Contract4Deed Wiki

Michigan

20 min read

Michigan — Contract for Deed / Land Contract

Legal information, not legal advice. Verify against the cited primary sources before acting. Statutes in this area are frequently amended. Last verified: 2026-06-08.

0. Identity & Terminology

  • In-state name(s): “land contract” is the dominant term of art in Michigan statutes and case law; “executory contract for the purchase of premises” and “contract for deed” are used interchangeably. The seller is the vendor, the buyer the vendee.
  • Recognition: statutory_and_common_law. Land contracts are recognized by the conveyance/recording statutes (Act 237 of 1879, MCL 565.351 et seq.), the summary-proceedings forfeiture statutes (MCL 600.5726–600.5728, 600.5744), the judicial-foreclosure statute (MCL 600.3101 et seq.), and a deep body of common law going back to the 19th century.
  • Statutory home: Forfeiture/summary proceedings — Revised Judicature Act of 1961, Act 236, Chapter 57, MCL 600.5701–600.5759 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-5726). Judicial foreclosure — Chapter 31, MCL 600.3101 et seq. (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-3101). Recording — Act 237 of 1879, MCL 565.351 et seq., and the master recording act MCL 565.29 (https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-565-29).
  • Remedy regime: hybrid. Michigan gives the vendor an election between two distinct statutory tracks: (1) forfeiture via summary proceedings (MCL 600.5726), a fast notice-and-cure possessory remedy in district court, and (2) judicial foreclosure of the land contract like a mortgage in circuit court (MCL 600.3101). The election is mutually exclusive and irrevocable as to a deficiency: a vendor who forfeits forfeits the contract debt. See gruskin-v-fisher-1979 and forfeiture-vs-foreclosure. Michigan layers a partial substantial-equity protection onto forfeiture by statute — the writ of restitution is delayed 90 days (under 50% paid) or 6 months (50% or more paid), and that post-judgment period is the buyer’s last cure window before equity of redemption is foreclosed (MCL 600.5744(4) [writ delay], (7) [cure by payment], (8) [redemption foreclosed]).

1. Formation & Mandatory Disclosures

  • Statute of frauds: Writing required. A contract “for the sale of any lands, or any interest in lands” is void unless in writing and signed by the party to be charged. MCL 566.108 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-566-108).
  • Mandatory disclosures: Michigan has no land-contract-specific mandatory disclosure statute of the Texas SB-198 type (no statutory tax-delinquency, lien, survey, or payoff disclosure schedule unique to installment contracts). However, the Seller Disclosure Act (Act 92 of 1993, MCL 565.951–565.966) does apply to a sale by land contract: the Act covers transfer by “land contract,” and the seller must deliver the statutory Seller’s Disclosure Statement form prescribed in MCL 565.957 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-565-957) on the transfer of 1-to-4-unit residential property. Penalty for omission: the Act is a good-faith-knowledge disclosure regime, not a strict-liability one; failure to deliver a signed statement lets the purchaser terminate the purchase agreement before closing (the form itself recites this), but does not by itself void a completed land contract. The Act expressly does not create a new cause of action beyond the transferor’s existing common-law duty as to known defects (MCL 565.964–565.965).
  • Recording requirement: Not mandatory for validity — a land contract is binding between the parties without acknowledgment or recording. Recording is permissive but priority-protective: a land contract that is executed and acknowledged (MCL 565.351–565.352) and recorded “shall have the same force and effect, as to subsequent encumbrancers and purchasers, as the recording of deeds and mortgages” (Act 237 of 1879, MCL 565.354 (https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-565-354)). An unrecorded conveyance is void against a subsequent good-faith purchaser for value who records first under Michigan’s race-notice act, MCL 565.29 (https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-565-29). There is no statutory deadline (contrast Texas’s 30 days). Who records: either party in practice; the vendee has the incentive to record (or record a memorandum) to protect priority.
  • Annual accounting statement: No statutory annual-accounting mandate unique to land contracts. MCL 565.361 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-565-361) imposes the payoff/conveyance duty: on full performance the vendor “shall make conveyance of the land to the vendee by a deed,” and a vendor who refuses is subject to the same penalties as for refusing to discharge a paid mortgage (Act 106 of 1998, eff. June 3, 1998). A running balance is typically tracked by contract terms or escrow, not by statute.
  • Prepayment: No statute prohibits prepayment and no statute bars a prepayment penalty on a vendor-financed land contract; the right and any penalty are contract-governed. (No prohibitory primary source located — flagged under needs_verification rather than asserted.)
  • Usury / interest cap: 11% per annum is the ceiling for a land contract made by a non-”regulated lender” (e.g., an individual vendor), inclusive of all Truth-in-Lending finance charges. MCL 438.31c (https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-438-31C). Banks, credit unions, and other regulated lenders are exempt from the 11% cap on land contracts secured by a first lien. This is the single most-litigated formation trap for individual operators.

