Background
Shiree Broaden loaned Milton Tinnon $20,000. In June 2021, Tinnon executed a quitclaim deed transferring his Detroit property to Broaden. The parties also executed an exhibit stating that the property would be used as security for the loan and that Broaden would receive repayment in about 30 days. According to Broaden, she could record the deed and take ownership if Tinnon failed to repay her.
After nearly a year without repayment, Broaden recorded her deed. Tinnon then executed another quitclaim deed transferring the property to CKT Enterprises LLC, which recorded its deed and sued to quiet title. CKT alleged that the deed to Broaden was intended as security for a loan and therefore constituted an equitable mortgage rather than an absolute conveyance. The trial court disagreed, granted summary disposition to Broaden, dismissed CKT’s complaint, and quieted title in Broaden’s name.
The Court’s Holding
The Michigan Court of Appeals reversed the grant of summary disposition to Broaden and the ruling quieting title in her favor. Although a deed absolute on its face may constitute an outright transfer, a court of equity may treat it as a mortgage when the parties intended the property to secure a debt. The parties’ intent is the controlling consideration, and the party asserting an equitable mortgage bears a heavy burden at trial.
Broaden did not meet her initial summary-disposition burden because her motion failed to address CKT’s equitable-mortgage theory. Moreover, the exhibit stating that the property “will be used as security” for the $20,000 loan was documentary evidence from which a factfinder could conclude that the deed was intended as a mortgage. Because Broaden offered no affidavit or sworn testimony disputing the exhibit or the asserted intent, a genuine issue of material fact remained.
The court also declined to grant summary disposition to CKT, leaving the parties’ intent for further proceedings. It held that Broaden waived her standing argument by failing to raise it in her first responsive pleading and declined to decide her unclean-hands theory through appellate factfinding, allowing her to pursue that issue in the trial court on remand.
Key Takeaways
- A deed absolute on its face may be declared an equitable mortgage when the parties intended it to secure a debt.
- A written statement that property “will be used as security” can create a genuine factual dispute concerning the parties’ intent.
- The court reversed summary disposition for Broaden but did not rule that CKT had established an equitable mortgage as a matter of law.
Why It Matters
The decision emphasizes that Michigan courts look beyond the form of a deed when evidence suggests that the transfer was intended to secure repayment. A party seeking summary disposition must directly address an opposing equitable-mortgage theory and cannot obtain judgment merely by relying on the deed’s facial terms.
The ruling also illustrates the importance of contemporaneous loan documents. Even a short attachment describing property as “security” may prevent summary disposition and require a factfinder to determine whether an apparent conveyance was actually a mortgage.