MICHIGAN REAL PROPERTY REVIEW
Vol 31, No 4 Winter 2004
CONTENTS
Chairperson’sReport ...... 182 by Mark F. Makower
Taxationof Landlordsand Tenants:Deferred and Prepaid Rent -...... 184 A Primer for Real Property Practitioners by William B. Acker
DividingPlatted Parcels: Harmonizing Sections 108 ...... 193 and 263 of the Land Division Act by Peter Swiecicki
Transferof DevelopmentRights in Michigan-...... 200 Is it Here Yet? by David Pierson and Elan Stavros
SeveredMinerals: Restrictive Covenants as Restrictions...... 208 on Surface Use by the Mineral Owner by Susan Hlywa Topp
AProgress Report on the Promulgationof Rules for ...... 214 "All Appropriate Inquiry" Under CERCLA by R. Craig Hupp
NewLegislation Impacts Tax Treatment of PrincipalResidence ...... 221 Converted from a 1031 Replacement ProperW by Dawn M Patterson
CaseCommen~ ...... 222 by Patrick A. ~rbowski & Vanessa Lozzi
ContinuingLegal Education ...... 225 by Brian P. Henry and Arlene R. Rubinstein
SpecialCommittees ...... 229 StandingCommittees ...... 232 AdHoc Committees ...... 234
MichiganReal Property Review ...... 235 Cumulative Article Index
Published by the Real Property Law Section State Bar of Michigan MICHIGAN REAL PROPERTY REVIEW
Vol. 32, No. 4 Winter 2004
The Michigan Real Property Review is the official journal of the Real Property LawSection of the State Bar of Michigan. The Review is published quarterly and is a significant part of the Section’s programof publications, seminars, conferences, legislative liaison and other undertakings for the professional education and development of its members and the Bar.
The Section encourages interested membersof the Bar to contribute articles and other publishable material relating to real property law and of interest to the profession. Manuscripts are reviewed by attorneys experienced in the subject matter covered by each article.
Readers are invited to submit articles, commentsand correspondence to George J. Siedel, Editor, University of Michigan Business School, 701 Tappan Street, Ann Arbor, Michigan 48109-1234 (gsiedel(~umich.edu). The publication of articles the editing thereof are at the discretion of the Editor. A cumulativeindex of articles is printed annually in the Winter issue of the Review and is available on the Section website: www.michbar.org/sections/realprop/
Articles in the Review may be cited by reference to the volume number, abbreviated title of the publication, the appropriate page number and the year of publication as, for example, 14 Mich Real Prop Rev 35 (1987).
Publications Committee, Real Property Law Section Mark Makower, Chairperson, Bloomfield Hills George Siedel, Editor of Review, Ann Arbor Lawrence M o Dudek, Detroit and all Special Committee Publications Coordinators
Copyright © 2004 Real Property Law Section of the State Bar of Michigan The views, opinions and conclusions expressed in the Michigan Real Property Revieware those of only the respective authors and do not necessarily reflect the position or opinion of the State Bar of Michigan, the Real Property LawSection, the MichiganReal Property Review, its editor or the Publications Committeeof the Section. The publication in the Reviewof articles, letters and other materials does not constitute and should not be construed to be an endorsement of any views, opinions or conclusions that may be expressed or implied. The Review is prepared and published as a part of the legal education activities of the Real Property LawSection, for the benefit of its membersand the Bar. In publishing the Review, the Real Property LawSection does not purport to engagein or to render legal or professional services. If legal advice or services are desired or appropriate, an attorney should be consulted.
The Michigan Real Property Review is published by the Real Property LawSection of the State Bar of Michigan. An annual subscription to the Review commencesin September of each year and ends in August of the following year. Four issues are published each year. The subscription price is $35 annually, payable in advance. Orders for subscriptions should be sent, with the above-stated payment, to Michigan Real Property Review, Real Property LawSection, State Bar of Michigan, Michael Franck Building, 306 TownsendStreet, Lansing, Michigan 48933-2083. MICHIGAN REAL PROPERTY REVIEW
EX-OFFICIO MEMBERS
(PAST CHAIRPERSONS OF THE SECTION)
G. Norman Gilmore* Nyal 1). Deems Patrick J. Keating Grand Rapids Detroit James R. Brown Ralph Jossman* Grand Rapids
Maurice S. Binkow Stephen E. Dawson Detroit Bloomfield Hills
Allen Priestly* Thomas C. Simpson Bloomfield Hills James W. Draper Detroit Robert R. Nix Ii Detroit Myron Weingarden* Lawrence D. McLaughlin David S. Snyder Detroit Southfield C. l~.obert Wartell* William B. Dunn Detroit Jack D. Shumate Bloomfield Hills Allen Schwartz Detroit JamesN. Candler, Jr. Detroit Stephen A. Bromberg Bloomfield Hills Gall A. Anderson Lansing Richard E. Rabbideau Detroit Carol Ann Martinelli Troy Gary A. Taback Southfield Robert A. Berlow Bloomfield Hills Peter A. Nathan Las Vegas, NV Vicki R. Harding Detroit Carl A. Hasselwander Rochester Hills Lawrence M. Dudek Detroit James M. Tervo San Francisco, CA COMMISSIONER LIAISON Gregory L. Ulrich *Deceased Livonia Winter 2004- Page 182 MICHIGAN REAL PROPEI~TY REVIEW
CHAIRPERSON’S REPORT
by Mark Makower
First, I would like to announce and welcome Ron registrants, the conference is sure to be a success. The Reynolds as the newest member of the Council of the conference title is Florida Lawfor MichiganReal Estate Section. Ronwas selected by a vote of the Council to fill Attorneys. Sessions include Title Practice in Florida, the seat of Susan Kovachfor the remainder of the 2004- 1031 Exchanges/Tenants in Commonunder Florida law, 2005 year after Susan resigned for personal and Issues Impacting Estate Planning in Florida, Florida Real professional reasons. Wewould also like to thank Susan Estate Transactions, and WhyDo Debtors Moveto Florida? for her service on the Council and her contributions to the Our distinguished panel of presenters includes Mark B. Section. Krysinski, Catharine LaMont, Kenneth Rossburg, Margo Rosenthal, Mark Kosanke, Christopher Boyett, Lisa Both the third season of the "Groundbreakers" Gretchko, Judge Arthur Spector, John G. Cameron, Jr. Breakfast Roundtables and the 29th season of "Homeward and MarvinS. Rosen. Please see the article on "Continuing Bound" are under way. The first Breakfast Roundtable Legal Education" and/or the Section website for more on like kind exchanges of real property was held on details. Welook