Tenant improvements do not establish a homestead exemption in equity

In an unpublished opinion, the Michigan Court of Appeals affirmed the lower court's summary disposition in Rule v. US Bank, stating that a mortgagee has no duty to investigate unrecorded property interests prior to foreclosure and is allowed to rely on the record of title.

In July 2006, Wayne and Raisa Rule executed a mortgage on their property that was later assigned to defedant US Bank. In February 2009, the Rules defaulted on the mortgage and the property was sold at a sheriff's sale.

Nine months after the redemption period expired, the Rules and their dependant adult daughter Wanda filed a complaint to determine their interests in the property. The Rules argued that the daughter had an unforeclosed homestead interest based on improvements to the property prior to the mortgage made to accommodate her disability.

The lower court granted summary disposition for US Bank. MCOA affirmed, pointing out that a homestead interest does not exist in property titled to another person, and the Rules conceded that Wanda does not own the property. MCOA concluded that however harsh the result, Wanda had no recorded interest in the property. Her claim was made in equity based on the modifications made to the home, which does not establish a homestead interest. Mortgagees are allowed to rely on a proper title search to disclose interests in land. Since Wanda had no recorded interest, the mortgagee was allowed to assume she had no interest. US Bank had no duty to investigate further.