Certain Tenants May Be Re…

The recently enacted Michigan Uniform Assignment of Rents Act (MUARA) regulates the rights and responsibilities of renters, landlord-borrowers, and creditors in circumstances when borrowers are in default.

What does MUARA provide?

MUARA provides that in the event of borrower default, a lender may contact the tenants of an income-producing property to inform them that they must pay rent to the lender instead of their landlord.

In the notice, the lender must inform the tenant of when and how to make rent payments to the lender, of their right to consult an attorney, and other provisions. Lenders may use their own written notice as long as all requirements are met, or the form notice provided by MUARA.

How does MUARA affect tenants?

If a landlord defaults on a loan, the lender may reach out to tenants and request rent payment. If that happens, tenants should comply with all instructions in a lender’s notice. The tenant must pay the lender until the lender cancels the arrangement via a signed letter delivered to the tenant or a court order is issued. Those who disregard the lender’s notice may have to pay rent a second time.

Tenants who receive notice may also receive additional time to pay their rent payment under MUARA. Additional time is allocated for tenants to better comply with instructions given through MUARA and for the tenant to consult with an attorney if they wish. MUARA provides that rent payments that are due within 30 days of receiving notice will not be due until 10 days after the next regularly-scheduled payment.

Lenders should seek legal advice

MUARA allows lenders to appoint a receiver when collecting rent payments from tenants. Lenders who are affected by a borrower’s default should consult with an attorney for advice to ensure they comply with the Act.

Help is available

The attorneys at O’Reilly Rancilio are available to answer your questions about the MUARA. For more information, please call 586-726-1000 or visit our website.

Categories: Business, Litigation