forward to seeing you in South Beach. October 21, 2004 and was a resounding success. The second Breakfast Roundtable will be held on March 3, The 2005 SummerConference is also starting to take 2005 and is entitled "Cornucopia of Leasing Clauses and shape. The tentative theme for the SummerConference Concerns." The program coordinator for this roundtable will be Real Estate Transactions from Here to Eternity. is KennethPosner of Couzens, Lansky, Fealk, Ellis, Roeder The program is intended to be a primer for real estate & Lazar, P.C. As always, space for these events is transactions from creation to closing, and will include extremely limited and we hope you will join us for this sessions on letters of intent and commitmentletters, useful presentation. negotiation of financing, land divisions, physical due diligence, title and survey issues, and zoning and land use. The 29th season of HomewardBound kicked off on There is even contemplated at this point a session in November 4, 2004 with the program on "Keeping the which a developer will address his views on how a lawyer Deal Together: Howto Avoid Unnecessary Closing Problems helps or hurts the developer in the development process. and Howto Solve Them." This program was presented This is sure to be an entertaining and informative by Margo Rosenthal, Thomas Richardson and Matt Keir conference, and with the location at the Grand Traverse of Liberty Title. On December2, 2004, James Bruno of Resort in Traverse City, fun for everyone is not far away. Butzel Long, along with Brian Henry of Freeman, Cotton Please look for additional information on this programas and Norris and LawrenceSchoffner of LawrenceSchoffner it comestogether, and plan to join us in July, 2005. PLLC, will present "Howto Create Better Real Estate Forms: Drafting Methods, Tips and Essential Clauses." Movingnow to legislation and advocacy, the current This program will be followed on January 13, 2005 by a legislative session is winding down. All legislation not program entitled "What Every Practitioner Needs to Know passed by the end of the session will "die" and will need About Bankruptcy Law," presented by Lisa Gretchko of to be reintroduced in the next session to be acted upon. Howard & Howard and Paula Osbourne of Butzel Long. During this session, the Real Property Law Section has The May 19, 2005 Homeward Bound seminar entitled taken public positions on seven pieces of legislation, and "Real Estate Financing, Negotiating, Documenting and is considering one additional position at this time. The Closing Deals," presented by Robert Mollhagen of Howard Real Property Law Section has supported proposed & Howard, will be videoconferenced to the Grand Valley amendmentsto the Notary Public Act to correct defects State University, Robert C. Pew, Grand Rapids campus. and deficiencies in the original version passed earlier this We look forward to continued strong support from the year, and has opposed a proposed bill to amend the western side of the state for these programsas this trial CondominiumAct to remove an association’s entitlement run continues. to attorney’s fees; opposeda bill to provide for "pop-up" recording of drain easements that do not appear in the The Winter Conference of the Real Property Law public record; opposed a proposed amendment to the Section is truly taking shape. With over 40 identified Land Division Act that would eliminate new division rights MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 183
generated 10 years after the original parent parcel or tract the support of several of the maior firms in the Detroit is divided; and also is opposing three combined Senate area for this project; however, I would also point out that bills that wouldrevise the foreclosure redemptionprovisions response has been slow and participation far from universal. of the Revised Judicature Act so as to removethe Register During this recruitment period, I have been advised by of Deeds from the redemption process. Recently, various philanthropy officers that traditionally the Detroit amendmentsto this package of bills were submitted at a area major law firms are regarded as not being active committee hearing attended by Pat Karbowski whereby enough in the support of the communityat large, and that the Register of Deedswould still be able to take redemption attorneys generally asking for philanthropic support are payments but would not be able to calculate the same. placed well downthe list due to their failure to reciprocate. The effect of that amendmenton the Section’s position I must say that I have found someof these sentiments to is currently being considered, however, since this section be true. While I knowthat several firms and individual of the Revised Judicature Act also suffers from a Iot~of lawyers are highly involved in philanthropic causes on ambiguity concerning redemption periods themselves and behalf of the community,this only illustrates the need for the difference between various redemption periods for more of us to do our part in serving the community.The commercial and residential properties. The Section is legal profession gets enoughbad press. I invite you all to likely to continue its opposition to an attempted piecemeal becomea part of this project and join the Real Property amendmentof the entire section without correcting all of Law Section in doing something beneficial for the the known procedural problems that currently exist. communitythat it serves. Wecannot change perceptions Accordingto the Section’s lobbyist, this package of bills without affirmative action. maybe brought up for a speedy hearing and floor action by both Housesbefore the session adjourns. The Section, through Mr. Karbowski, will be monitoring these bills closely during the waningdays of the legislative session.
The Long Range Planning Committee continues its work on a strategic long-range plan for the Section’s future. The members of the committee and its various subcommittees met to discuss overall progress and ideas at a dinner in October, 2004. The subcommittees are pursuing meetings of their own between now and the beginning of next year with a target date for preliminary reports of February 28, 2005. Thereafter, the preliminary reports of the various subcommitteeswill be reviewed and discussed at a meeting of the entire committee with an eye toward finalizing the committee’s report by Mayof 2005. I wish to acknowledgethe efforts of those involved in this process and look forward to the final report for consideration by the Council thereafter.
