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A Better Partnership
June 27, 2016

A mortgagor who takes fixtures from his property during the foreclosure redemption period does not commit larceny

The taking of fixtures by a mortgagor after a foreclosure sale but during the foreclosure redemption period is not larceny, according to the Michigan Supreme Court’s decision in People v. March, No. 151342.  It does not constitute trespassory taking because the mortgagor retains both legal title and the exclusive right of possession until legal title has passed to the foreclosure-sale purchaser.
 
The defendant was charged with committing larceny for removing fixtures from his home after it had been sold in the sheriff’s sale.  Because taking the ‘property of another,’ is an element of common law larceny, the charge hinged on whether the defendant took his own property or the ‘property of another.’  The trial court ruled that the defendant did not commit larceny because he had the right to possess the property and the fixtures intentionally annexed to it during the redemption period.  The court of appeals disagreed, explaining that the foreclosure-sale purchaser was also an owner of the property because he had an interest in the property and his consent was not sought before the fixtures were taken.
 
On appeal, the Supreme Court emphasized the distinction between a legal title and an equitable title.  According to the court, the foreclosure-sale purchaser’s interest in the property was an equitable title which is not a possessory right.  This interest would need to ripen into legal title at the end of the six-month redemption period before ownership could pass from the mortgagor to the foreclosure-sale purchaser.  Thus, the foreclosure-sale purchaser was not an owner of the property as at the time when the defendant removed the fixtures and his consent was not needed.  Accordingly, the Supreme Court reversed the court of appeals and reinstated the dismissal of charges entered by the trial court.

(Note, this does not mean there is no remedy when the mortgagor damages the property in this way during the redemption period.  See MCL 600.3278.)

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