Coventry Parkhomes Condominium Ass'n v. Federal National Mortgage Ass'n

827 N.W.2d 379, 298 Mich. App. 252, 2012 WL 5290150, 2012 Mich. App. LEXIS 2172
CourtMichigan Court of Appeals
DecidedOctober 25, 2012
DocketDocket No. 304188
StatusPublished
Cited by35 cases

This text of 827 N.W.2d 379 (Coventry Parkhomes Condominium Ass'n v. Federal National Mortgage Ass'n) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coventry Parkhomes Condominium Ass'n v. Federal National Mortgage Ass'n, 827 N.W.2d 379, 298 Mich. App. 252, 2012 WL 5290150, 2012 Mich. App. LEXIS 2172 (Mich. Ct. App. 2012).

Opinion

PER CURIAM.

In this priority dispute between plaintiff, Coventry Parkhomes Condominium Association, and defendant, Federal National Mortgage Association (FNMA), FNMA appeals by right the circuit court’s order granting Coventry’s motion for summary disposition under MCR 2.116(C)(10). We reverse.

i

On July 29, 2005, Denise Walsh, a coowner of a unit in Coventry’s condominium complex, entered into a mortgage agreement with JP Morgan Chase Bank, N.A. (Chase), and the mortgage was recorded on August 18, 2005. On June 17, 2009, Coventry recorded a lien on Walsh’s condominium unit for unpaid association fees and dues. On July 20, 2010, Chase assigned its interest in the mortgage to FNMA. FNMA recorded the assignment on September 9, 2010.

On November 10, 2010, Coventry initiated the instant action against FNMA to foreclose on its condominium-association lien and to obtain from FNMA unpaid condominium assessments and fees in the amount of $5,673.10, plus late charges and fines. On February 8, 2011, Coventry moved the circuit court for summary disposition under MCR 2.116(C)(10). Coventry argued that, under the Condominium Act, MCL 559.101 et seq., its lien had priority over the mortgage [255]*255assigned to FNMA and FNMA was liable to Coventry for all unpaid assessments, fees, late charges, interest, and attorney fees levied against Walsh’s condominium unit. In response, FNMA argued that it was entitled to summary disposition under MCR 2.116(I)(2), insisting that its mortgage had priority over Coventry’s lien and that it was not liable to Coventry for dues and assessments because FNMA was merely a holder of a security interest and not a coowner of Walsh’s condominium unit.

After a hearing, the circuit court granted summary disposition in favor of Coventry, concluding that Coventry’s lien had priority over the mortgage assigned to FNMA and that FNMA was liable to Coventry for $16,980.98 in unpaid assessments, late fees and charges, interest, and costs of collection. FNMA appeals the circuit court’s order, as previously discussed.

ii

The sole issue before this Court is whether the circuit court erroneously granted summary disposition in favor of Coventry, concluding that Coventry’s lien had priority over the mortgage assigned to FNMA and that FNMA was liable to Coventry for unpaid assessments, late fees and charges, interest, and costs of collection.

We review de novo a trial court’s summary-disposition ruling. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). When reviewing a motion brought under MCR 2.116(C)(10), this Court considers the pleadings, affidavits, depositions, admissions, and any other documentary evidence submitted by the parties in a light most favorable to the nonmoving party. The Cadle Co v City of Kentwood, 285 Mich App 240, 247; 776 NW2d 145 (2009). A motion for summary disposition under MCR 2.116(C)(10) may be granted if [256]*256there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Campbell v Dep’t of Human Servs, 286 Mich App 230, 235; 780 NW2d 586 (2009). Furthermore, “[statutory interpretation is a question of law that we review de novo on appeal.” Johnson v QFD, Inc, 292 Mich App 359, 364; 807 NW2d 719 (2011).

“ ‘Michigan is a race-notice state, and owners of interests in land can protect their interests by properly recording those interests.’ ” Richards v Tibaldi, 272 Mich App 522, 539; 726 NW2d 770 (2006), quoting Lakeside Assoc v Toski Sands, 131 Mich App 292, 298; 346 NW2d 92 (1983). “Under MCL 565.29, the holder of a real estate interest who first records his or her interest generally has priority over subsequent purchasers.” Id. MCL 565.29 provides as follows, in pertinent part:

Every conveyance of real estate within the state hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser in good faith and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded.

Thus, a later interest holder may take priority over a prior conveyed interest only if the later interest holder takes in “good faith.” “A good-faith purchaser is one who purchases without notice of a defect in the vendor’s title.” Mich Nat’l Bank & Trust Co v Morren, 194 Mich App 407, 410; 487 NW2d 784 (1992). Notice can be actual or constructive. Richards, 272 Mich App at 539. Constructive notice “is notice that is imputed to a person concerning all matters properly of record . . . .” Id. at 540 (citation and quotation marks omitted).

It is well established that an assignee stands in the shoes of an assignor, acquiring the same rights and [257]*257being subject to the same defenses as the assignor. See, e.g., Nichols v Lee, 10 Mich 526, 528-529 (1862); Burkhardt v Bailey, 260 Mich App 636, 652-653; 680 NW2d 453 (2004); Prof Rehab Assoc v State Farm Mut Auto Ins Co, 228 Mich App 167, 177; 577 NW2d 909 (1998); First of America Bank v Thompson, 217 Mich App 581, 587; 552 NW2d 516 (1996). “When a mortgage is assigned, the assignee, for all beneficial purposes claimed under it by him, becomes a party to the mortgage, and stands in the place of the mortgagee . . ..” Nichols, 10 Mich at 528; see also Burkhardt, 260 Mich App at 653.

Moreover, Michigan caselaw illustrates that a mortgage assignee has the same priority rights as the original mortgage assignor. See Wilson v Campbell, 110 Mich 580; 68 NW 278 (1896). In Wilson, Freeling H. Potter granted a first mortgage to E. E. White on January 27, 1886. White assigned the mortgage to the defendant, Elizabeth Campbell, on June 14, 1887. Potter then sold the mortgaged property to the complainant, Robert Wilson, on October 3, 1888. On April 1, 1892, Wilson granted a second mortgage on the property to Michigan Mortgage Company, Limited, which then assigned the mortgage to Mrs. John Nichols on April 27, 1892. On April 13, 1894, Campbell recorded her assignment of the first mortgage. Id. at 581-583. The Michigan Supreme Court held that Campbell’s mortgage had priority over Nichols’s mortgage. Id. at 589. The Court opined, in pertinent part:

The question of priority between the mortgages of Mrs. Nichols and [Mrs. Campbell] is also involved. The mortgage of Mrs. Campbell was prior in point of time, and was duly recorded.... [Mrs. Nichols] undoubtedly assumed that there was no prior incumbrance. Had she examined the record, she would have discovered a mortgage to Mr. White. She must, therefore, be held bound by notice of this. The [258]*258case is certainly not stronger for her than it would have been had White become the purchaser of the land, and attempted to convey or incumber the fee. Having constructive knowledge of the existence of this mortgage, Mrs. Nichols was also chargeable in law with the further notice that the mortgage is a lien in the hands of any person to whom it may have been legally transferred, and that the record of such transfer is not necessary to its validity, nor as a protection against the purchaser of the property mortgaged, or any other person than a subsequent purchaser in good faith of the mortgage itself or the note or debt secured by it,

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827 N.W.2d 379, 298 Mich. App. 252, 2012 WL 5290150, 2012 Mich. App. LEXIS 2172, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coventry-parkhomes-condominium-assn-v-federal-national-mortgage-assn-michctapp-2012.