On March 29, 2019, significant amendments to the Marketable Record Title Act (MRTA) went into effect. 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. In the absence of this specific reference, restrictions older than 40 years could be extinguished.
The 2019 MRTA amendments provide that an interest, claim or charge older than 40 years may be preserved and kept effective by recording a “Notice of Claim” by March 29, 2021. With that deadline quickly approaching, a Bill was introduced in the Michigan legislature to extend the deadline in which to file the “Notice of Claim.” On December 31, 2020, the Bill was approved by the Governor and went into immediate effect. As a result, the deadline to file a “Notice of Claim” has been extended to March 29, 2024.
This extension provides community associations much needed relief from rushing to have the requisite “Notice of Claim” recorded in roughly two-months’ time, as their recorded restrictions may be negatively affected by the 2019 MRTA amendments. Even though the language contained in the 2019 MRTA amendments appear to only apply to restrictions contained in property deeds recorded outside the 40-year period, there are many real estate professionals who argue that the 2019 MRTA amendments would also void restrictions contained in subdivision declarations or condominium master deeds/bylaws 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.
Even though references to eliminating aged homeowner association restrictions did not make it to the final form of the 2019 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.
While we believe the above-referenced commentators are incorrect for many reasons, we do not believe associations should take the chance that the recorded community restrictions will be wiped out and deemed unenforceable if challenged on this basis by an enterprising owner. Given the potentially significant and detrimental consequences of the 2019 MRTA amendments, and unless condominium and subdivision homeowner restrictions are explicitly exempted, we recommend that, for communities were restrictions were recorded more than 40 years ago, associations proceed with the following before March 29, 2024: (1) an amendment to their recorded restrictions approved by the requisite number of owners, which extends and reaffirms the restrictions and other document provisions; and/or (2) the filing 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. While this deadline may be extended again by the State legislature, and there is the possibility that during this extension further amendments may be introduced to explicitly exempt recorded community restrictions from possible extinguishment, community associations should still use this extension to proactively safeguard their community’s recorded restrictions.
If you have any questions regarding the 2019 MRTA amendments, the extension to file a “Notice of Claim” or ensuring your community’s recorded restrictions are not subject to extinguishment, please contact one of the experienced attorneys at our firm.