Court case breathes a possible new life into Michigan’s Judgment Lien Statute

Many years ago, the Michigan Creditors Bar Association, then headed up by Michael H.R. Buckles, spearheaded a drive to pass a law that allowed creditors to place liens on real estate owned by debtors. I know Mike Buckles to be a first rate lawyer and someone that just gets things done. Unfortunately, in this case, Mike was out spent by other lobbyists to the point where although a law was passed, it was nothing like what we had envisioned. Michigan’s new judgment lien statute was impotent. Essentially, a creditor can place a lien on a debtor’s property and if that debtor sells the property or refinances, the creditor may get paid. The creditor, however, COULD NOT foreclose on the judgment lien. Hence, the lien just hands on the property, year after year, until something financial happens to it. That is, until recently.

In Thomas v Dutkavich (Lawyers Weekly 07-74446), a 2010 decision, the Michigan Court of Appeals has opened the possibility that a creditor may foreclose on a lien by using a remedy other than the Michigan Judgment Lien statute. In this case, Thomas purchased property from Peletier. Peletier had owed money on a judgment to Dutkaviches who had placed a lien on the property. When Thomas purchased the property, the judgment lien was in place. Interestingly, the title company that insured the title in Thomas had missed the lien. Mr. and Mrs. Dutkavich wanted their money and would not release the lien and, in fact, attempted to seize the property. Thomas filed a lawsuit to quiet title.
The trial court dismissed the lien holding that Thomas was not indebted to the Dutkaviches. The Court of Appeals disagreed. The higher court reinstated the lien and noted that although the Judgment Lien Statute expressly forbids foreclosure of a judgment lien, that the Dutkaviches may nevertheless still be entitled to foreclose on their lien under the Revised Judicature Act. The appellate court remanded the case to the trial court for a determination of this issue.
It seems to me that the Thomas and Peletier are going to get a payday at the expense of the title company. The title company blew it when they missed the lien. Title companies insure against claims that are as of record and the judgment lien was certain one such lien of record.
The bigger issue, it seems to me, is whether one can foreclose on a judgment lien under the Revised Judicature Act even though foreclosure of judgment liens is expressly prohibited under the Judgment Lien Act.
Mr. Buckles, you may have satisfaction yet!

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This entry was posted on Tuesday, November 16th, 2010 and is filed under Collection Laws Michigan . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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