An important amendment to the Marketable Record Title Act becomes effective on March 29, 2019. The Amendment renders ineffective one of the most commonly seen phrases in real property transactions: “subject to easements and restrictions of record.” The Amendment requires affirmative renewal of certain claims, encumbrances, interests, and use restrictions in real property, before their expiration, by use of additional information contained in an affidavit format. Changes to notice and preservation requirements should be noted by fiduciaries and attorneys who convey or attend to real property in the course of their duties.
Passed in 1945, the Marketable Record Title Act, MCL 565.101 et seq. (“Act”) was generally intended to allow persons involved in real estate transactions to rely upon recorded title to real property as reflected in the register of deeds office for the forty (40) years before the transaction for (or 20 years ago for mineral interests). See, Gibbs v Smock, 195 Mich App 450; 491 NW2d 614 (1992).
The Senate Fiscal Agency Legislative Bill Analysis suggests the Amendment to the Act was proposed due to concern that typical deed language may not be sufficient for a title search to reveal all interests and restrictive covenants. The Analysis states “…it is common for deeds or purchase agreements to contain generic statements such as ‘subject to anything of record’ or ‘subject to existing use restrictions, if any’….Reportedly, land title companies are reluctant to issue title insurance in these situations… .” Senate Bill Analysis, SB 671, 4-3-18.
Restrictive covenants running with the land, encumbrances or clouds on title, and building restrictions in deeds are interests in real property. Malicke v Milan, 320 Mich 65; 30 NW2d 440 (1948); Hyman v Boyle, 239 Mich 357; 214 NW 163 (1927); Ogooshevitz v Warijas, 203 Mich 664; 169 NW 820 (1918). These covenants, encumbrances, and restrictions are generally considered subject to the Act and therefore subject to extinguishment after 40 years if not properly extended.
The Amendment now requires affirmative renewal of some of those claims, interests and use restrictions using language significantly beyond the general statements noted above. The general language will no longer preserve interests over 40 years old without a direct reference to recorded document, with a liber/page or other county-assigned number, as well as other information set forth in the amended statute. To preserve certain interests, the Amendment requires recordation of an instrument that meets the requirements of amended Section 5 of the Act (MCL 565.105). Section 5 adds multiple requirements for an interest to be effective and preserved, including but not necessarily limited to the following:
• liber and page or other county-assigned unique identifying number;
• claimant’s name;
• claimant’s mailing address;
• interest claimed to be preserved;
• except as to mineral interests, the liber and page or other unique identification number of the instrument creating the interest to be preserved;
• legal description of the real property affected;
• claimant’s signature;
• and an acknowledgment in the form required by the uniform recognition of acknowledgments act (MCL 565.261 to 565.270) and the Michigan Notary Public Act (2003 PA 238, MCL 55.287); • drafter’s name and address; and
• address to which the document can be returned. MCL 565.105.
However, there are certain interests the Amendment does not affect, for example, mortgage interests, possession after expiration of a lease, and easements whose existence is recorded and which contain underground facilities or those that are “clearly observable by physical evidence.” MCL 565.104.
The State Bar of Michigan Real Property Law Section opposed the Amendment, noting, among other things, that it “may have the unintended consequence of terminating more than aged and outdated deed restrictions . . . desired deed restrictions could also be terminated . . . without the benefitted parties being aware . . . . ” SBM Real Property Section Public Policy Position, SB 671, Adopted: February 14, 2018.
Despite the stated intention to promote specificity, the new statutory language poses multiple questions and uncertainties. Among these are: Who is responsible for filing the affidavit contemplated by Section 5, and who should receive notice? What about fiduciaries who only handle property for a short time? Will the information contained in a conveyance document, rather than a separate affidavit, preserve an interest? and What exactly constitutes an observable easement? Not much is known yet about the application of this Amendment or the implications it may have. Surely there will be more to come as the effective date nears and more analysis is done.
As published in Macomb County Probate Bar Association Quarterly Petition 2019 Spring Edition
