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Home / Firm Blog / Banking/Credit Unions / Equitable Subrogation: It’s not volunteering when you’re helping yourself

Equitable Subrogation: It’s not volunteering when you’re helping yourself

Peter Brown and Adam Holland, attorneys at the Gallagher Law Firm, have prepared the following article relating to the recent case about equitable subrogration in Michigan. The article was published on the

In December 2011, the Michigan Court of Appeals issued an opinion in CitiMortgage, Inc. v MERS, Inc. that addressed and expanded the doctrine of equitable subrogation in Michigan. The Court held that if the refinancing lender is the holder of the original mortgage that is being refinanced, the new mortgage can be subrogated to take the position of the original mortgage and it may retain the original mortgage's priority over intervening mortgages.

The holding in CitiMortgage, Inc. v. MERS, Inc. will prove to be very beneficial to the title industry in Michigan. In 2005, the holding in Washington Mutual Bank, N.A. v. Shorebank Corporation established a rather inflexible rule in Michigan precluding the application of equitable subrogation in mortgage refinancing transactions. Although the Washington Mutual opinion suggested that equitable subrogation may still be applicable where the new mortgagee is the holder of the mortgage that is being refinanced, that situation was not specifically addressed by the Court. As a result, since 2005, the application of the doctrine by Michigan Courts has been unpredictable. However, the CitiMortgage Court made it very clear that equitable subrogation is available and should be applied if the refinancing lender is the same lender that held the original mortgage before the intervening mortgage arose and the intervening lienholder is not materially prejudiced by the application of equitable subrogation.

Peter C. Brown and Adam A. Holland of the Gallagher Law Firm prepared an overview of the case and discuss the impact that it will have on the lending and title industry. The article can be found on the Michigan Banker's Magazine blog, found here:

The article was also featured in the American Land Title Association members news report for January 5, 2012 at

  • Item Tag: Equitable Subrogation, Mere Volunteer, Title Insurance

Author; Pat Gallagher Categories: Real Estate Law, Insurance, Banking/Credit Unions

About the Author

Pat Gallagher

Pat Gallagher

Attorney Pat Gallagher is founder of The Gallagher Law Firm overseeing its day-to-day operations, as well as the long-term strategic planning of the firm. He focuses his law practice on the needs of businesses and specializes in a wide variety of transactional matters, litigation and mediation. He received his J.D. legal degree from the Washington University School of Law in St. Louis, Missouri. Mr. Gallagher has litigated cases throughout Michigan before the American Arbitration Association, State and Federal Courts, Michigan Court of Appeals, Michigan Supreme Court and the United States Court of Appeals.