Michigan Commercial Real Estate Loans: Transfer Tax & PACE
What changes for a commercial property loan in Michigan: state and county transfer taxes, foreclosure by advertisement, the six-month redemption period and PACE.
| What | Michigan |
|---|---|
| State real estate transfer tax | $3.75 for each $500 or fraction of $500 of the total value of the property transferred. The seller or grantor is liable for the tax. [1] |
| County real estate transfer tax | 55 cents for each $500 or fraction of $500 in a county with fewer than 2,000,000 people (up to 75 cents where a county of 2,000,000 or more authorizes it), on top of the state tax. [2] |
| Tax on the mortgage | None under the transfer tax acts: a written instrument given as security, and its assignment or discharge, is exempt from both the state and the county tax. Recording a document costs a flat $30 regardless of page count; a charter county may set its own fee by ordinance, capped at the cost of the service. [3] |
| Foreclosure process | Foreclosure by advertisement, without a court case, under a mortgage that contains a power of sale. Notice of the sale is published in a newspaper in the county for 4 successive weeks, at least once each week, and a copy is posted on the property within 15 days after the first publication. [4] |
| Redemption after the sale | 6 months from the date of the sale for a mortgage on commercial or industrial property, or on multifamily residential property of more than 4 units. To redeem, the owner pays the amount bid, interest from the sale date at the mortgage rate, and the sheriff’s fee. [5] |
| C-PACE law and program | The Property Assessed Clean Energy Act, 2010 PA 270 (MCL 460.931–460.949), lets a county, township, city or village finance energy projects on privately owned commercial or industrial property, repaid through a voluntary assessment and lien under a contract with the local unit. If the property is subject to a mortgage, the owner needs the mortgage holder’s written consent. 2023 PA 106 and 107 added environmental hazard projects and agricultural property. [6] |
Checked 2026-10-13; sources are listed at the end of the page. Rates and rules change — your title company and closing attorney confirm the figures for a specific deal.
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Commercial property loans in Michigan use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Michigan changes is a state and a county transfer tax that the seller owes, no percentage tax on the mortgage, a foreclosure that runs by newspaper advertisement instead of a lawsuit, a six-month redemption right after the sale, and a PACE program that needs the mortgage lender's written consent.
Transfer taxes on the sale, not the loan
Michigan has two transfer taxes, both collected when the deed is recorded. The state tax is $3.75 for each $500 of value, and the state act makes the seller or grantor liable for it. The county tax is 55 cents for each $500 in every county under 2,000,000 people. Together that is $4.30 per $500, or 0.86% of the price. Each act exempts an instrument given as security, so the mortgage itself is not taxed; recording it costs the same flat $30 as any other document, unless a charter county has set its own fee.
Example: a $2,000,000 commercial building bought with a $1,400,000 loan.
- State transfer tax: $2,000,000 ÷ $500 × $3.75 = $15,000
- County transfer tax: $2,000,000 ÷ $500 × $0.55 = $2,200
- Tax on the $1,400,000 mortgage: $0 — only the $30 recording fee
- Total transfer tax: $17,200, owed by the seller
Next door in Ohio, the same sale carries at most $8,000 in conveyance fees, and in Minnesota the deed and mortgage taxes come to $9,820. The difference for a buyer is where the tax lands: in Michigan it is a seller's cost that shows up in negotiations over price, while the borrower's own loan-side cost stays at the recording fee — and stays there on a refinance, because a new mortgage is exempt too.
Foreclosure by advertisement — and six months to redeem
A Michigan mortgage that contains a power of sale can be foreclosed by advertisement, ending in a sheriff's sale without a court case. The lender publishes notice of the sale in a newspaper in the county at least once a week for four successive weeks, and within 15 days of the first publication posts a copy on the property. Compared with a lawsuit, that is a short run from the first notice to the sale.
The sale is not the last word. For a mortgage on commercial or industrial property, or on an apartment property of more than four units, the owner can redeem for six months after the sale by paying the amount bid, interest from the sale date at the mortgage rate, and the sheriff's fee. That is the same window as Minnesota and very different from Colorado, where the owner has no redemption right after the sale. Interest keeps running the whole time, so if a refinance or a sale is the way out, start well before the first notice. Read the personal guarantee you sign as carefully as the mortgage — and on a non-recourse loan, the carve-outs that would turn recourse back on.
PACE: local districts and lender consent
Michigan's Property Assessed Clean Energy Act, 2010 PA 270, lets a county, township, city or village set up a PACE program and finance energy projects on privately owned commercial or industrial property. The owner repays through a voluntary assessment and lien on the property, under a contract with the local unit. Amendments in 2023 (PA 106 and 107) added environmental hazard projects and opened the program to agricultural property. A local unit has to establish a PACE district before owners there can use it — many have done so by joining Lean & Green Michigan, a statewide program — so check first that your city, township or county takes part.
The act's key rule for a borrower: if the property has a mortgage, the owner needs the mortgage holder's written consent to take part. C-PACE Desk, a BestLoanUSA site, tracks Michigan's C-PACE status. If you already have a loan on the building, ask that lender for its consent before you apply.
Where to start
Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and, as a seller, put the transfer taxes in your net proceeds. Size the loan with the commercial mortgage calculator. For financing that isn't tied to real estate, the Michigan business loan guide covers SBA offices and state programs.
Ready to compare? Start a commercial real estate loan request — one application, compared across our lender network.