Finally, I am happyto report that the Section will be sponsoring a house during the 2005 Jimmy Carter Work Project sponsored by Habitat for HumanityInternational and Habitat for Humanity Detroit. This will be a one- week blitz build between June 17 and June 24, 2005. As a Habitat for HumanityInternational sponsored project, manyactivities are planned during this week for workers and volunteers in the host cities. I will provide more details about these programs as they are finalized. It is anticipated that President Carter will be on site during the middle of the weekly build. The Real Property Law Section must raise $75,000 to sponsor this house. Contributions must be collected and paid to Habitat for Humanity before March 31, 2005. I wish to acknowledge Winter 2004 - Page 184 MICHIGAN REAL PROPERTY REVIEW
TAXATION OF LANDLORDS AND TENANTS: DEFERRED AND PREPAID RENT - A PRIMER FOR REAL PROPERTY PRACTITIONERS
by William B. Acker*
Tax planning for structuring and negotiating the capitalized improvementsdepreciable by landlord that are fundamental economics of typical rental real property generally depreciated over the applicable recovery period transactions all too often receives cursory attention. In for each improvement and may be eligible for bonus part, this is because the tax consequences are well depreciation.~ understood by commercial landlords in many business leasing transactions, and usually leases are prepared by These and other basic income tax considerations landlords for a prospective tenant facing myriad important apply to simple and sophisticated lease transactionsfl economic terms to negotiate. However, economic Additional tax considerations discussed below become negotiations can quickly evolve into tax matters. Real important in sophisticated leases. property leasing transactions with spice added, such as TIMING delayed or accelerated rent, require deeper scrutiny, and demandboth the landlord’s and tenant’s attention to tax The value of rental real property is often determined analysis. by its current and perceived future cash flow potential. BASIC TAXATION OF LANDLORD AND TENANT The amountof cash flow is important, as is the timing of actual receipt and the timing of resultant tax consequences. Generally, the landlord includes in its taxable income The timing of inclusion of rents in the landlord’s taxable all rent payments for the right to occupy and use the income is a key element of taxation, tax planning, and of rental real property, ~ including without limitation, not the value of rental real property. For the tenant, the only direct rent payments received or accrued,~ but also timing of the tenant’s deduction of rental and other tenant payments for any of the landlord’s expenses or payments is crucial to determining the economic cost of obligations. In a typical triple net lease, all paymentsof the lease. rent, and payments by the tenant for insurance, taxes, Manyreal property leases require the tenant to make maintenance,3 etc. constitute rental incometo the landlord. A landlord should take care that leases are drafted to a fixed rent payment, for all or a portion of the term of the entire leasehold ("Term") or, alternatively, to make clarify income tax treatment if tenant-paid improvements are to be owned, capitalized and/or depreciated by the payments that are adjusted for a portion of the Term as tenant, and/or to confirm that tenant payments for determined by a cost inflation index or otherwise. Payments are typically due in advance on an established date during improvements are not intended by the parties to be taxable to the landlord as rent. 4 Alternatively, if tenant- a periodic portion of the Term, such as each month. These paymentsrepresent an arms-length negotiated charge paid improvements are to be owned by the landlord and/ for that month’s occupancy. Examination of the lease or the payments effectively made for improvements are usually reveals howrental and other deemedrental payments taxable to the landlord as rent, 5 this should be carefully are designated to apply to periods of occupancy and use reflected in drafting the lease to confirm the landlord’s during the Term of the leasehold. For example, in a claim for depreciation deductions, because rent paymentsby simple lease between an unrelated landlord and tenant, if the tenant for landlord-owned improvements may produce the lease states that a rental payment shall be madefor a tax deduction and other non-tax benefit for the tenant. and during a designated month of the Term, that payment generally represents an arms-length negotiated charge for Thetenant generally deducts rent~ paid for real property that month’s use and occupancy. used in a trade or business if the payments are for 7 ordinary and necessary business expenses. Tenant-paid Commerciallandlords and tenants often plan for and improvements deductible by the tenant as rent become experience predictable timing for incometax inclusion of rent and the deduction of rent payments, as determined *Kemp, Klein, Umphrey, Endelman & May, P.C. by the tax accounting method applicable to the landlord MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 185
and tenant, respectively. A classic examplewould be rents market conditions favor one side of the transaction and paid in the exact amount and during the exact period for enable that party to negotiate for advantage. In this which they represent an economic charge for actual use setting, tax planning and awareness on both sides of the of the real property. Generally, in such a case, rental transaction becomemore important. Also, planning between income to the landlord and deduction by the tenant related landlords and tenants maybenefit the interests of would result for each period in which paymentsare made, both. as specified in the lease. Consider the following: Tax accounting rules determine the timing of inclusion of rent in the landlord’s taxable incomeand deduction of Example I. A commercial landlord encounters a rent payable by the tenant. Landlordsoften utilize entities decidedly "so~t" market favoring tenants at a time of dedicated to owningand leasing rental real property, and excess rental capacity. To attract qualified tenants, the increasingly use single-purpose partnerships or lirn~ted landlord may be compelled to offer someincentive, such liability companies,~° which mayeach elect a different as a rent holiday, rent deferral, build out allowance or method of tax accounting, subject to limitations, n Some other favorable