Simon PLC Attorneys & Counselors – February 2020 Memorandum
Complying with the 2018 Amendment to the Michigan Marketable Record Title Act (MRTA) (2018 PA 572)
Bloomfield Hills, Michigan – The MRTA (the Act) was enacted in 1945 with the intent to “clean up” titles by eliminating interests in land more than 40 years old from the chain of title unless an additional notice of claim had been recorded. In order to maintain a recorded restriction, the practice has been to deed property “subject to building and use restrictions of record”, or some similar generic reference, in order to keep any restrictions in the chain of title without specifically referring to them. But the original Act did not clearly state that this type of general incorporation by reference qualified as the necessary additional notice of claim.
In 2018 the Michigan Land Title Association (“MLTA”) supported amending the Act to respond to concerns including: (i) the uncertainty about the adequacy of the “subject to” language, (ii) the extensive research that was required to identify what were valid restrictions, and (iii) the risk to the title company from issuing a title policy that omitted claims, however stale, that were valid. The Amendment was passed in a lame-duck session at the end of 2018 and will likely require further modification to answer the questions that it creates. Most notably, the Act now allows a “claimant” to file a notice of claim, but the term “claimant” is not defined.
The Amendment provides that for a restriction to be preserved, a claim of interest must be recorded with Register of Deeds no later than March 28, 2021. The claim of interest document must contain all of the specifics in the following section in order to be effective. Note that the liber and page/document number of the originally-recorded document must be included or the filing will be void:
MCL 565.105 Sec. 5. (1) To be effective and to be entitled to record, a notice of claim under section 3 must contain an accurate and full description of all the land affected by the notice, which description must be set forth in particular terms and not by general inclusions. However, except as to mineral interests, if the claim is founded on a recorded instrument, the notice must also state the liber and page or other county-assigned unique identifying number of the recorded instrument the claim is founded on. The failure to include the liber and page or other county-assigned unique identifying number renders the recording ineffective and the claim unpreserved. The notice must contain all the following:
(a) The claimant’s name.
(b) The claimant’s mailing address.
(c) The interest claimed to be preserved.
(d) Except as to mineral interests, the liber and page or other unique identification number of the instrument creating the interest to be preserved.
(e) The legal description of the real property affected by the claimed interest.
(f) The claimant’s signature.
(g) An acknowledgment in the form required by the uniform recognition of acknowledgments act, 1969 PA 57, MCL 565.261 to 565.270, and section 27 of the Michigan notary public act, 2003 PA 238, MCL 55.287.
(h) The drafter’s name and address.
(i) An address to which the document can be returned.
(2) A notice of claim under section 3 must be filed for record in the register of deeds office of the county or counties where the land described in the notice is located. The register of deeds of each county shall accept all notices of claim under section 3 that are presented to the register of deeds that describe land located in the county in which the register of deeds serves and shall enter and record full copies of the notices in the same way that deeds and other instruments are recorded.
Example: A subdivision with covenants or deed restrictions recorded more than 40 years ago. Who is the “claimant” authorized to file to maintain the recorded restrictions – one homeowner, or the homeowners association? What if no homeowners association exists? Can one homeowner record a notice that maintains the restrictions for the entire subdivision?
Example: A subdivision deed restriction requires all garages to be attached. If one homeowner conveys their lot without reference to the restriction, is the restriction eliminated to that lot alone, or as to the entire subdivision? If the homeowner has done so intentionally, can the association oppose the action in court? Will all future individual sales be subject to a review of the deeds, to make sure that they reference the original subdivision restrictions?
Condominiums are less likely to have a problem, because the legal description of a condominium unit always includes specific reference to the recorded Master Deed and amendments.
The implications of the Amendment to the Act are immediate and in effect. Holders of interest in land such as use restrictions, product supply agreement requirements, branding restrictions, neighborhood covenants, and prohibitions on use for a particular purpose, and the like, are all implicated. Unless a restriction or interest has been otherwise excluded from the Act, a holder must preserve their claim of interest every 40 years. All holders seeking to preserve their long standing interests and private deed restrictions are encouraged to coordinate with their attorney without delay. The Transactional and Real Estate Group at Simon PLC is prepared to answer any questions or concerns your organization may have regarding this new regulation and its implementation. Visit the Team at https://simonattys.com/commercial-lending-and-real-estate/ for more information.
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