2. Buyer’s Equitable Interest

  • Equitable title passes: Yes. On execution of a Michigan land contract the vendee acquires equitable title and the incidents of ownership; the vendor retains bare legal title as security and holds a duty to convey by deed on full payment. MCL 565.361 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-565-361); see equitable-conversion.
  • Equitable conversion recognized: Yes (long-settled Michigan doctrine — the vendee’s interest is treated as realty, the vendor’s as personalty/security).
  • Buyer’s interest recordable / insurable: Recordable (the contract or a memorandum may be recorded under Act 237 of 1879 / MCL 565.29) and insurable — the vendee’s equitable title is a recognized insurable interest, and title insurance is available to vendees in Michigan.
  • Risk of loss: contract_governed in practice; under equitable conversion the default common-law allocation places risk of loss on the vendee/equitable owner after execution, but Michigan contracts routinely shift or address it by clause. (Default-rule case citation flagged under needs_verification.)
  • Improvements & waste: The vendee in possession holds the ownership incidents and bears responsibility for the property; the vendor’s security interest supports a waste claim against a defaulting vendee. (Specific Michigan waste citation flagged under needs_verification.)

3. Default & Remedies → see forfeiture-vs-foreclosure

  • Primary remedy: election between forfeiture (summary proceedings) and judicial foreclosure. Michigan does not force land contracts onto a mortgage-only track (contrast sebastian-v-floyd-1979 in Kentucky) and does not permit pure strict forfeiture with no cure (contrast skendzel-v-marshall-1973); it sits between as a hybrid.
  • Forfeiture available? Yes, but only if the contract expressly provides a forfeiture/termination right and only for “nonpayment of any moneys required to be paid” or “any other material breach” — excluding accelerated indebtedness (you cannot forfeit on the accelerated balance). MCL 600.5726 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-5726). The vendor serves a Notice of Forfeiture (statutory contents per MCL 600.5728), files summary proceedings in district court (MCL 600.5701 et seq.; MCR 4.202), and obtains a judgment of possession.
    • Substantial-equity bar: Michigan’s protection is statutory and partial, not an outright bar. Forfeiture is still available even with substantial equity, but the writ of restitution is delayed: 90 days after judgment if less than 50% of the purchase price has been paid, and 6 months if 50% or more has been paid (MCL 600.5744(4)) — during which the writ “must not be issued” if the vendee pays the amount stated in the judgment with taxed costs and cures other material breaches (MCL 600.5744(7); acceleration is excluded from that amount under MCL 600.5726). (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-5744). Issuance of the writ then “forecloses any equitable right of redemption” (MCL 600.5744(8)).
  • Cure period (pre-judgment): 15 days after service of the Notice of Forfeiture to pay the past-due money and cure other breaches, unless the contract provides a longer time. MCL 600.5728 (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-5728). Runs from: service of the notice. Notice form prescribed: Yes — MCL 600.5728 fixes the required contents (parties, execution date, premises, unpaid amounts and due dates, other material breaches, signature of person entitled to possession or agent). Service: personal service or by methods authorized under MCL 600.5718 (the summary-proceedings service statute).
  • Judicial foreclosure required when: Never strictly required, but it is the vendor’s tool when it wants to (a) accelerate the full balance, (b) reach a deficiency judgment against the vendee, or (c) deal with a high-equity buyer through a court-supervised sale. Foreclosure proceeds in circuit court under MCL 600.3101 et seq. (MCR 3.410): the property is sold, surplus over the debt belongs to the vendee, and the vendee gets a 6-month statutory redemption period after the sale (MCL 600.3140, https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-600-3140).
  • Acceleration enforceable? conditional. An acceleration clause is enforceable to drive foreclosure of the full balance, but acceleration is statutorily excluded from what may be demanded as a cure in a forfeiture (MCL 600.5726 — “moneys required to be paid … shall not include any accelerated indebtedness by reason of breach”).
  • Restitution offset on forfeiture: Under gruskin-v-fisher-1979, a vendor who takes/accepts possession via forfeiture cannot also recover money damages — the forfeited payments are the vendor’s recovery and the deal is extinguished. Forfeiture thus operates as the offset: the vendor keeps payments and property but loses the debt.
  • Seller’s other remedies: specific performance / suit for the price, foreclosure (with deficiency), money damages for breach (if possession is refused, per Gruskin), and quiet title after the redemption period lapses.