terms. eligible landlords mayselect the cash methodfor simplicity and flexibility in determining the timing of income Example 2. A tenant manufacturing business leases recognition and deductions, iz Sophisticated landlords may its business facility from an affiliated entity ownedand elect the accrual methodto accelerate expenses typically controlled by a majority of the tenant’s owners. The paid in arrears (such as mortgage interest), and to match tenant is required to utilize the accrual method of tax TM However, the timing of inclusion of rental income, typically paid in accounting due to the nature of its business. advance, unless they have substantial contingent or the landlord, although controlled by the same taxpayers, utilizes the cash method of tax accounting,v~ The accrual delinquent rent. Commercialtenants generally choose tax accounting methods based on their principal business method tenant may expect to accrue and deduct deferred and, if they have inventory, usually are accrual method rent ratably over the Term, while the landlord having taxpayers. Tenants engaged in service businesses may elected the cash method ot tax accounting would prefer to~° defer rental incomeuntil receipt. select the cash methodfor simplicity and to avoid accrual of fee income and other receivables. Example3. An accrual basis landlord may hope that Cash basis landlords generally include rent in income advance rent would be includable in income as allocated when actually or constructively received. 13 Cash basis by the lease ratably over the Term, and the accrual basis tenants engaged in a "trade or business" deduct rent that tenant maylikewise expect to deduct the rental payments is an "ordinary and necessary" expense~4 when actually as allocated ratably over the Term. Generally, prepaid rentals allocable to periods beyond the current taxable paid. Accrual basis landlords generally recognize income when"all events" have occurred to fix the right to receive year must be capitalized and amortized over the leasehold term by an accrual method tenant, but are included in income and the amount is determined with reasonable accuracy, la "All events" fixing the right to receive income income when received by the landlord regardless of tax accounting method, unless special rules for leases with generally occur when: 1) all required performance takes ~ place, 2) payment is due, or 3) payment is received, prepaid rent apply. Absent application of special rules whicheveris earlier, i~ Accrualbasis tenants generally deduct for leases with prepaid rent discussed below, advance trade or business ordinary and necessary rent payments rentals, lease cancellation payments and improvements when the "all events" test is met and when "economic to real estate that are a substitute for rent are rental income to the landlord when received, except when other performance"of the lease occurs; that is, rent is deducted ~ ratably~7 as the tenant occupies the rental real property, limited rules apply. The accrual method landlord would eliminating acceleration of rent deductions. be disappointed by application of this rule, and would prefer to induce the tenant to agree to allocate the ~ TAXATION OF LEASES WITH ADVANCE AND/ prepaid rent to later period(s) of use and occupancy. OR DEFERRED RENTS Other examples of structured leases involve "stepped Lease negotiations may lead to departures from the rent" increases in future years or blocks of years of the classic exampleof level rent if tax planning dictates, or Term,designed as negotiated fixed inflation hedge factors, when the relative bargaining strength of landlords and and other departures from classic level rent payments. tenants tips out of balance. This may occur because Winter 2004 - Page 186 MICHIGAN REAL PROPERTY REVIEW
NEVER LAND "prepaid" and if the lease does not explicitly provide for the paymentof "adequate interest" (generally 110 percent Prior to 1984, landlords and tenants, or their counsel, of the applicable federal rate ("AFR")~ in effect whenthe were left to surmise whether economic shifts resulting lease is made), lease rent allocations are disregarded, rent from market-driven negotiations or tax planning changed allocations are provided in a "proportional rental amount," the tax treatment of commercial leasing transaction by and a loan is imputed with interest ("Code §467 Loan"). including deferred or prepaid rent. If a lease is "disqualified" without safe harbor protection and provides for future increases in rent, rents are allocated Congressbecame interested in relatively sophisticated under special level payment ("constant rental amount") transactions structured by taxpayers, seeing abuse and a rules instead of under the lease, and if the lease does not source of revenue. The resulting legislation includes a explicitly provide for the paymentof "adequate interest," numberof Codeamendments designed to prevent perceived a deemedCode §467 Loan with interest is imputed. In all abuses based on general tax accounting rules, including instances where a Code§467 Loan is imputed, the parties 24 newrules for leases. In 1984, the tax law was altered to must:~:~ recognize interest income and expense annually. provide an exception to tax accounting rules for certain leasing transactions involving deferred and, by subtle The effect of these rules is that both landlord and 2~ implication, prepaid rent. Congress sought to eliminate tenant under a covered lease must accrue rent income mismatching between landlords and tenants in reporting and expense as allocated by the lease, unless the lease is rent, and to require recognition of deemed loans and deemedto be "disqualified," has "prepaid" or "deferred" interest for leases with significantly deferred or accelerated rent and does not provide adequate interest, or does not rent. The provisions of the 1984 Act utilize time value of allocate rent as required. Allocations according to covered money concepts to require landlords and tenants to non-"disqualified" leases that successfully allocate rent account and report for tax purposes the interest element and provide adequate interest are respected, and are not present in structured leases with deferred or prepaid rent. required to spread rent ratably over the term of the lease. 