HB 5260: Exempting Condominiums from the Marketable Record Title Act
As previously discussed in, Amendment to the Marketable Record Title Act puts Michigan Restrictive Covenants at Risk, the Michigan Marketable Record Title Act, MCL 565.101, eq seq., was amended at the end of 2018, via 2018 PA 572, and may have unforeseen consequences for Michigan condominiums and homeowners associations. As a result of the 2018 amendment to the Michigan Marketable Record Title Act, if a property owner has an unbroken chain of title of more than 40 years, that does not specifically identify restrictive covenants, restrictive covenants may no longer be enforceable as to that owner. However, the filing of a claim of interest by a condominium association or homeowners association, that specifically describes the property subject to the restrictions, would preserve the restrictive covenants if done by March 29, 2021, if the restrictions are more than 40 years old, or prior to the expiration of the 40 year time-period if the restrictions are less than 40 years old.
MCL 565.104 also provides a list of items that are exempt from having the Michigan Marketable Record Title Act apply to it. On November 13, 2019, HB 5260 was introduced and would amend MCL 565.104 by exempting condominiums from the purview of the Michigan Marketable Record Title Act. Specifically, HB 5260 would add the below language, that is identified in bold, to the list of exemptions contained in MCL 565.104:
Sec. 4. (1) This act must not be applied to do any of the following:
(a) Bar a lessor or his or her successor as reversioner of his or her right to possession on the expiration of a lease or a lessee or his or her successor of his or her rights in and to a lease.
(b) Bar any interest of a mortgagor or a mortgagee or interest in the nature of that of a mortgagor or mortgagee until after the instrument under which the interest is claimed has become due and payable, except if the instrument has no due date expressed, if the instrument has been executed by a railroad, railroad bridge, tunnel, or union depot company, or a public utility or public service company.
(c) Bar or extinguish an easement or interest in the nature of an easement, the existence of which is clearly observable by physical evidences of its use.
(d) Bar or extinguish an easement or interest in the nature of an easement, or any rights appurtenant to the easement or interest granted, excepted, or reserved by a recorded instrument creating that creates the easement or interest, including any rights for future use, if the existence of the easement or interest is evidenced by the location beneath, on, or above any part of the land described in the instrument of a pipe, valve, road, wire, cable, conduit, duct, sewer, track, pole, tower, or other physical facility and whether or not the existence of the facility is observable, by reason of failure to file the notice required by this act.
(e) Bar the enforcement of any provision contained in or referred to in a recorded master deed for a condominium and its recorded amendments.
While MCL 559.164 of the Michigan Condominium Act requires a deed for a condominium unit to reference the liber and page number of the original master deed, it is possible that a deed contains an error or that if does not reference an amendment to the Master Deed, which would lead to litigation on whether the Marketable Record Title Act is applicable. Accordingly, HB 5260 would be beneficial for all condominium associations as it would ensure that all of the restrictive covenants in the governing documents would remain undisturbed and avoid potential litigation as to the applicability of the Marketable Record Title Act as to Michigan condominium projects. However, HB 5260 would have no application to traditional homeowners associations that are not subject to the Michigan Condominium Act. Accordingly, unless the legislature takes additional action, it will likely be left to the courts as whether the restrictive covenants in traditional homeowners associations are subject to the Marketable Record Title Act. If HB 5260 passes, it will certainly be beneficial for condominium associations, but traditional homeowners must consult with counsel prior to March 29, 2021 to determine whether the recording of a claim of interest is necessary and the appropriate timing of the same to avoid the possibility that their restrictive covenants will unknowingly be removed.
Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners’ associations and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2019, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel has been named a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine in 2018 and 2019, an award given to less than 5% of the attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners’ associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or [email protected]