Koenig v. Van Reken

279 N.W.2d 590 (Mich. Ct. App. 1979)

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Nature of the Case

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Facts

Koenig (P) owned a home with a market value of $60,000 with three mortgages totaling $25,933.26. P was delinquent on his real estate taxes, and foreclosure had begun on one of the mortgages. Van Reken (D) approached P and proposed a fee of 10 percent to service the mortgages and pay the delinquent taxes. Three documents were executed. The first provided for D to purchase the property, redeem it from tax sale and mortgage foreclosure, and gave P an exclusive right to repurchase under a lease option. The second document was a warranty deed that conveyed the property to D for $28,600. The third document was a lease-purchase agreement for a three-year period with fixed rent of $300 per month and an exclusive option to repurchase for $32,318.79 with a down payment of $3,500 and monthly payments of $300 which included taxes, insurance, principal and interest. There were no attorneys involved for either party. P made total payments of $5,800 and then defaulted. P was evicted by D. P sued to declare the deed an equitable mortgage.