34 As a result, parties to manyleases with delayed, Unfortunately, the 1984 Act Code provisions accelerated, increasing or decreasing rent may benefit addressing deferred rent expressed Congress’s intent in from special structuring of the transaction and drafting of general concepts. Manydetailed implementing rules were lease provisions to avoid subjecting the lease to rules left to Treasury regulations, 26 and no Code provisions under Code §467 and the Regulations overriding lease concerned prepaid rent. Uncertainty persisted for nearly allocations. Rent allocated to a period but not payable 12 years, when the scope of open issues narrowed as until a later period is treated as a loan, and unless proposed regulations were announcedin 1996 and finalized adequately provided by the lease, interest accruals are in 1999. imputed. Prepaid rent allocated to later periods may be WHAT THE DEFERRAL AND PREPAID RENT treated similarly. RULES DO: GENERALLY "Disqualified Leases" are certain leasebacks or long- If the special rules of the 1984 Act and Treasury term leases with increasing and decreasing rents that are Regulations ("Modified Accrual Rent Rules" or "Code treated by the IRS as entered into for tax avoidance. The §467 and the Regulations") apply,27 landlords are required IRS was apparently concerned in such cases that the to report rent receipts as income, and may only claim deferred costs would exceed market rent levels over the tenants’ rent payments as deductions, according to term and, by options or negotiation, the value of such Modified Accrual Rent Rules, despite their overal~ method deferred rents would becomepart of the selling price of of accounting/8 Rent paymentsthat are delayed or increase the real property, possibly converting a landlord’s ordinary (as defined by special rules) are includible by the landlord rental income into capital gain. As a result, constant and deductible by the tenant in their taxable year as equal rental amounts are mandated for "disqualified required by the special rules. Similarly, accelerated or leases," overriding the lease agreement. Upondisposition decreasing rent (as defined by special rules) is taxed in the of the property, if certain leasebacks and/or long term taxable~ year as recruited by the special rules? leases are not subject to constant rent accrual provisions, the landlord must recapture part of any capital gain as Painting the 19~,4 Act and Regulations with a broad ordinar~ income. brush, if a lease is covered,~°rent is required to be reported and expensed as accrued, usually as allocated by the Returning to the examples described above, in Example lease to each leasehold period .31 If rents are "deferred" or I, the commercial landlord offering a rent holiday or MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 187
deferred rent to attract tenants may be subject to the year in advance, but up to two years in time, is not Modified Accrual Rent Rules if the rent holiday exceeds covered by the Code §467 rules, generally applicable tax three months and the lease has "increasing" rents as a roles discussed above4° require landlords to include advance result, or if the lease has "deferred" rent, which would rentals in incomefor their taxable year of receipt, regardless require the landlord to include rent as accrued by the of~I their tax accounting method, with limited exceptions. Modified Accrual Rent Rules during the rent holiday. If, however, the rent holiday does not cause Code §467 to Specifically, the Modified Accrual Rent Rules apply apply, the accrual method tenant may claim deductions to leases where i) the aggregate rent payments and the for the first year of the lease, while a cash method value of other consideration reasonably expected to be landlord maydefer inclusion of the rent not paid during received for the use of property exceeds $250,000; 2) at the rent holiday. In Example2, the manufacturing tenant least one amount allocable to the use of property during and the cash method landlord may be able to report~rent a calendar year is to be "deferred" or "prepaid," that is, as allocated by the lease, and not when paid, if the to be paid after the close of the succeeding calendar year deferred rent is allocated ratably over the Termand the or before the beginning of the preceding calendar year, or deferred rent causes the lease to be covered by Code the lease agreementprovides for the paymentof "increasing" §467. In Example 3, the accrual method landlord may be or "decreasing" rents, that is, the lease allocates a set able to report advance rent as allocated ratably over the amountof rent to any calendar year that is different from Termif the rent advanceconstitutes "prepaid" rent, although the set amount of rent allocated to a different calendar 42 a deemedCode §467 loan with interest may be imputed. year.
IN THE SOUP OR OUT?. Congress’ statutory approach in crafting the Modified Accrual Rent Rules was to allow Small Leases and Simple The fundamental question posed to real property Leases to be taxed under existing tax accounting rules. counsel by the newrules is: whenis a lease covered by the Essentially, Small Leases, Simple Leases and even broad Modified Accrual Rent Rules? Simply put, Code §467 categories of covered leases with "increasing" or rules apply if aggregate rents under the lease equal or "decreasing" rent, and leases with "deferred" or prepaid" exceed $250,000, and either rents increase or decrease rent that qualify under strict rules as "adequately stating over the Term, or are deferred or prepaid.35 "Increasing" interest," are allowed within limits to determine the and "decreasing" rent, and "deferred" and "prepaid" rent allocation of rent to leasehold periods of use (e.g., are36 each defined in the regulations. monthly). However, the Modified Accrual Rent Rules are far-reaching and the IRS implemented the congressional In effect, the Modified Accrual Rent Rules do not grant of a broad range of regulatory authority by issuing apply to: 1) leases involving relatively small amounts of complex43 final regulations and other retained authority. reasonably anticipated total rent and "other consideration to be received for the use of property" (less than $250,000) INCREASING AND DECREASING RENTS paid over the life of the lease37 ("Small Leases") or most leases involving solely level rent payable in each The Regulations quickly becomecomplex in providing month of the leasehold term. The later category covers howto determine whether a lease provides for "increasing" the most commonlyencountered form of real property or "decreasing" rent. Essentially, if a lease "allocates" lease, that is, a lease that sets equal monthlyrentals over rent to rental periods during a calendar year and the the entire Term, with all payments of rent due in the aggregate amountof "fixed rent" allocated to any calendar calendar year to which the corresponding use of the year differs from the aggregate amount of "fixed rent" leasehold3~ relates ("Simple Leases"). allocated to any other calendar year during the lease term, then the lease provides for "increasing" or Surprisingly helpful is a rule that allows somemoderate "decreasing"44 rents. degree of deferral or repayment to escape the Modified Accrual Rent Rules. The categories of excluded leases are "Fixed rent" is rent for which the amountand time for expanded to include leases that require the payment of payment are fixed and determinable as of the ~5 rent in a calendar year preceding or succeedingthe calendar commencementof the leasehold. Rent adjustments that year to whichthe rent relates. 