REAL PROPERTY DISTINCTIONS PROFESSOR JULIA BELIAN UNIVERSITY OF DETROIT MERCY SCHOOL OF LAW

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1 REAL PROPERTY DISTINCTIONS PROFESSOR JULIA BELIAN UNIVERSITY OF DETROIT MERCY SCHOOL OF LAW CHAPTER 1: FUTURE INTERESTS AND TENANCIES Exam Tip 1: Real Prperty appears n almst every Michigan bar exam. Frequently tested tpics include c-tenancies, mrtgages (pririty, freclsure, right f redemptin), recrding acts, and easements. A. Fee Tail in Michigan Treated as a creating a B. Cncurrent Estates (C-Tenancies) 1. Tenancy in Cmmn N big distinctins frm MBE Real Prperty Default c-tenancy in Michigan 2. Jint Tenancy In Michigan, pssible t create tw different estates depending n the language used. Relevant case: Albr v. Allen, 434 Mich. 271 (1989). ONLY state t take this apprach t jint tenancies. Lk t the language - if the grantr is attempting t create a jint tenancy as understd under cmmn law (and everywhere else), grantr shuld use the fllwing language in MI: "T A and B as jint tenants, and nt as tenants in cmmn." In Michigan, a cnveyance f "T A and B as jint tenants with right f survivrship" results in the fllwing: estates in A and B A and B each have alternative. In the MBE, language "Jint Tenants With f Right f Survivrship" will create a Jint Tenancy. In Michigan, it will create the "5th Estate," as described abve. Cmmn law/mbe - requirement f unity f time, title, interest and pssessin ("T-TIP") In Michigan, the requirement f a unity f and has been ablished. Only interest and pssessin are required in Michigan.

2 Lk t the grantr's. Exam Tip 2: Michigan's fcus n intent makes this a gd chice fr an essay questin. Implicatins f the MI rule regarding severance: Cmmn law/mbe - if either jint tenant unilaterally cnveys his r her interest t a third party, the jint tenancy wuld be severed (resulting in a tenancy in cmmn). Michigan - either party can unilaterally cnvey his interest t a third party, but they cannt, by ding s, defeat the rights f the ther jint tenant. Example 1: In Michigan, O cnveys "t A and B as jint tenants." B cnveys her entire interest t C. In such a case, A's right f survivrship cannt be defeated. Thus, if C dies first, A takes the entirety f the prperty. Editr's Nte 1: The cnveyance shuld read "t A and B as jint tenants with right f survivrship." Mrtgages by jint tenants: either party can mrtgage his r her interest. Michigan - such a mrtgage create a severance. Burdens nly that jint tenant's interest in the prperty If there is a freclsure n the mrtgage interest, severance will ccur. 3. Tenancy by the Entirety Grantees must be legally married at the time the interest is cnveyed. Editr's Nte 2: Same-sex marriage is legal in all U.S. states fllwing the U.S. Supreme Curt ruling f Obergefell v. Hdges n June 26, Default c-tenancy between married persns in Michigan T vercme the presumptin in favr f a tenancy by the entirety: Deed must explicitly state that the grantr intended t create sme ther estate (e.g., a tenancy in cmmn). In Michigan, a c-tenant by the entirety cannt r his interest withut the spuse's participatin (it is vid). Grantees must be married at the time they take. C. Future Interests 1. Future Interests Retained by the Grantr Reversin, pssibility f reverter, and right f entry (als called right f reentry r pwer f terminatin ) Themis Bar Review, LLC MI Real Prperty Distinctins

