Court Opinion

ID: 9569002
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:09:34.565302+00
Date Added: 2024-06-11T11:18:28.697309
License: Public Domain

Reilly, P.J.
Plaintiff appeals as of right a circuit court order granting defendant’s motion to stay enforcement of the acceleration provisions contained in a land contract between plaintiff and defendant and stating that the land contract was usurious. We reverse and remand for further proceedings.
Pursuant to the land contract, defendant purchased a home from plaintiff for $65,000. The land contract did not provide any terms for the payment of the $65,000, nor did it state the interest to be paid. According to an addendum, which was *192incorporated by reference in the land contract, $45,000 was to be paid in monthly payments of $482 or more, "including principal and annual interest of 12% of the unpaid balance.” The balance of principal and interest on that amount was due on or before May 1, 1995. The remaining $20,000, together with interest of eight percent per annum, compounded monthly, was also due on or before May 1, 1995. Defendant and Andrew L. Fugate, who later became defendant’s husband, also executed a promissory note in favor of plaintiff for $20,000. The payment terms of the promissory note were the same as those for the $20,000 referred to in the addendum to the land contract, although the promissory note does not refer to the land contract or the addendum, and vice versa.
Plaintiff initiated this action to foreclose on the land contract after defendant failed to make three payments. Defendant filed an answer and a countercomplaint in which she contended that the interest rate being charged in the land contract was usurious and, therefore, that the interest was forfeited. MCL 438.32; MSA 19.15(2). Defendant also requested injunctive relief pursuant to MCL 438.31c(10); MSA 19.15(lc)(10) to prevent plaintiff from enforcing the acceleration provisions of the land contract. The trial court’s order granting defendant’s motion to stay enforcement of the land contract stated that the "land contract in question is deemed usurious.”
On the basis of the court’s ruling, the parties entered into a stipulation. They agreed on the principal balance remaining on the contract. That amount was paid and, pursuant to the agreement, the warranty deed for the property was executed and delivered to the defendant, and the promissory note was canceled. The stipulation preserved plaintiff’s right to appeal the usury issue. The trial *193court certified its order approving the stipulations and the transaction as a final order for purposes of MCR 7.203(A)(1).
We agree with plaintiff that the land contract and the addendum must be read together in order to determine the terms under which the $65,000 should be paid. We conclude that the total interest on the $65,000 amount of the land contract did not exceed the eleven percent per annum maximum rate allowed for land contracts under MCL 438.31c(6); MSA W.lSilcXfi).1 The trial court’s ruling, based in part on Bebee v Grettenberger, 82 Mich App 416; 266 NW2d 829 (1978), was erroneous. That case is factually distinguishable inasmuch as it concerned a second mortgage that was substituted for a land contract. Second mortgages are treated differently than land contracts and first mortgages, and are subject to a lower maximum interest rate under the statute.
Because the land contract was not usurious, plaintiff is entitled to the interest as provided in the addendum to the land contract. Plaintiff’s acceptance of payment, delivery of the warranty deed to defendant, and cancellation of the promissory note ended any further obligation by defendant to make payments under the land contract. However, because defendant agreed by stipulation to accept the deed with the understanding that *194plaintiff reserved his rights to pursue the "usury issue” on appeal, defendant is obligated to pay the interest owing on any outstanding balance until the date the deed was delivered. Plaintiff is also entitled to reimbursement for the amounts paid for defendant’s attorney fees, which plaintiff paid pursuant to the trial court’s ruling that the contract was usurious. MCL 438.32; MSA 19.15(2).
Accordingly, the order granting defendant’s motion for a stay and stating that the land contract is usurious is reversed. We remand for determination of the amount of interest owing for the period from the date the land contract was executed to the date the warranty deed was delivered.
Reversed and remanded.
Taylor, J., concurred.

 Neither party has suggested that the promissory note is evidence of an obligation to pay an additional $20,000 over and above the $65,000 stated in the land contract, and we have no reason to do so. The maximum interest rate that could be charged on the $65,000 land contract was eleven percent per annum, or $7,150. The parties agreed that defendant would be obligated to pay twelve percent per annum on $45,000 of the amount due, or $5,400. They also agreed that the remaining $20,000 of the debt would be paid at the rate of eight percent per annum, compounded monthly, or an effective annual rate of 8.3 percent. Assuming no part of the $20,000 was paid by the end of the first year, $1,659.98 in interest would be owing on that portion of the debt. Interest owed under the two rates equals $7,059.98, or 10.86 percent of $65,000.