Detailed answer — how Michigan law treats a co-tenant’s unilateral refinance or home-equity loan

When someone inherits real property with other people, the default ownership form is often tenants in common (each heir owns a share). Under Michigan law, a co-tenant may not encumber another person’s ownership interest without that person’s consent. But a co-tenant can generally pledge or mortgage the interest they personally hold. What that means in practice depends on the facts:

• If the co-tenant only signs loan documents for their own ownership interest:

  The loan or mortgage will generally attach only to the signing co-tenant’s legal interest. A mortgage signed only by one co-tenant usually cannot, by itself, encumber another co-tenant’s legal title. The lender may therefore have a lien only on the signer’s share of the property, not on your separate share.

• If the co-tenant somehow obtains a loan that purports to encumber the whole property without your signature or consent:

  This can involve mortgage fraud, forged signatures, or defective loan documentation. A mortgage that was created without the required signatures of other owners may be voidable as to the non-signing owners. You may have immediate remedies to cancel the instrument or to ask a court to declare it invalid.

• If the lender relied on defective title or false statements:

  Banks and title companies typically require proof of ownership and signatures. If the lender failed to obtain proper signatures but later tries to foreclose, you can challenge the foreclosure in court. In some situations the lender may still seek to enforce the loan with respect to the signer’s interest or seek sale of the whole property to satisfy the debt — but you have defenses and equitable remedies.

Common legal actions and remedies in Michigan

Depending on the situation, these are common courses of action available under Michigan law:

• Quiet title or cancellation of instrument: File a lawsuit asking the court to cancel a fraudulent or unauthorized mortgage or to quiet title (declare your ownership free of that encumbrance).
• Tort and contract claims: Suits for fraud, negligent misrepresentation, conversion, or unjust enrichment are options against a co-tenant who misused title or forged documents.
• Injunctions to stop foreclosure or sale: If a foreclosure sale is pending, ask the court for a temporary restraining order or preliminary injunction to halt the sale while the dispute is resolved.
• Partition action: If you no longer want to co-own the property or the dispute is unfixable, you can seek a partition (court-ordered division or sale). Michigan law provides procedures for partition actions; a partition sale allows the property to be sold and proceeds divided among owners. See Michigan’s partition statute, MCL 600.2801 et seq., for details: MCL 600.2801.
• Criminal complaints for forgery or fraud: If signatures were forged or documents were falsified, you may have grounds to contact law enforcement to investigate possible criminal conduct.

How lenders and title companies affect outcomes

Practical outcomes often depend on the lender’s and title company’s role:

• If the lender properly obtained signatures from all required owners, the loan will generally be enforceable against the property in accordance with the loan documents.
• If the lender failed in its due diligence (for example, it accepted forged signatures or incorrect title information), the lender may face claims and the mortgage can be challenged or set aside in court.
• If a title company issued a title insurance policy that insured the loan, the insurer’s position and coverage terms matter. Title insurance may provide a path to recovery or negotiation.

Practical example (hypothetical)

Imagine three siblings inherit a house as tenants in common. One sibling signs a refinancing agreement and takes a home-equity loan without telling the others. If the lender received only that sibling’s signature, the bank likely has a lien on that sibling’s one-third interest. If the loan documents falsely claim full ownership and the lender recorded a mortgage purporting to encumber the entire property, the other siblings can:

1. Record an affidavit of adverse claim or otherwise put the public record on notice;
2. Demand loan documents and title evidence from the lender;
3. File a civil action to cancel the fraudulent mortgage and seek damages for fraud; and
4. Seek injunctive relief if a foreclosure sale is scheduled.

If resolution is impossible, the non-consenting siblings can file for partition under MCL 600.2801 and ask the court to sell the property and distribute the proceeds after satisfying any valid liens.

Urgent steps to take right away

1. Check the county land records online or at the register of deeds. Confirm whether a mortgage or deed was recorded and who signed it.
2. Contact the lender or title company and ask for copies of all loan and title documents. Request proof of each owner’s consent.
3. Preserve evidence: keep copies of the deed, death certificate, probate documents, correspondence, and any documents the co-tenant provides.
4. Consider filing a lis pendens or asking an attorney about a temporary restraining order if a foreclosure sale is scheduled.
5. Talk to a Michigan real estate or probate attorney quickly — statutes of limitation and equitable considerations can limit remedies.

Helpful hints

• Title check first: A recorded mortgage or deed is public. Pull the county register of deeds record to verify what was recorded and when.
• Know your ownership type: Determine whether the property was inherited as tenants in common or joint tenancy; that affects what each owner can do unilaterally.
• Act quickly to stop sales: In foreclosure situations, time is critical. Seek legal help immediately to request injunctive relief.
• Ask for the loan paperwork: Lenders usually keep copies. If signatures are missing or forged, that’s strong evidence for rescission or cancellation of the instrument.
• Consider negotiation or mediation: If relationships allow, negotiate repayment, buyouts, or a formal partition agreement to avoid expensive litigation.
• Keep criminal options in mind: Forgery, fraud, and related crimes may be present — talk to local law enforcement only after consulting an attorney about timing and strategy.
• If there is title insurance, check the policy — it may provide coverage or leverage for resolving the problem.
• Document everything: notes of conversations, written demands, and timestamps help in court and with investigators.