3 In Michigan, t preserve pssibility f reverter r right f entry, the grantr must recrd them within a certain time frame. The right f entry and pssibility f reverter are subject t a year time limit, unless they have been. Time limitatins d nt apply t certain types f interests, such as a lease fr years and certain cntingencies that are guaranteed t ccur within RAP. Editr's Nte 3: These are technical exceptins that have nt really been tested. Hwever, yu shuld memrize the list as discussed in the MI Real Prperty Distinctins utline. 2. Dctrine f the Destructibility f Cntingent Remainders in Michigan 3. Dctrine f Wrthier Title in Michigan 4. Rule Against Perpetuities Michigan has adpted the Unifrm Statutry Rule Against Perpetuities. "Wait and see" apprach - year perid If an interest des vest within 90 years, then the interest is valid under the RAP. Nte, hwever, that the 90-year "wait and see" rule applies nly if the interest des nt therwise satisfy the RAP. An interest that clearly must lgically vest r fail within the nrmal RAP perid is valid, and it is nt necessary t wait 90 years t find that ut. CHAPTER 2: LANDLORD/TENANT LAW A. Ntice f Terminatin 1. Peridic Tenancy Exam Tip 3: This is a favrite tpic fr bar examiners and appears n the bar exam quite regularly. Editr's Nte 4: Michigan recgnizes peridic tenancy, tenancy at will, tenancy at sufferance, and tenancy fr a term. Perid renews autmatically unless prper ntice f terminatin is given. Required ntice - perid f time equal t the intervals n which. If the payment perid fr the rent is less than mnths, then a ne-mnth ntice perid applies. Calculatin f ntice - must give a minimum f ne FULL perid f ntice. MI Real Prperty Distinctins 2016 Themis Bar Review, LLC 3

4 Lk at the beginning date f the lease, figure ut the terms (e.g., mnth-t-mnth), figure ut what a mnth frm the beginning date is, and prvide ntice f terminatin prir t the beginning f a cmplete unit/perid. Example 2: L and T enter int a leasehld agreement that cmmences n February 1st and runs n a mnth-t-mnth basis. After a few mnths, T wants t terminate the lease. If T wants t mve ut in the middle f July, the ntice must be given a minimum f ne full perid prir. T must give ntice n later than the beginning f. 2. Tenancy at Will Cmmn law: Either party can terminate the tenancy fr any reasn, at any time, upn reasnable ntice. Michigan statute: Either party can terminate the tenancy by giving ne mnth's ntice. 3. Tenancy at Sufferance Hldver tenant Lease has already expired, but tenant remains n premises. Michigan requires ntice t terminate a tenancy at sufferance. B. Lease Creatin All leases must be in writing if the term f the lease is fr lnger than. Michigan - if the term f the lease is lnger than years, it is subject t the act. C. Duties under the Lease 1. Destructin f the Premises Neither party is at fault. Michigan - Tenant is under the lease. Destructin f the subject matter releases the tenant. 2. Landlrd Rights and Duties a. Summary prceedings and remedies 1) Evictin - in general Michigan - landlrd use selfhelp. Must fllw the prcedures fr a Themis Bar Review, LLC MI Real Prperty Distinctins

5 2) Evictin - specific instances a) Failure t pay rent Ntice - Landlrd may evict thrugh summary prceedings nly when a tenant cntinues t retain the premises after refusing t pay rent due after days' ntice frm the landlrd. Prcess: Landlrd serves ntice f demand fr the rent due. Landlrd waits 7 days. If, after the 7 days, tenant has still nt paid the rent, landlrd may g frward with summary prceedings and btain an rder fr evictin. b) Cntrlled substances n the premises Must file a frmal After the landlrd files the plice reprt, the landlrd may mve ahead with summary prceedings. c) Physical injury (caused r threatened) must be ntified. Landlrd may recver pssessin when a persn hlds ver fr after service f a written ntice f terminatin after the tenant r smene in her cntrl has caused r threatened physical injury t a persn n the prperty. b. Michigan Truth in Renting Act Cncerns a landlrd's duties t maintain and repair Applies t residential leases Landlrd cannt put clauses int the lease by which the tenant wuld be certain statutry rights. Rights that may nt be waived: Premises must be habitable - cannt be waived. Right t be free frm vilatins cannt be waived. Lease agreement cannt agree t waive r alter any party's rights with regard t evictin/summary prceedings. Any prvisin r clause f a rental agreement that attempts t waive such rights is. c. Warranty f habitability Created by statute in Michigan MI Real Prperty Distinctins 2016 Themis Bar Review, LLC 5