▸ For Sellers / Operators — This is the deal-defining module. Michigan hands you a fork, and you must choose: forfeiture (district court, 15-day cure, fast, cheap) abandons the debt — no acceleration in the cure demand, no deficiency, ever (gruskin-v-fisher-1979). Foreclosure (circuit court) lets you accelerate and pursue a deficiency, but the property is sold, surplus equity goes to the vendee, and there is a 6-month post-sale redemption. You cannot do both. Forfeiture is not available on accelerated debt (MCL 600.5726), and even on a clean forfeiture the writ is stalled 6 months if the buyer has paid 50%+ (MCL 600.5744). Lock these in before you contract, draft an express forfeiture clause, confirm your rate is ≤ 11% if you are an individual vendor (MCL 438.31c), deliver the Seller’s Disclosure Statement (MCL 565.957), and record a memorandum to protect priority (MCL 565.29). Compliance is what keeps the contract enforceable.

▸ For Buyers — Your protections are the 15-day pre-judgment cure (MCL 600.5728), the 90-day / 6-month post-judgment redemption by paying only the past-due amount (MCL 600.5744 — acceleration is off the table in forfeiture), your equitable title (§2), and — if the vendor forecloses — surplus equity from the sale plus a 6-month post-sale redemption (MCL 600.3140).

3b. Remedies — Advanced

  • Election of remedies: doctrine applies. A vendor’s forfeiture is an election that bars a later deficiency/foreclosure on the same default, but gruskin-v-fisher-1979 holds that merely sending a notice of forfeiture is not an irrevocable election — until the vendor actually takes possession, it may still refuse the vendee’s tender of possession and instead sue for money damages or foreclose. The line is acceptance of possession, not service of notice. 405 Mich. 51, 273 N.W.2d 893 (1979).
  • Deficiency after forfeiture or foreclosure: None after forfeiture (Gruskin / election rule). Permitted after judicial foreclosure — the circuit court determines any deficiency after confirming the sale (MCL 600.3101 et seq., Chapter 31).
  • Equitable relief from forfeiture: Michigan provides relief structurally through the statutory redemption windows (MCL 600.5744) rather than through a freestanding Skendzel-style anti-forfeiture decree; courts also police forfeiture for compliance with the strict statutory notice/cure requirements.
  • Ejectment vs. eviction path: A defaulting land-contract vendee is not a tenant — the vendee is an equitable owner, and the vendor’s possessory remedy is the land-contract-forfeiture summary proceeding (MCL 600.5726, a distinct track from landlord-tenant eviction) or foreclosure (an ownership remedy), not a tenancy-termination eviction.
  • Quiet title after cancellation: Not strictly required where the writ of restitution issues (it “forecloses any equitable right of redemption,” MCL 600.5744(8)), but vendors frequently file a quiet-title / claim-of-title action in circuit court to clear the record where a recorded memorandum or contract clouds title.
  • Forfeited payments treatment: Functionally liquidated damages — on a completed forfeiture the vendor keeps the payments and the property and the debt is extinguished (Gruskin); the statutory redemption windows are the buyer’s counterweight rather than a payment-refund/penalty-doctrine offset.
  • Intervening seller-lien risk to buyer: A vendee who fails to record (contract or memorandum) risks subordination to a later lien or conveyance by the vendor under the race-notice act (MCL 565.29); recording is the defense.

