The 2018 Amendment to the Michigan Marketable Record Title Act Goes Into Effect on March 29, 2024: Does Your HOA or Condo Association Need to Record a Notice?

The 2018 Amendment to the Michigan Marketable Record Title Act Goes Into Effect on March 29, 2024: Does Your HOA or Condo Association Need to Record a Notice?

Introduction

Michigan’s Marketable Record Title Act, MCL 565.101, et seq. (the “MRTA”), has been around since 1945, yet many homeowners associations are unaware of the MRTA and its potentially devastating impact on their communities. This article provides a brief background on the MRTA and its 2018 amendment that opened the door to the possible extinguishment of restrictive covenants across the state of Michigan. This article will then discuss the 2022 amendment to the MRTA, which may create a potential safe harbor to preserve restrictive covenants that are nearing or are already more than 40 years old. Finally, the article will discuss whether your HOA or condo association should consider recording a notice to comply with the new requirements created by the 2018 amendment, which, as of the date of this article, will go into effect on March 29, 2024.

The 2018 Amendment to the MRTA

The MRTA was initially enacted in 1945 with the purpose of simplifying land transactions throughout the state of Michigan. When a person buys property in Michigan, instead of having to track down every recorded property interest or deed restriction that has ever been recorded within the chain of title for that property, the MRTA creates a limited, 40-year period of time over which the chain of title will be reviewed. Subject to certain exceptions, any property interests or deed restrictions that are not recorded within that 40-year window or sufficiently identified within the other documents that have been recorded within that 40-year window are no longer enforceable against that property. For example, if a person was purchasing a home that was subject to restrictive covenants in 2023, their 40-year chain of title would start in 1983 – If the restrictive covenants had not been recorded or sufficiently identified within any other documents that were recorded within that property’s chain of title between 1983 and 2023, then that property may no longer be bound by those restrictive covenants!

For decades, this potential threat to restrictive covenants did not loom large for homeowners associations. Prior to 2018, a sufficient identification of restrictive covenants in documents within the 40-year chain of title typically was language just stating that it was “subject to building and use restrictions of record,” “subject to easements and restrictions of record,” or other similar language; however, in 2018, all of that changed when the Michigan legislature amended the MRTA. Now, a sufficient identification of restrictive covenants within the recorded documents of a property’s 40-year chain of title must include specific references to the liber and page or instrument number of the restrictions themselves. For example, a deed within a property’s 40-year chain of title now needs to include language such as “subject to restrictions recorded at Liber 123, Page 456” as opposed to “subject to restrictions of record.” The 2018 amendment to the MRTA initially only gave homeowners associations whose deed restrictions otherwise would be extinguished under the act until March 29, 2021 to record notices that complied with the new law to preserve those restrictions.

After the 2018 amendment to the MRTA was enacted, many in the community association industry were concerned about whether sufficient time existed to record notices to continue various restrictive covenants. In 2020, the Michigan legislature extended the time period for community associations to extend the deadline for HOA and condo associations to record notices that comply with the new requirements in order to preserve their restrictions until March 29, 2024.

The 2022 Amendment to the MRTA

At the end of 2022, the Michigan legislature amended the MRTA again to exclude certain restrictions from the effects of the act. Specifically, MCL 565.104(1) now states, in pertinent part, the following:

This act must not be applied to do any of the following: . . .

(e) Bar or extinguish any land or resource use restriction, including any of the following:

(i) An environmental restrictive covenant or other recorded instrument if the restrictive covenant or other recorded instrument specifically cites the state or federal environmental statute that is the basis for the restriction, including any of the following:

(A) The natural resources and environmental protection act, 1994 PA 451, MCL 324.101 to 324.90106.

(B) The resource conservation and recovery act of 1976, Public Law 94-580.

(C) The comprehensive environmental response, compensation, and liability act of 1980, 42 USC Chapter 103.

(ii) A conservation easement as that term is defined in section 2140 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.2140.

(iii) Any environmental land or resource use restriction recorded by a public utility as that term is defined in section 1 of 1929 PA 69, MCL 460.501, or by an independent transmission company as that term is defined in section 2 of the electric transmission line certification act, 1995 PA 30, MCL 460.562, on real property in which the public utility or independent transmission company had an interest when recorded. (emphasis added).

Generally speaking, Michigan courts have held that restrictive covenants in community associations are a type of land use restriction. See, e.g., Brown v Martin, 288 Mich App 727, 729; 794 NW2d 857 (2010) (“Plaintiffs complained to defendants about the home-based business, asserting that operation of the business was in violation of the subdivision’s land-use restrictions.”); Johnson v Kristin, unpublished per curiam opinion of the Court of Appeals, issued Mar 6, 2007 (Docket No. 266649), p 2 (“Defendants concede that they rent rooms and serve food to others at the residence in which they live in accord with the statutory definition of a bed and breakfast. Such activity clearly constitutes a commercial use of their property in violation of the subdivision’s building and land use restrictions.”); Lauren Hills Home Owners Improvement Ass’n v Kokko, unpublished per curiam opinion of the Court of Appeals, issued Apr 26, 2005 (Docket No. 253523), p 2 (“Defendant does not dispute that the construction of his garage violated the land use restriction prohibiting the construction of detached structures.”)