6 3. Evictin Apply t every lease The premises must be fit fr the use intended by the parties; and Landlrd is bligated t keep the premises in reasnable repair during the term f the lease. a. Cnstructive evictin If the premises becme, cnstructive evictin ccurs. Tenant may leave the premises withut any further bligatin under the lease. b. Retaliatry evictin If the tenant exercises rights available under statutry law and the landlrd evicts the tenant, the landlrd vilates the law if the evictin was made in respnse t the tenant's exercise f rights. 4. Cndemnatin f the Leasehld Cndemnatin partial r cmplete taking f a land by the gvernment, either fr public use r because it is unfit fr use. Editr's Nte 5: Please refer t the MI Real Prperty Distinctins utline fr a cmplete discussin f this tpic. D. Michigan Civil Rights Act The Act frbids discriminatin upn any f the fllwing bases: Religin Clr Natinal rigin Sex Marital/Familial status (as recgnized under Michigan law) CHAPTER 3: DISPUTES ABOUT OWNERSHIP IN LAND AND THE LAND SALE CONTRACT A. Adverse Pssessin 1. Statutry Perids Exam Tip 4: Adverse pssessin is tested in great detail n the MBE and is als tested n ccasin n the Michigan essay exam. Yu must review bth the MBE materials fr adverse pssessin as well as these Michigan-specific rules. Michigan's general statutry perid fr adverse pssessin: years Themis Bar Review, LLC MI Real Prperty Distinctins

7 Adverse pssessr claims under clr f title by way f a tax deed: statutry perid f years. Adverse pssessr claims under clr f title by a curt rder r a freclsure sale: statutry perid f years. "Clr f title" - may be flawed prceedings (i.e., a prcedural prblem with the tax deed r curt rder), but the adverse pssessr satisfies the requirements fr a claim f adverse pssessin. 2. Dctrine f Acquiescence When adjining prperty wners acquiesce r agree t a bundary line fr at least years, the line becmes the actual prperty bundary line between the parcels. Unlike a claim based n adverse pssessin, a claim based n acquiescence des nt require any r lack f. B. Land Sale Cntract 1. Michigan's Seller Disclsure Act Seller is required t cmplete a frm that disclses certain infrmatin abut the prperty being sld. Seller is nly required t disclse infrmatin that he r she hnestly. Applies t the transfer f any real prperty cnsisting f between ne and fur residential units Requires the disclsure f a variety f infrmatin, including whether the prperty has termites, water damages, etc. Seller is NOT required t find ut the answers t the specific questins, especially if the seller has nt lived at the prperty (i.e., "flipping" the prperty). 2. Perfrmance f the Land Sale Cntract a. Cvenants and warranties In Michigan, n cvenant is implied in any cnveyance (i.e., transfer f deed) f real estate (nte: except fr il and gas leases). Des NOT apply t the usual implied warranties f the land sale cntract. b. Equitable cnversin Michigan has adpted its versin f the Unifrm Vendr and Purchaser Risk Act ("UVPRA") Cmmn law: the buyer bears the risk f lss after executin f the agreement but befre pssessin. Michigan (UVPRA): the seller retains the risk f lss until clsing. Exceptin: the buyer ccupies the premises MI Real Prperty Distinctins 2016 Themis Bar Review, LLC 7

8 CHAPTER 4: SECURITY INTERESTS A. Mrtgages 1. Title Thery v. Lien Thery Michigan is a thery state. Mrtgagr remains the wner f the prperty fr purpses f title. Mrtgage is a lien against the prperty, nt a title interest. 2. Freclsures - In General Exam Tip 5: Very ppular tpic fr testing. Michigan - Freclsure by Knwn as freclsure by sale in ther states Original mrtgage agreement may include authrizatin t permit the mrtgage hlder t freclse n the prperty withut having t file a actin. Freclsure by curt actin is als permitted. B. Installment Land Cntracts Recgnized in Michigan as anther type f security interest in land Similar t mrtgages, particularly with regard t freclsure prcedures Purchaser has same rights as a mrtgagr under mre traditinal financing. C. Due-n-Sale Clauses (Acceleratin Clauses) If the mrtgagr makes a certain type f transfer, the entire mrtgage bligatin is due immediately. Michigan - right t include acceleratin clause is available, but can validly be enfrced ONLY if the transfer that triggers the clause perates as a threat t a legitimate interest f the mrtgagee (lender). D. Freclsure Prcess 1. Freclsure by Advertisement (Nn-Judicial Freclsure) Prper must be given. There must be a by which the pwer f sale was triggered. Cannt have already begun a judicial freclsure Mrtgage must be. Freclsing party must have an interest in the that the mrtgage secures (determined liberally in MI) Themis Bar Review, LLC MI Real Prperty Distinctins