4. Federal Overlay (as applied in-state) → see dodd-frank-seller-financing, safe-act-mlo

  • Dodd-Frank exposure: A Michigan land contract on a 1-to-4-unit owner-occupied dwelling is residential “credit” subject to the dodd-frank-seller-financing seller-financer framework. An individual vendor selling one property in any 12 months (no balloon, fixed/qualifying rate) may fall within the § 1026.36(a)(5) one-property exclusion, and a vendor (incl. entities) selling three or fewer may fall within the three-property / ability-to-repay exclusion (12 C.F.R. §§ 1026.36(a), 1026.43(a),(e)). A pure land/lot or commercial deal is generally outside the dwelling-secured rules. The 11% Michigan usury cap (MCL 438.31c) operates independently of and on top of any federal exclusion.
  • SAFE Act MLO licensing: Michigan adopted the SAFE Act via the Mortgage Loan Originator Licensing Act (Act 75 of 2009, MCL 493.131 et seq.); a vendor originating dwelling-secured seller financing above the federal/state de minimis threshold may trigger MLO-licensing exposure. State agency: Michigan Department of Insurance and Financial Services (DIFS). See safe-act-mlo. (Exact Michigan de-minimis count flagged under needs_verification.)
  • State consumer-protection overlay / CFPB notes: No Michigan land-contract consumer-protection statute of the post-2005 reform type. Michigan land contracts are part of the national CFPB / state-AG predatory-CFD scrutiny wave (2016–present, e.g., Harbour Portfolio activity in Midwest/Rust-Belt markets); the Seller Disclosure Act (§1) and 11% usury cap are the in-state guardrails.

5. Title, Recording & Wraps → see garn-st-germain-due-on-sale

  • Memorandum recording: Permitted. A memorandum of land contract (or the contract itself), if acknowledged, may be recorded and carries the same priority force as a recorded deed or mortgage against subsequent purchasers and encumbrancers (Act 237 of 1879, MCL 565.354; MCL 565.29). A recorded memorandum is evidence of the contract but is not itself a conveyance of ownership; assessors may require the underlying contract to confirm validity.
  • Garn-St. Germain due-on-sale: A land contract is a transfer that triggers a due-on-sale clause in any underlying mortgage; see garn-st-germain-due-on-sale (12 U.S.C. § 1701j-3). The residential exemptions (e.g., transfers into an inter vivos trust where the borrower remains a beneficiary/occupant) generally do not cover a sale on land contract to a third-party buyer, so wraps over an existing mortgage carry acceleration risk.
  • Underlying-mortgage / wrap: Permitted but risky. Selling on a wrap land contract while an institutional first mortgage remains in place exposes the deal to due-on-sale acceleration (above) and to the vendee’s loss if the vendor stops paying the senior lien; disclosure of the underlying encumbrance is essential (and a recorded prior mortgage is constructive notice to the vendee under MCL 565.29).
  • Deed delivery: deliver_at_payoff — the vendor delivers a warranty deed on full performance (MCL 565.361); escrow of the executed deed is a common contractual mechanism.
  • Marketable title at payoff: The vendor’s MCL 565.361 conveyance duty (penalty parity with refusal to discharge a paid mortgage) is the vendee’s lever to compel delivery of marketable title; title search/insurance at payoff is standard.
  • Title insurance: Available to the vendee (equitable-title owner’s policy) and to the vendor; Michigan has an active title-insurance market (e.g., MLTA members).
  • Seller death or bankruptcy effect: The vendor’s interest is legal title held as security plus the right to payments; on the vendor’s death it passes by estate/devise subject to the contract, and the vendee’s equitable title and conveyance right survive (see §7).

6. Tax Treatment

  • IRC §453 installment reporting: A Michigan land contract is an installment sale for federal income tax — the vendor may report gain under IRC § 453 as principal is collected, subject to the dealer-property exclusion (§ 453(b)(2), (l)) and depreciation-recapture acceleration. See irc-453-installment-sale (26 U.S.C. § 453).
  • Property-tax responsibility: contract_governed, but the vendee in possession is the equitable owner and typically pays property taxes; a land contract is a “transfer of ownership” that can uncap taxable value under Michigan’s Proposal A (MCL 211.27a). A Property Transfer Affidavit (Form 2766) is due within 45 days of transfer.
  • Homestead / Principal Residence Exemption: Eligible. A land-contract vendee qualifies as an “owner” for the Principal Residence Exemption — MCL 211.7dd(a) defines “owner” to include “a person who is purchasing property under a land contract,” and MCL 211.7cc grants the PRE to a qualifying owner-occupant. (https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-211-7cc; https://www.legislature.mi.gov/Laws/MCL?objectName=mcl-211-7dd).
  • Transfer / documentary-stamp tax: Michigan imposes state (Act 330 of 1993, MCL 207.526) and county (Act 134 of 1966, MCL 207.505) real estate transfer tax. A “land contract whereby the legal title does not pass to the grantee until the total consideration … has been paid” is exempt at contract execution (county: MCL 207.505(m); state: MCL 207.526(o)); the deed in fulfillment of the land contract is likewise exempt where the contract tax was satisfied / referenced. Practical effect: transfer tax is generally not collected on the land contract itself. (https://www.legislature.mi.gov/Laws/MCL?objectName=MCL-207-526; https://www.legislature.mi.gov/documents/mcl/pdf/mcl-207-505.pdf).
  • Mortgage registration tax: Michigan has no mortgage recording/registration tax; recording is a flat per-document fee.