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Sources: MCL 207.523, 207.525 and 207.526 (State Real Estate Transfer Tax Act); MCL 207.502, 207.504 and 207.505 (County Real Estate Transfer Tax Act); MCL 600.2567; MCL 600.3201, 600.3208 and 600.3240; Michigan House Fiscal Agency, analysis of HB 5640 (2010 PA 270, MCL 460.931–460.949); Senate Fiscal Agency, analysis of SB 302 and 303 as enacted (2023 PA 106 and 107); Lean & Green Michigan, Detroit PACE district presentation (2025). Checked 2026-10-13.
The bottom line
In Michigan the transfer taxes fall on the sale, not the loan: the seller owes $17,200 on a $2,000,000 building, and the $1,400,000 mortgage records for a flat $30 fee. The bigger difference is after a default — a sheriff’s sale by advertisement needs only four weeks of newspaper notice, and a commercial owner then has six months to redeem. If a PACE project is on your list, ask your mortgage lender for its written consent before you apply, because the act requires it.
Commercial loan rates and terms in Michigan
Rates and leverage come from the lender, the property and the borrower, so they are the same national ranges in Michigan as elsewhere — what changes here are the closing costs and rules in the table above. Typical terms as of September 2026:
| Program | Rate | Max LTV / LTC | Term |
|---|---|---|---|
| Bank / credit union | 6.5–8% | 65–75% (80% multifamily) | 5–10 yr |
| SBA 504 | 6.25–7.25% | Up to 90% | 10–25 yr |
| SBA 7(a) | 8.5–11.5% | Up to 90% | Up to 25 yr |
| DSCR | 6.75–8.75% | Up to 75–80% | 5–30 yr |
| CMBS | 7–8% | Up to 75% | 5–10 yr |
| Bridge | 6.25–8.25% | 65–80% | 12–36 mo |
| Construction | 6.75–10.5% | 65–80% LTC | 12–24 mo |
How each range is built: commercial real estate loan rates by type.
Michigan commercial real estate loan FAQ
What are commercial mortgage rates in Michigan?
Commercial lenders price a loan on the property and the borrower rather than the state, so Michigan rates follow national ranges: about 6.5–8% for a bank loan, 6.25–7.25% for SBA 504, 6.75–8.75% for a DSCR loan and 6.25–8.25% for a bank or debt-fund bridge loan (benchmarks as of September 2026).
How much down payment do I need for a commercial property in Michigan?
Typically 25–35% for a bank loan and 20–25% for a DSCR loan. An owner-occupied building can qualify for SBA 504 with 10% down (15% for a business under two years old or a special-purpose building, 20% if both).
Does Michigan tax a commercial mortgage when it is recorded?
Not under the transfer tax acts. Both the state and the county act exempt an instrument given as security, and its assignment or discharge, so the mortgage carries no percentage tax. Recording it costs the flat $30 document fee, or a charter county’s own fee where one has been set.
Who pays Michigan’s transfer tax on a commercial sale?
The state act makes the seller or grantor liable for the state tax, and the county tax is also on the seller. On a $2,000,000 sale that is $15,000 of state tax and $2,200 of county tax, $17,200 in all.
How long can a Michigan commercial owner redeem after a foreclosure sale?
For a mortgage on commercial or industrial property, or on an apartment property of more than 4 units, the redemption period is 6 months from the sheriff’s sale. Redeeming takes the amount bid, interest from the sale date at the mortgage rate, and the sheriff’s fee.
Sources
- MCL 207.523 and 207.525 (State Real Estate Transfer Tax Act)
- MCL 207.504 (County Real Estate Transfer Tax Act)
- MCL 207.526(d), 207.505(d) and 600.2567
- MCL 600.3201 and 600.3208
- MCL 600.3240 (2013 PA 104)
- Mich. House Fiscal Agency, analysis of HB 5640 (2010 PA 270); Senate Fiscal Agency, analysis of SB 302–303 as enacted (2023 PA 106–107)
Checked 2026-10-13.
Run the numbers
- DSCR Calculator Calculate your Debt Service Coverage Ratio instantly. See if your property qualifies for CRE financing and which loan programs are available to you.
- Refinance Break-Even Calculator Find out exactly how many months until your refinancing savings cover the closing costs. Make a data-driven decision on whether to refinance your CRE loan.
- SBA 504 Loan Calculator Estimate your SBA 504 loan structure — see the three-part split (borrower, CDC, bank), monthly payments for each portion, and total project financing.
Keep reading
- Michigan Business Loans: SBA, State Programs & Lenders Michigan is the heart of American automotive manufacturing — and one of the most actively transforming industrial economies in the country. Here's how to navigate business lending across the Great Lakes State.
- California Commercial Real Estate Loans: Taxes, Prop 13 & C-PACE What changes for a commercial property loan in California: city transfer taxes, a Prop 13 reset at purchase, trustee-sale foreclosure and the largest C-PACE market.
- Colorado Commercial Real Estate Loans: Public Trustee & C-PACE What changes for a commercial property loan in Colorado: a 0.01% deed fee and no mortgage tax, public trustee foreclosure with a court order, statewide C-PACE.
- Connecticut Commercial Real Estate Loans: Taxes & C-PACE What changes for a commercial property loan in Connecticut: the conveyance tax, entity transfers, court-run strict foreclosure and the Green Bank’s C-PACE.