On Thursday, May 4, 2023, we held an ICLE Community Zoom discussion about recent developments concerning the MRTA. Lavinia Biasell, David Martyn, and Kayleigh Long shared their expertise and insights into this topic. Here is a quick recap of what was discussed:
· History and Purpose of the MRTA. The panelists discussed the history and purpose of the MRTA noting that, as of 2023, 17 states have implemented some form of the MRTA, which aims to simplify the process of determining property interests. In Michigan, the MRTA establishes a 40-year-search window. The act intends to eliminate the need to search back to the original covenant to determine property interests, making it easier for property owners to identify any relevant interests within the 40-year window. However, over time, various amendments and exceptions have been introduced, making the act less effective and more ambiguous.
· Recent Amendments. Also discussed were the 2018, 2020, and 2022 amendments to the act. Here is a condensed summary of that conversation: In 2018, the Michigan Land Title Association proposed changes to the MRTA, which took effect in March 2019. This amendment introduced a two-year window (later extended to four years in the 2020 amendments) for the preservation of easements and restrictions. Once the preservation process went into effect, the utility groups and the environmental groups raised concerns. For instance, questions arose about whether utility companies would need to review thousands of documents to ensure that the proper information was identified to preserve their rights.
In 2022, the MRTA was amended to carve out exceptions for certain utilities. See MCL 565.104(1)(d). The act was also amended to state that the act does not bar or extinguish “any” land or resource use restriction. See MCL 565.104(1)(e). For additional discussion of the MRTA including the many amendments, see Michigan Real Estate Practice and Forms, §9.5
· Caselaw Discussed. The case, Affeldt v Lake Court Beach Ass'n, No 315277 (Mich Ct App Jan 29, 2015) (unpublished), was discussed. In Affeldt, the Michigan Court of Appeals determined that the MRTA extinguished an easement from 1926. Plaintiffs claimed their predecessor in title acquired a right of way easement over defendants’ beachfront property in 1925. However, the court found that a 1932 plat map, which didn't mention the easement, conveyed a fee interest to defendants unencumbered by the easement. Because the 1925 easement was more than 40 years old, the court ruled that the plaintiffs’ easement had been extinguished.
· Intent of the Act Getting Lost. Based on these amendments, the panel discussed whether the initial intent and usefulness of the MRTA has changed or been lost altogether. Because there are now many exceptions and carve outs, it can be difficult, if not possible, for title insurance companies to rely on the act without exposing themselves to liability. For instance, the MRTA can now reasonably be read to state that the act does not bar or extinguish “any land or resource use restriction.” What this means in practice, however, is not entirely clear. This language potentially removes a significant number of easements and restrictions from the purview of the act, potentially thwarting the overall intent of the MRTA. The act is still relied on for establishing chain of title.
· Practical Implications. David and Lavinia noted that, after the amendments, title agencies have been reluctant to rely on the MRTA to remove restrictive covenants because of the ambiguities. The MRTA does not provide additional recourse for disputing land use issues. If there is a land use dispute, quiet title actions are still the primary way to extinguish easements or restrictions.
· Title Searches. There was a question posed regarding how far back a title agency will perform a title search. The panel responded that it is standard practice on residential properties to do a 40-year search for chain of title but further for easements and restrictions. On a commercial property, a search will go further back than 40 years. For platted subdivisions, it is possible to search for the lot number and pull the plat to see easements and restrictions on the plat. The panel emphasized the importance of watching for changes in the property’s use. In those cases, it is necessary to look back further. David and Lavinia provide an excellent review of title insurance generally in this recently posted on-demand seminar.
· Reference to Specific Document Numbers. Under the 2018 and 2020 amendments to the MRTA, the use of broad language such as “subject to easements and use restrictions of record” is insufficient to preserve an easement or restrictive covenant that is over 40 years old. Beginning March 29, 2024, restrictive covenants within the recorded documents of a property’s 40-year chain of title must include specific references to the liber, page, or instrument numbers of where the restriction was originally recorded. This requirement is retrospective, which is why the law provides additional time for relevant documents to be properly recorded. The panel noted, however, that this applies to easements and restrictions outside the 40-year period. For more information on preserving restrictive covenants, see ICLE’s recently posted Top Tips titled Drafting, Enforcing, and Preserving Restrictive Covenants, authored by panelist Kayleigh Long.
· Extinguishing Unknown Restrictions and Easements. A question was posed about the best way to extinguish unknown restrictions and easements. The panel noted that you can do this by consent of all parties. If consent is not possible, then a quiet title action must be filed.
· Recording HOA Restrictions. A question was asked regarding whether it is necessary to record restrictions for every house in an HOA under the MRTA. The panel answered that, typically, one blanket preservation notice that includes all the lots will work; however, if there is no blanket set of restrictions, and there are individual deed restrictions, it may then be necessary to record for each lot. The panel noted that MRTA is not particularly clear on this issue.