7. Bankruptcy & Death / Divorce

  • Buyer bankruptcy: circuit_split / fact-dependent. Land contracts straddle the executory-contract (§ 365) vs. secured-debt characterization; many courts treat a substantially-performed land contract as a secured financing (vendee = debtor/owner, vendor = lienholder) rather than a true executory contract, letting the vendee cure and reinstate in a Chapter 13 plan (11 U.S.C. § 1322). See dodd-frank-seller-financing note and the national split discussed in forfeiture-vs-foreclosure. (Specific Sixth Circuit / Michigan bankruptcy citation flagged under needs_verification.)
  • Seller bankruptcy: If the vendor files, the vendee’s recorded equitable interest and conveyance right are generally protected against the bankruptcy estate (a recorded interest defeats the trustee’s strong-arm/BFP powers under 11 U.S.C. § 544); recording is again the protection.
  • Assignability by buyer: The vendee’s equitable interest is assignable unless the contract restricts it; anti-assignment / due-on-sale clauses in the land contract are generally enforceable (the vendor may condition or accelerate on transfer). (Michigan-specific anti-assignment case flagged under needs_verification.)
  • Survivorship / divorce: The vendee’s equitable interest is real property for survivorship and marital-estate purposes — it may be held jointly with survivorship, devised, and is divisible marital property in a Michigan divorce judgment.

8. Case Law (real, verified)

CaseYearTopicHolding (plain English)Source
gruskin-v-fisher-19791979remedies / electionSending a notice of forfeiture is not an irrevocable election; until the vendor takes possession, it may refuse the vendee’s tender of possession and instead sue for money damages or foreclose. A vendor who takes possession cannot also recover money damages. 405 Mich. 51, 273 N.W.2d 893.https://www.courtlistener.com/opinion/1980746/gruskin-v-fisher/

9. Edge Cases (state-specific notes)

  • garn-st-germain-due-on-sale — a Michigan land contract is a triggering transfer; wraps over an institutional mortgage risk acceleration; the inter-vivos trust and other § 1701j-3(d) exemptions do not cover a third-party land-contract sale.
  • dodd-frank-seller-financing — the one-property / three-property exclusions may apply to an individual or small operator; stacked on top of Michigan’s 11% usury cap (MCL 438.31c).
  • Usury (11% trap): the most common formation defect for individual vendors — the 11% ceiling includes all TILA finance charges (MCL 438.31c); regulated lenders are exempt.
  • The 50% line: forfeiture redemption flips from 90 days to 6 months at 50% of purchase price paid (MCL 600.5744(4)) — a hard operational threshold for timing a forfeiture.
  • Manufactured/mobile homes, SCRA, seller insolvency — to be developed.

10. Operations

  • Where records live: county Register of Deeds (land contracts / memoranda); forfeiture (summary proceedings) in district court (MCR 4.202); foreclosure in circuit court (MCR 3.410); PRE/transfer affidavits with the local assessor / township-city treasurer.
  • Public-access URLs: Michigan Legislature (https://www.legislature.mi.gov); Michigan Courts (https://www.courts.michigan.gov); DIFS (https://www.michigan.gov/difs); Treasury PRE (https://www.michigan.gov/taxes/property/principal).
  • Who may draft (UPL): standardized fill-in land-contract and memorandum forms are widely used; drafting custom terms or advising on remedy strategy is law practice — non-attorney form completion risks UPL exposure.
  • Typical costs / timelines: forfeiture summary proceeding is the fast/cheap track (district-court filing + 15-day cure + judgment, then 90-day or 6-month writ delay); foreclosure is slower and costlier (circuit court, sale, 6-month post-sale redemption).
  • Key agencies: Michigan DIFS (MLO/SAFE), Department of Treasury (PRE / transfer tax), county Registers of Deeds.
  • Useful forms: Seller’s Disclosure Statement (per MCL 565.957), Memorandum of Land Contract, Notice of Forfeiture (MCL 600.5728 contents), Property Transfer Affidavit (Form 2766).

11. Meta

Disclaimer. This page is legal information, not legal advice, and may be out of date. Contract-for-deed statutes are frequently amended and remedies turn on facts. Consult a licensed attorney in this jurisdiction before drafting, enforcing, or signing an installment land contract.

Graph View

Backlinks