39 This rule tolerates modest are based on a reasonable price or interest rate index rent deferral from one year to another, effectively up to (even if likely to occur and susceptible of estimation), and two years in time. For example, rent allocated to January truly contingent rent dependenton speculative possibilities 1, 2005 may be deferred to as late as December 31, such as tax indemnities, are "contingent rent" and not 2006. Note, however, that although prepayment of one "fixed," and are tested for excludability under safe harbor Winter 2004 - Page 188 MICHIGAN REAL PROPERTY REVIEW
rules. 4~ Contingent rent that is covered by a safe harbor Late Charge for Late Payment of Rent. Late exclusion is not tested as "fixed" rent, but if it is not payments by lessee that require late payment covered, it is included in testing for "increasing" or charges are not determinable at lease inception. "decreasing" rent. Thus, generally, a lease has "increasing" Nonetheless,5~ they are disregarded. or "decreasing" rent if the lease requires or mayrequire "contingent" rent that is not "fixed" and not protected by Security Deposit. No safe harbor is provided for any47 of various safe harbors. the receipt by the landlord of a security deposit although, generally, a returnable security deposit Determining the amount of "fixed rent" can become is not taxable as rent or other income to the complexif a lease provides for various types of contingent landlord if it is paid to insure the tenant’s rent or, rent adjustments based on a reasonable price performance of lease covenants other than rent index, or is based on results or speculative occurrences payment, even if commingledwith the landlord’s such as a tax indemnity provision that are each tested assets. 55 under separate safe harbor tests. 48 Rent payable during a renewal term, if fixed, is included unless the option to ho Lease-End Payments for Excess Wear and Tear. renew is reasonably expected not to be exercised. A lease-end payment for excessive wear and tear measured by a formula or objective measure of General descriptions of some safe harbor exclusions use5~ or condition under a lease is excluded. from amounts tested to determine if a lease has "increasing" or "decreasing" rents and discussion of related Rent Adjustment for Landlord’s Interest Variation. matters follow: Tenant’s promise to pay a rent adjustment based on changes in the interest rate payable on Qualified Percentage Rents. Rent paid based on indebtedness incurred by landlord to acquire or a percentage of tenant’s receipts or sales that refinance the property acquisition indebtedness, main49 constant over the lease term is excluded. if the change results from a "qualified" variable rate mortgage or refinancing debt instrument and Rent Index Adjustments. A generally recognized satisfies5v other conditions are excluded. reasonable price index, e.g., the U.S. Department of Labor Commission Price Index, presumably Other P~yments; Tenant Improvements; Landlord for a legal geographic area, maybe utilized to Build-Out Obligation or Allowance. Unfortunately, adjust rent. 5° This rule creates a bias against the Code §467 regulations provide no guidance "stepped" rent provisions as a negotiated means as to whethera lease will be treated as a lease for of hedgingagainst inflation with a simple inflation federal income tax purposes, or whether any factor, in favor of an indexed rent adjustment. tenant obligations are treated as rent. 5~ The regulations do reserve the determination of whether Landlord Expenses Paid by Tenant; Net Leases. lease obligations not stated as rent may be Tenant payments of specified third-party costs, equivalents of rent. ~ Improvements paid for by e.g., real estate taxes, insurance premiumsand tenants that are ownedby the landlord at lease maintenancecosts, and any other costs not within termination and meet other criteria may be 5~ the control of any party are excluded. equivalents of rent to the landlord and includable in landlord’s income. Query whether the value of do Tax Indemnities. Tenant payments to protect such improvements should be considered rent landlord’s anticipated income tax treatment are under Code§467 and in testing for "increasing" generally~z excluded. or "decreasing" rent. Build out obligations may actually be income to the tenant, ~° and should e° Rent Holidays. A limited rent holiday at the beginning of a lease is excluded if it does not not be counted as rent under a lease for Code exceedthree months.~3 Note that legislative history §467 purposes. to the 1984 Act suggests that a rent holiday up PREPAID OR DEFERRED RENT to 24 months was considered permissible; however, the IRS limited the safe harbor. H.R° Rep. No. Even leases generally requiring equal rent accrual 861, 48th Congress, 2nd Sess., at 833 (1984). each year, but that also provide for paymentsof "deferred" or "prepaid" rent, are covered by the Modified Accrual Rent Rules.~ "Deferred" or "prepaid" rent is fixed rent MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 189
