Why Associations Must Be Aware of Changes to the Marketable Record Title Act

Updated as of March 28, 2024

As discussed in more detail below, the State legislature amended the Marketable Record Title Act (MRTA) in 2019. While many community associations may not be familiar with the MRTA since its provisions historically have not affected community association living or administration, the 2019 amendments make it necessary for community associations to take note now before the true impact of this law takes effect on September 29, 2025.

Background: The Marketable Record Title Act

To establish “marketable title” to real property, an owner must establish that they have an “unbroken chain of title” to that property. A “chain of title” is the historic sequence of transfers of title to a property, with the “chain” running from the present owner back to the original owner of the property. An “unbroken” chain of title refers to having a deed or a series of deeds to the current owner with nothing in the record purporting to “divest” or take away the owner’s title to the property.

Prior to 1945, a complete search to establish a full chain of title could be cumbersome, potentially covering more than 100 years. Because of this, in 1945 the State legislature enacted the MRTA to permit title examiners to go back only 40 years, rather than to the original owner. If the title examiner could establish an unbroken chain of title for more than 40 years, the existing owner would have marketable title to the property free of interests older than this 40-year search period.

Purported Purpose of the 2019 MRTA Amendments

Prior to what is now the customary recording of a declaration or bylaws to establish common restrictions for entire subdivision and condominium communities, owners often included restrictions in the actual deed transferring the property. For example, a person selling portions of their property for residential development and wanting to ensure that the sold property continued to be utilized for residential purposes might have included a restriction in the individual deed to the purchaser limiting the use of the property to “residential purposes.” Although this form of individual deed restriction is no longer as common, current deeds still often use generic statements like “subject to easements and restrictions of record,” which effectively incorporates the older deed restrictions by reference.

Utilizing the above example, some title companies were concerned that, even if the “residential purposes” restriction was only referenced in a deed recorded outside the 40-year period, a generic statement like “subject to easements and restrictions of record” contained in a deed to the property recorded within the 40-year period, incorporated the “residential purposes” restriction, effectively making the 40-year MRTA provisions worthless. That is, even though the “residential purposes” restriction was not included in a deed recorded within the 40-year time period, some title examiners believed this type of generic incorporation by reference made it necessary to expand the title search beyond the 40-year period despite the MRTA provisions.

To address this concern, the State legislature amended the MRTA. Under these amendments, for a generic incorporation by reference like “subject to easements and restrictions of record” to validly preserve a restriction recorded outside the 40-year period, a document recorded within the 40-year period must specifically reference the liber and page of the document containing the restriction that is recorded outside the 40-year period. The legislature also allowed for a long period during which claims of interest could be recorded to preserve interests older than 40 years, which was subsequently extended through March 29, 2024, then extended again through September 29, 2025.

Potential Problems Created by the 2019 MRTA Amendments

We believe that the language contained in the 2019 MRTA amendments appear to only apply to restrictions contained in property deeds recorded outside the 40-year period, not homeowner association declarations. However, there are other real estate professionals who argue that the 2019 MRTA amendments would also void restrictions contained in subdivision declarations recorded more than 40 years ago. These commentators point to the legislative history for the MRTA amendments, which includes discussions that homeowner association restrictions older than 40 years could be extinguished if the MRTA notice of claim provisions were not complied with. The reason this is a concern specifically for homeowner associations/subdivisions and not condominiums is that condominium unit deeds will nearly always refer to the specific recording information of the Master Deed, whereas it is common for deeds in homeowner associations only to include a general reference like “subject to easements and restrictions of record.”

While references to eliminating aged homeowner association restrictions did not make it to the final form of the MRTA amendments, the discussion is still a part of the written legislative history and current commentary. We believe that some will attempt to utilize this legislative history to support the position that the legislature intended to render aged homeowner association restrictions unenforceable.

MRTA Amended Further in 2022

In December 2022, the legislature again amended the MRTA to include the following provision:

“This Act must not be applied to do any of the following… (e) Bar or extinguish any land or resource use restriction…”

While this was a positive development, we are still concerned for our homeowner association clients. A good portion of a homeowner association’s declaration can usually be easily categorized as a “land use restriction,” but what about other provisions in the declaration that arguably have nothing to do with land use, such as provisions regarding payment of assessments? This is just one area that could represent significant litigation risk for older subdivisions if the MRTA is not amended further before September 29, 2025.

Steps Associations Should Take: Amendment and/or Notice of Claim

While we believe associations to be in a defensible position even if they do not take further action, we do not believe associations should take the chance that an enterprising owner may wish to pursue litigation over this issue. Also, a judge may disagree with our position, and the recorded community restrictions may be wiped out and deemed unenforceable. Given the potentially significant and detrimental consequences of the 2019 MRTA amendments, and unless subdivision declaration restrictions are explicitly exempted by further amendment to the MRTA, we recommend that, for subdivision communities where restrictions were recorded more than 40 years ago, associations proceed with the following before September 29, 2025: (1) amend their recorded restrictions, approved by the requisite number of owners to extend and reaffirm the restrictions and other document provisions; and/or (2) file of a “Notice of Claim” to be recorded with the Register of Deeds, which includes, among other things, a statement preserving the restrictions, the restriction recording information, and a copy of the recorded restrictions. Association members do not have to approve the association’s filing of a Notice of Claim.