Monday, November 25, 2013

Koenig v. Van Reken case brief

Koenig v. Van Reken case brief summary
279 N.W.2d 590 (Mich. Ct. App. 1979)

Plaintiff grantor challenged an order from the Oakland County Circuit Court (Michigan), which granted defendant grantee's motion under Mich. Ct. R. 117.2(1) for summary judgment on her equitable mortgage complaint. The grantor sought to have a warranty deed executed by her declared an equitable mortgage because she was in financial difficulties at the time of conveyance.

The real estate taxes on the grantor's home had become delinquent and foreclosure proceedings had begun. She was then approached by the grantee, who proposed that for a fee of 10 percent he would "service" the mortgages and pay the delinquent taxes. The record showed that she conveyed her equity worth over $ 30,000 for less than $ 4,000. The trial court granted the grantee's summary judgment on the equitable mortgage complaint.


  • On appeal, the court reversed, holding that the agreement impermissibly circumvented the right to redeem, which was required to protect parties such as the grantor in times of financial crisis. 
  • The court noted that the grantor, while in severe financial distress, sought help from the grantees to save her home from foreclosure, but didn't really intend for the conveyance to be final. 
  • Moreover, while financial embarrassment of the grantor and inadequacy of consideration did not provide an infallible test, they were an indication that the parties did not consider the conveyance to have been absolute.

The court reversed the order granting summary judgment in favor of the grantee on the grantor's equitable mortgage count and remanded for trial.

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