paid (and any ratable portion of rent) and any contingent term to that time, a deemedloan exists. The deemedloan rent delayed or accelerated to a period beyondthe calendar is from the landlord if accrued rents exceed rents payable, year following or preceding the calendar year in which the and the deemedloan is from the tenant if payable rents rent is allocated. Rent is "deferred" if the cumulativerent exceedaccrued rents. Interest imputedis treated as interest allocated to all periods through the close of the subject for all provisions of the Codeand, if resulting from a loan calendar year exceeds the cumulative rent payable through from the landlord, it diminishes the landlord’s passive the close of the succeedingcalendar year. Rent is "prepaid" activity rental income, converting it to portfolio income if the cumulative rent payable for all periods through the not deductible against passive activity losses/~’ close of the subject calendar year exceeds cumulative rent allocated through the close of the succeeding calendar DISQUALIFIED LEASEBACKS AND year.~z LONG-TERM LEASES ’’¢~ As described above, these rules permit rent delay or Restrictive "constant rent accrual maybe imposed acceleration from one taxable year .to the next, and by the IRS and deemed Code §467 loan treatment if essentially up to a two-year time deferral. Also, a cash imposedon leases that are: I) "disqualified" leasebacks, basis ~andlord can enjoy limited but meaningfultax timing that is, leases with a tenant (or related person) that had planning for the paymentof rent, but not show up on the any interest in the rental real property during two years ~° radar screen of the Modified Rent Accrual Rules. preceding the date of the lease; and 2) "disqualified" long-termleases with terms exceeding75 percent of specified The cumulativefeature of the test provides interesting periods, generally specified as 19 years for land and most possibilities. Supposethat real property is leased for four commercialand residential rental real property, equating calendar years, and the lease allocates $100,000for each to a lease with a term in excess of 14 years and three calendar year. The lease allocates equal amounts to each months,~ and which have a "tax avoidance" purpose. period and does not provide for "increasing" or The Regulations state that a tax avoidance purpose is "decreasing" rent. However,$0 is payable in year one, ordinarily inferred unless proven by clear and convincing $100,000 is payable in years two and three, and $200,000 evidence to the contrary by the taxpayer, subject to is payable in year four. The amount of rent allocated to certain safe harbors. each rental year is $100,000. As a result, there is no "deferred," "increasing" or "decreasing" rent. Eventhough DISPOSITIONS OF CODE §467 the $100,000 allocable to year one may appear to be RENTAL AGREEMENTS deferred and payable in year four, there is no "deferred rent" because the payment due in year two equals the A landlord disposing of rental real property subject to cumulative rent accrued in year one, and the same is true a "leaseback" or "long-term" lease agreement, but that is for each year of the lease. That is, the cumulative amount not otherwise "disqualified," maybe required to recapture due as of end of each year of the lease equals the as ordinary income a portion of gain realized on the cumulative amountpayable as of the end of the preceding disposition, that wouldotherwise be reportable as capital v~ year.~3 The lease is not covered by Code §467. The cash gain. Death and dispositions with carryover basis, such method landlord may include rent when received, and as gifts or contributions to entities taxed as partnerships presumably the accrual method tenant may accrue under federal law, are exempt from recapture, although $100,000 of rent as a deduction in year one. tax-deferred like-kind exchanges may becomepartially taxable if the replacement property is not subject to a If a lease has "deferred" or "prepaid" rent, and has lease73 covered by Code §467. "adequate" stated interest, no interest is imputed but instead, by definition, is stated and treated by the parties FINAL REGULATION EFFECTIVE DATES as interest paid and received. ~4 If a lease does have The regulations apply to leases entered into after May "deferred" or "prepaid" rent but does not provide for 18, 1999/4 retroactively to "disqualified leases" entered adequate stated interest, the "proportional rental accrual into prior to that date and after June 3, 1996, non~ method"65 is used to determine the portion of allocated "disqualified" leases entered into during the retroactive rent that is recast as imputed interest; the deemedCode ~ period if elected, and certain otherwise excluded or §467 Loan is determined; and the rent amounts that "grandfathered" leases that are modifiedif the modification remain for each period of the Term.67 If the total fixed is "economicallysubstantial," excluding certain safe harbor rent payable at the beginning of any rental period is less modifications.75 or more than the total amount accrued over the entire Winter 2004 - Page 190 MICHIGAN REAL PROPERTY REVIEW
CONCLUSION: THE GOOD, THE BAD 9. See generally, Real Estate Leases, BNATM Portfolio, AND THE UGLY No. 593. I0. Rental real property is often owned by single asset, The Modified Rent Accrual Rules provided planning single purpose entities to: I) isolate liability risks from opportunities to well-advised landlords and tenants. Active and belween rental real properties controlled by the planning to use the Code §467 rules is advisable in landlord, 2) accommodatediffering ownership interests drafting many leases. Tax counsel can serve a useful role or participation by d~fferent investors or property in lease negotiations and drafting to achieve advantageous managers, 3) satisfy lender commitment conditions tax positions for either the landlord or the tenant. requiring "bankruptcy remote" ownership without other assets, activity or credit history, and 4) avoid lender Although not common, the IRS may still throw a demandsfor cross collateralization wrinkle into well-laid plans. The IRS retained the broad 11. See generally, Code §§446,448 and 451, and applicable power to decline to accept a taxpayer’s tax treatment or regulations. method under so-called "clear-reflection-of-income 12. The landlord would have to pass the eligibility tests of principles"7s and the "substance-over-form" doctrine. Code §448, including, without limit, having "average annual gross receipts" of less than $5,000,000 for all Finally, applying the most complex of the Regulation’s related entities, or be a "qualified personal service" rules may become downright ugly, and move thoughtful entity. Also, even if real property is held for sale in the landlords, tenants, and their real property counsel to ordinary course, it Is not considered inventory for involve tax counsel to plan for a more definitive and purposes of determining available tax accounting hopefully advantageous tax result from a commercial methods. Rev. Ru[. 69-536, amp. by Rev. Rul. 86-149. lease agreement. 13. Reg. §1.451-2. ENDNOTES 14. Code §162(a)(3).