9 2. Order f Pririty a. Types f interests mrtgages - granted in exchange fr a lan that is made t make the initial purchase. liens - cntractr files a lien against the prperty being wrked n in rder t ensure payment. liens b. Pririty f interests mrtgages Even ver interests recrded prir t the PMM liens Lk t when the wrk began. Pririty ver ther interests, even thse recrded prir t the cnstructin lien, s lng as they were after the wrk began. Further pririty is gverned by the act. 3. Right f Redemptin a. right f redemptin Owner may redeem the prperty until the freclsure sale begins. Must pay ff the entire debt b. right f redemptin Right t redeem the prperty even AFTER the freclsure sale Must pay ff the entire debt Michigan - freclsed-n wner has a maximum f mnths after the freclsure sale. 4. Physical Injury t Prperty After freclsure, the party freclsed upn cannt d any physical damage t the prperty. 5. Deficiency Judgments Michigan allws fr deficiency judgments after the sale if the sale did nt bring in enugh mney t satisfy the mrtgage. Curt rder Garnishment f wages, bank accunts, etc. MI Real Prperty Distinctins 2016 Themis Bar Review, LLC 9

10 E. Mrtgage Fraud "NINA" lan - N incme, n assets Michigan - statutry law that makes the brrwer, and pssibly the lender, guilty f mrtgage fraud if they engage knwingly in a mrtgage lan based n deceptive reprting regarding incme and assets. CHAPTER 5: DEEDS A. Types f Deeds There are n deeds in Michigan. General warranty deed - a warranty f any srt Quitclaim deed - n warranties B. Recrding Act 1. Purpse T prtect subsequent purchasers wh satisfy certain requirements Alternative t "first in time" rule 2. Types Pure race Pure ntice Race-ntice 3. Michigan Michigan is a jurisdictin. Subsequent purchaser must take prperty fr value (cnsideratin) withut AND recrd. Must recrd befre whever else is claiming superir title. C. The Merchantable (Marketable) Recrd Title Act In Michigan, a persn with an unbrken chain f title f recrd t an interest in land fr years will, at the end f that perid, be deemed t have a marketable recrd title interest. D. Fixtures Tangible persnal prperty (chattel) that has becme s affixed t a piece f real prperty that is assumes the nature f real prperty Three factrs t cnsider in determining whether an item is a fixture: t which the item has attached; Themis Bar Review, LLC MI Real Prperty Distinctins

11 t which the item has becme adapted t the use f real prperty; and Whether the parties intended t make the item a fixture. Example: Ht water heater If item is a fixture, title passes with the cnveyance f real prperty. Trade fixtures in leasehld estates: tenant can remve fixtures that were installed fr his trade, even if nrmally wuld be cnsidered fixtures. CHAPTER 6: DISPUTES ABOUT THE USE OF LAND, WATER RIGHTS, AND GOVERNMENT REGULATION OF LAND A. Easements 1. Scpe f Use f an Easement Michigan strictly cnstrues easements. The scpe f an easement will be limited t the f the grant. 2. Easement by Necessity Mst jurisdictins: cnstrue this very strictly (e.g., easement nly arises when a parcel is cmpletely landlcked) Michigan: is less harsh. necessity f access (as ppsed t strict necessity) 3. Easement by Prescriptin In Michigan, the easement by prescriptin perid is. Burden is n the party the easement. The use des nt need t be, but as needed. The scpe f an easement by prescriptin is limited t the nature and extent f the adverse use that gave rise t the easement by prescriptin. B. Implied Reciprcal Negative Servitudes (Equitable Servitudes) Recgnized in Michigan Reciprcal prmises t refrain frm ding smething Must riginate frm a C. Waiver r Abandnment (Terminatin) 1. Generally Michigan curts are reluctant t find waiver r abandnment. MI Real Prperty Distinctins 2016 Themis Bar Review, LLC 11

12 2. Changed Circumstances Outside changes alne wn't justify the terminatin f a cvenant if the character f the neighbrhd is still preserved. D. Water Rights - Riparian Rights Exam Tip 6: Nt very different frm easements and ther nn-pssessry interests in land. Include the right t cnstruct and maintain a alng the wner's shre Easement f access alng the water's edge des nt cut ff a riparian wner's rights. Michigan's stewardship ver the public trust extends t the Great Lakes. Michigan has the authrity t allw public access t the shreline belw the rdinary. E. Gvernment Regulatin f Land - Eminent Dmain Michigan State Cnstitutin: limits eminent dmain mre than it is limited under the U.S. Cnstitutin. In rder t exercise eminent dmain ver private land, the taking authrity must shw "public necessity f the." [END OF HANDOUT] Themis Bar Review, LLC MI Real Prperty Distinctins

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