
Securing Extra Time
In order to be granted a year to pay off the mortgage, a farmer must prove that the land is being farmed. There are two ways to do this: an easy way and a hard way.
The EASY Way: Schedule F and the Affidavit
In order to buy that extra time with minimal hassle, two things must be done right away after a farmer receives notice of foreclosure:
- First, the farmer must deliver proof that a Schedule F was filed with the prior year’s federal taxes to both the foreclosing bank and to its attorney.
- Second, the farmer must file an affidavit with the county register of deeds, stating that this proof was delivered.
If both of these things are done before the foreclosure sale, the law presumes that the property is agricultural, and it would be up to the foreclosing bank to prove otherwise.
The HARD Way: Court Action
If a farmer did not file a Schedule F with income tax for the prior year or if the foreclosure sale has already happened, then the farmer will need to file a civil action in court to present evidence that a property really is agricultural. At this point, the law presumes the property is not agricultural, and it will be up to the property owner to prove otherwise. This will involve navigating the court system or hiring a lawyer. And it could get complicated.
Time Really, Really Matters
If there has already been a foreclosure sale on a property, then the redemption period in the foreclosure sale deed is the real deadline for the property owner to come up with the funds to pay off the mortgage. If the deed says the redemption period is 6 months or 30 days, an action MUST be filed within that time period. Once the redemption period has passed, it doesn't matter what could have been: the owner will have lost any chance of redemption or extension.
No matter where a property owner is in the foreclosure process, getting the particulars of the proofs and the affidavits can be complicated, and a mistake on a technical detail could mean a lost chance at redemption. For property owners and especially farmers, hiring an attorney who understands the law can make all the difference.
Typically, property owners have just one chance to prove to a judge that a property is agricultural. Proving that alone, while up against an attorney hired by the bank, is not something you should bet the farm on.