For large corporate real estate operators in Michigan, knowing when to use land contract forfeiture versus foreclosure is critical in protecting investments and minimizing legal exposure. Both remedies help reclaim property following a buyer’s default, but each follows distinct legal pathways with different implications.
Land Contract Forfeiture: A Faster, Streamlined Option
In Michigan, forfeiture allows a seller to reclaim property more quickly when a buyer breaches a land contract. If specified in the contract, the seller must first issue a 15-day forfeiture notice (you can use form DC101 provided by the State Court Administrator’s Office), giving the buyer a chance to pay past-due amounts. If the buyer fails to cure the default, the seller may file a complaint for possession in district court.
Once the court schedules a hearing (typically within 30 days), it may issue a judgment of possession. Following a successful judgment, the buyer is offered a redemption period: 90 days if less than 50% of the purchase price is paid, or 180 days otherwise. If the buyer fails to redeem, the seller obtains full possession; however, forfeiture bars certain monetary relief that you must discuss with counsel to understand the remedy.
Foreclosure: When Equity Is at Stake
Foreclosure is the more comprehensive route when a buyer has significant equity or the seller needs to recover a deficiency. In foreclosure, the seller can accelerate the remaining balance and pursue a full judgment in circuit court. This process often concludes with a sheriff’s sale, where property proceeds may repay outstanding debt, and a deficiency judgment may be sought if the sale price falls short.
Foreclosure takes longer and costs more than forfeiture, but provides broader legal remedies—making it a better fit for recovering full value or dealing with complex title and equity issues.
Choosing the Right Method for Your Portfolio
- Choose forfeiture if… you need fast repossession, and the buyer holds little equity in the property.
- Opt for foreclosure if… you’re dealing with significant equity, title complexities, or require a deficiency judgment.
Selecting the appropriate legal path can save time, money, and risk, especially when managing large-scale portfolios where speed and precision matter.
Protect Your Portfolio with Legal Expertise
Confidently navigating Michigan’s land contract remedies requires a clear strategy and legal precision. If your property management firm is facing defaults, drafting contracts, or evaluating forfeiture versus foreclosure, a trusted legal partner can make all the difference.
Contact the Law Offices of Aaron D. Cox for expert guidance customized to large corporate portfolios. Start your consultation online today by completing our contact form.