Similarly, Michigan courts have interpreted the term “any” in a very expansive manner and held that the term “any” applies to a wide range of things. See, e.g., 2 Crooked Creek, LLC v Cass Co Treasurer, 507 Mich 1, 12; 967 NW2d 577 (2021) (“See Random House Webster’s College Dictionary (1999) (defining ‘any’ as ‘1. one, a, an, or some; one or more without specification or identification[.] … 2. whatever or whichever it may be[.] … 3. in whatever quantity or number, great or small; some[.] 4. every; all[.]’)”); People v Harris, 495 Mich 120, 131; 845 NW2d 477 (2014) (explaining that “‘any’ is commonly understood to encompass a wide range of things” such that “it is difficult to imagine how the Legislature could have cast a broader net given the use of the word[ ] ‘any’”), citing People v Lively, 470 Mich 248, 253-54; 680 NW2d 878 (2004); Attorney General v Blue Cross Blue Shield of Mich, 291 Mich App 64, 94; 810 NW2d 603 (2010) (“Random House Webster’s College Dictionary (1992), defines ‘any’ as ‘one, a, an or some,’ or as ‘every, [or] all’”). Accordingly, by using the term “any,” the Michigan legislature presumably intended that any type of land use restriction, including restrictive covenants, be exempted from the MRTA moving forward.

It is also illuminating that the list of examples of the types of land use restrictions that are now exempted from the MRTA in MCL 565.104 is preceded by the term “including.” When interpreting the term “including” in the context of other statutes, the Michigan Court of Appeals has held as follows:

[T]he term “including” should be construed as merely providing specific examples of the types of damages available, and not an exhaustive list. To view the term in the limiting manner urged by defendants would result in an internal contradiction. Interpreted in the manner suggested by defendants, the statutory language would mandate both the award of damages “consider[ed] fair and equitable, under all the circumstances” while simultaneously limiting a plaintiff’s recovery only to those items specified in the list following the term “including.” We find that such an interpretation conflicts with our rules of statutory interpretation that preclude construing terms beyond their “plain and ordinary meaning” and would render the expansive language preceding use of the term either “surplusage” or “nugatory.” Thorn v Mercy Mem Hosp Corp, 281 Mich App 644, 651; 761 NW2d 414 (2008).

See also Rickwalt v Richfield Lakes Corp, 246 Mich App 450, 469; 633 NW2d 418 (2001) (“[W]e note that ‘[w]hen used in the text of a statute, the word “includes” can be used as a term of enlargement or of limitation, and the word in and of itself is not determinative of how it is intended to be used.’ Because a plain reading of subsections 6301(a) and (b) indicates that the Legislature did not intend that the specific items listed after ‘includes’ within subsection 6301(a) comprise a limited, exclusive category of ‘future damages,’ we reject plaintiff’s proposed interpretation.”).

Accordingly, the Michigan legislature’s use of the term “including” within the amendment to MCL 565.104 is also indicative that the list of restrictions that are now exempt from the MRTA was intended to be illustrative, as opposed to exhaustive; however, as discussed below, until a Michigan court interprets the 2022 amendment to the MRTA, we recommend that certain associations record notices to preserve their restrictive covenants under the 2018 amendment as a belt and suspenders approach to avoid an unintentional erasure of those restrictions.

How to Preserve Restrictive Covenants in Michigan

The easiest way to protect restrictive covenants from disappearing is to timely record a notice of interest to preserve those restrictions that complies with the requirements set out in MCL 565.105, including:

• The claimant’s name
• The claimant’s mailing address
• The interest claimed to be preserved
• The liber and page or other unique identification number of the instrument creating the interest to be preserved
• The legal description of the property affected by the claimed interest
• A notarized signature from the claimant
• The name and address of the drafter of the notice
• An address for the notice to be returned to

Whether or not your homeowners association needs to record a notice before March 29, 2024 will depend on a number of factors, including, but not limited to, the following:

• Is your community a HOA or a condo?
  • If your community is a CONDO, then a notice of interest may not need to be recorded because Section 64 of the Michigan Condominium Act, MCL 559.164, requires recorded instruments for condominium units to include the recording information of the original master deed and bylaws; however, you should still consider the other questions below because it is possible that some recorded documents for units within your community are missing this information or contain incorrect recording information.
  • If your community is a HOA, then a notice of interest may be required because it is unlikely that the recorded documents for the properties within your community include the specific liber and page or other instrument numbers for your HOA restrictions.
• By March 29, 2024, will your restrictive covenants be 40 years old or older?
  • If NO, then you may not need to record a notice at this time; however, you should get a legal opinion from an experienced community association attorney on the future date by which you will need to record a notice to preserve your deed restrictions.
  • If YES, have any amendments to your restrictive covenants or notices of interest regarding your restrictions been recorded since March 29, 1984?
    • If YES, then you may not need to record a notice at this time; however, you should have an experienced community association attorney review your restrictive covenants, including any recorded amendments and notices, as soon as possible to make sure that those amendments and/or notices properly preserved your restrictive covenants.
    • If NO, then you may need to record a notice before March 29, 2024 and you should contact an experienced community association attorney as soon as possible to review your recorded documents and advise you on the steps necessary to record a timely notice under the MRTA.

Kayleigh B. Long is a Member at Hirzel Law, PLC and focuses her practice in the areas of community association law and appellate litigation. Ms. Long obtained her Juris Doctor degree from Indiana University Robert H. McKinney School of Law, where she graduated in the top 5 of her class and served as the Senior Executive Editor on the Indiana Law Review. Ms. Long has been recognized as a Michigan Rising Star in Real Estate Law by Super Lawyers since 2020, an award given to no more than 2.5% of the attorneys in the State of Michigan. Ms. Long has also made numerous presentations on community association law, along with having articles published in the Michigan Real Property Review. She can be reached at (248) 478-1800 or klong@hirzellaw.com.