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Gregg A. Nathanson, Esq.
In the waning hours of the last Michigan Legislative session of 2018, the State passed a flurry of new laws. In the last issue of TitleBytes, Bill Robinson provided an excellent summary of 2018 changes in Michigan real estate law. This article focuses on three of those changes and how title companies may need to grapple with certain recorded documents. These new changes involve the Michigan Marketable Record Title Act, the Michigan Construction Lien Act, and Michigan law governing the content and recording of certificates of trust.
Marketable Title Act. On December 28, 2018, the Michigan Legislature amended Michigan’s Marketable Record Title Act. The amendment seeks to clean up title by eliminating the enforceability of certain documents that were recorded more than 40 years ago. The intent was partly, but not exclusively, to eliminate old building and use restrictions. Recorded easements can terminate as well, but face a lower threshold to remain in effect.
If a property owner now wants to preserve a recorded restriction, then it must be referred to by liber and page in a later recorded document. It is anticipated this will happen most frequently in the “subject to” line of a deed. Current common practice in Michigan is to transfer property “subject to easements and restrictions of record”, without citing a particular liber and page, except in larger commercial transactions. The law provides a 2 year window for recording an affidavit of interest (referred to in the statute as a “notice of claim”) to preserve the effectiveness of documents recorded more than 40 years ago, and the recording of a notice of claim thereafter before the expiration of 40 years from the date of the original or last recording of the restriction being extended. The notice of claim must contain certain minimum statutorily required information, including: the claimant’s name and mailing address; the interest claimed to be preserved; the liber and page of original recorded document; and the legal description.
In short, this law requires affirmative action by parties who desire to preserve the effectiveness of old recorded restrictions such as those pertaining to a residential development, shopping center, office complex, or even limited environmental use of certain contaminated sites. This new law went into effect on March 28, 2019.
Construction Lien Act. The second significant year end change involves amendments to Michigan’s Construction Lien Act. The Act now permits architects, professional engineers and professional surveyors (design professionals) to record a notice of professional services contract, or notice of professional services subcontract, before construction commences and within 90 days after last performing professional services. The notice is valid for one year after the date it is recorded. If the design professional subsequently records a claim of lien, it will be enforceable even if there are never any actual physical improvements to the property. The lien may have priority over a mortgage recorded after the notice of professional services contract. However, if an actual physical improvement is made to the property after the notice is recorded, then the notice is only effective from the date of the first actual physical improvement. The statute contains a form of Notice of Professional Services Contact, and Notice of Professional Services Subcontract. This law took immediate effect.
Certificates of Trust. The third recent change involves certificates of trust. When a trustee of a trust sells property, the trustee can record a certificate of trust instead of the actual trust agreement. There are 2 competing and often inconsistent statutes in Michigan governing the contents of a certificate of trust and who can sign it: a real estate statute and the Michigan Estates and Protected Individuals (EPIC) code. Both statutes were amended to provide that the newer EPIC certificate of trust content and signatory requirements supersede the older real estate statute. For example, the certificate no longer needs to contain verbatim reproduction of trust language, and the certificate can be executed by any trustee, even a successor trustee who is not the grantor. Certificates of trust can still be recorded under the real estate statute, so long as the certificates comply with the EPIC requirements.
Please do not hesitate to connect us with any questions about these or other Michigan laws.