On December 28, 2018, the Michigan legislature passed Senate Bill 671 (“Bill”) which amends the Marketable Record Title Act (“MRTA”). The Bill took effect on March 29, 2019. The “Amendment” to the MRTA provides for a 2-year grace period (until March 29, 2021) for recording a notice to preserve interests or use restrictions that are more than 40-years old (20 years for mineral interests).
Most importantly, the Amendment requires the recording of a “Notice of Claim” which must contain very specific information including, among other things, the claimant’s name, the interests to be preserved, the liber and page or other unique identification number of the instrument originally creating the interest, and a legal description of the real property affected. After March 29, 2021, if a Notice of Claim is not recorded within the 40-year time period containing the required identifying information as provided in the Amendment, then the claimed interest or restriction will no longer be preserved and will be void as a matter of law. Unfortunately, the Amendment has created many ambiguities regarding compliance with the new restriction preservation recording requirements, which are discussed in detail below.
In particular, condominium and homeowners associations have had difficulty in trying to determine:
- Whether an association is a “claimant”? An association is generally charged with enforcement of use restrictions in association communities, but do they have an interest under the Amendment to file a Notice of Claim and extend the restrictions if the interests or restrictions aren’t necessarily for the association’s benefit?
- Whether an association (i) may legally describe the real property collectively as is typically done in a plat or site condominium map, or (ii) must legally describe every parcel of real estate impacted by the use restrictions separately? The administrative burden of the latter on both associations and registers of deeds could be catastrophic.
- Whether the proposed bill, HB5260, will apply only to condominium associations and not traditional homeowners associations HB5260 (in its current state) purported to exempt condominium associations from the Amendment, but not necessarily homeowners associations.
The above examples are just the tip of the iceberg. Luckily, members of the Real Property Law Section of the State Bar of Michigan (the “RPLS”) are chairing legislative efforts to amend MRTA to extend the grace period and clarify various issues. A new proposed amendment is in the works which would change the effective date of the Amendment to March of 2024 (to extend the grace period from 2 years to 5 years). Members of the RPLS report that there is a high likelihood that progress on this extension bill will happen before the end of the year. Unfortunately, a possible amendment correcting the Amendment’s flaws is of little help for those who might have major work to comply with the act before a resolution is completed. As to HB5260, it is being reported that the exemption for condominium associations and not homeowners associations is being addressed in the RPLS amendment.
If you have questions regarding the Amendment to MRTA, you can email me at jwheeler@localhost or call me at 616.248.3061.