Koenig v. Van Reken
Michigan Court of Appeals
279 N.W.2d 590 (Mich. Ct. App. 1979)
Koenig (plaintiff) owned a home subject to three mortgages, had fallen behind on property taxes, and faced foreclosure on one mortgage. Van Reken (defendant) offered, for a fee, to service Koenig's mortgages and pay her delinquent taxes; the parties agreed Van Reken would buy the property at about half its market value, clear the foreclosure and tax debts, and then give Koenig the exclusive right to repurchase it, subject to a lease-option letting Koenig stay in the home paying monthly rent. When Koenig later defaulted on a rent payment, Van Reken evicted her. Koenig sued for a declaration that the deed to Van Reken was really an equitable mortgage rather than an outright sale.
Whether a deed absolute on its face is actually a mortgage when the grantor was in financial distress and intended the transfer to function only as an equitable mortgage rather than a true land sale.