1. Code §61(a)(5). 15. Reg. §1.451-I(a) and Reg. §1.446-1(c){I). 2. This depends on the landlord’s tax accounting method. 16. See Rev. Rul. 84-31. For example, generally, an accrual See discussion below. method landlord must accrue percentage rents when the landlord has a fixed right to receive paymentdespite 3. Amey v. Commissioner, 22 TC 756 (1954). the fact that the landlord may have to return all or a portion of the rentals once calendar or fiscal year lease 4. Reg. §1.167(a)-4. See Grodt & McKayRealty, Inc. accounting is complete. Rod Realty v Comm’r,26 T.C.M. Comr, 77 T.C. 1221 (1981), regarding factors 243 (1967). determine ownership of leasehold improvements. Also, see M.E. Blatt Co. v US, 305 US 267 (1938). Lease- 17. Code §461(h)(2)(A)(iii), Reg. §1.461-4(d)(3). required tenant-paid improvements are not rent unless the parties’ intention is plainly disclosed. Although the 18. See Code §446 and Reg. §1.446-I. rule favors a finding of non-rent status unless clear contrary intent is shown, wise drafting will clarify the 19. See endnote 18, above, and Reg. §1.448-IT. parties’ intent. Tenant-paid improvements may be 20. Note that Code §267(a)(2) may prevent a sufficiently- subject to possible inclusion in the landlord’s income at related accrual-method tenant from claiming a deduction lease termination if the improvements are to revert to until matched by an income inclusion by a cash-method, the landlord, but only if Code §109’s exclusion from sufficiently-related landlord. income does not apply. 21. Reg. §1.61-8(b) and (c). Certain advance payment rentals 5. Reg. §1.61-8(c). Also see endnote 4 above. including, without limit, certain rentals ancillary to 6. See text accompanying endnote 3 above. services would enjoy limited one-year deferral if elected under proposed IRS procedures. Prop. Reg. 1.61-8(6) 7. Code §162(a)(3). (12/2/02), and Notice 2002-79, modifying and superseding Rev. Proc. 71-21. 8. See Code §168(k)(3)(B), and Code §168(c). improvementhas a longer useful life than the remaining 22. See endnote 19 above. term of the ’lease, the asset is capitalized and the unrecovered cost is deducted over the applicable 23. An example would be if the lease provided that the rent recovery period, and written off if abandoned or removed was for later taxable years. from the propert~ at termination of the lease. "Qualified 24. The Deficit Reduction Act of 1984 (" 1984 Tax Act"). leasehold improvements" may be eligible for 30%bonus depreciation, with certain exceptions. MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 191
25. Section 467 of the Internal Revenue Code of 1986, as 38. Reg. §1.467-I(a)(2). amended. (Added by the 1984 Tax Act to the 1954 Code.) All Section 467 provisions under the code and 39. Reg 81.467-i(a)(2). prior code are referred to as the Code for simplicity. 40. See text accompanying endnote 21 above. 26. See Reg. §§1.467-1-1.467-9. 41 Reg. 81.61-8(b). See endnote 21 above. Note also case 27. Code §467. law requiring accrual taxpaying to include advance payments in income when received ~f the advance 28. See Reg. §I 467-1(b) This includes all "fixed" rent and payments are received and held without restriction as to any ratable portion allocated by the lease to, or payable use or obligation as to refund Schulde v. Comm’r, 372 during, periods during the taxable year, and any U.S. 128 (1963). contingent rent. Reg. 81.467-I(d). See also Reg. 81 467- 1(c)(2). 42. Code §467(d)(I), (d)(2). See discussion concerning "increasing," "decreasing" and "fixed" rents. 29. See Reg. §1.61-8(b). 43. See Reg. §1.467-I(a)(5). 30. These are oral or written agreements treated as a "lease" for federal tax purposes. Reg. §1.467-I(h)(12). 44. Reg. §1.467-1(c)(2). "Fixed rent" is allocated by a lease if it specifies a "fixed" amount of rent payable by the 31. A lease can allocate rent differently from its paynrent tenant for each period (less than a year) for use and schedule and can have separate rent allocation occupancy, and the total amount of "fixed rent" specified provisions. Code §467 rent allocations control unless equals the total amount of "fixed rent" payable under the total "fixed rent" allocated differs from the total fixed the lease. Reg. ~1.467-I(c)(2)(ii)(A)(2). If a rent actually payable, or if the lease allocates rent to not specifically allocate "fixed rent," the rent deemed periods longer than one year, Reg. §1.467-1(c)(2), allocated to a particular period is the amount payable if the lease is subject to IRS challenge based on lack of during that period. Reg.~1.467-1(c)(2)(ii)(B). economic substance or "clear reflection of income principles." These rules prevent a tenant prepaying rent 45. Reg. ~1.467-I (h)(3). This test disregards possible default, from accelerating its deduction or the landlord’s income early termination, insolvency, bankruptcy, non-exercise inclusion. Also note that Code §467 and the Regulations or renewal of an option to extend tbe lease (thus, renewal suggest that Congress and the IRS were not generally term rent is generally taken into account in determining concerned with disturbing rent allocations, even between whether the lease provides for "increasing" or "decreasing" rent), and adjustments based on a reasonable related parties, except for "disqualified" leases, but sought to require a matching of rental income inclusion and price index or variable interest rate provision. Regffl.467- deduction. 32. Under Code 81274, AFRs are provided for each month. 46. See Reg. ~1.467-i(c)(2)(iii). 33. Reg. §1.467-I(e)(3). 47. Reg. ~1.467-I(c)(2)(ii). 34. Reg. §1.467-1(d)(2)(iii) and Reg. 81.467-1(e)(2)(ii). 48. Reg. ~1.467-I(c)(2)(iii). Also, options expected to be exercised are included in 49. Reg. ~1.467-1(c)(2)(iii)(B)(1),and the lease Term. See Reg. §1.467-I(a)(1). 50. See Reg. ~1.467-1(c)(2)(iii)(B)(2), and 35. Joint Committee on Taxation, Staff, 2nd Sess. General Explanation of the Revenue Provisions of the Deficit 51. Reg. ~1.467-1(c)(2)(iii)(B)(3), and Reduction Act of 1984, at 285-286 (1984). 52. Reg. ~1.467-1(c)(2)(iii)(B)(8), Reg. ~1.467-1(h)(14). 36. See endnote 26 above. 53. Reg. ~1.467-I(c)(2)(i)(B). 37. Rego §1.467-I(c)(4), determined on the earlier of date of binding agreement or of the lease. Special rules 54. Reg. ~1.467-1(c)(2)(iii)(B)(4), and apply to exclude landlord expenses paid for by a tenant 55. See Indianapolis Power & Light Co. v. Comm’r, 493 under a triple net lease (such as real property taxes, ~.S. ~0~ (19~0). insurance premiums and maintenance costs or other costs not within the control of the parties), stated interest 56. Reg. }1.467-1(c)(2)(iii)(B)(7), and on deferred rent (unless clearly in excess of arms-length interest), rent variations due to reasonable price index 57. Reg. ~1.467-1(c)(2)(iii)(B)(9), and changes or changes in interest rates, tax indemnity payments, and most contingent rent and other payments. 58. Reg. 81.467-I(a)(4). Future rents are not discounted to present value. 59. Reg. 81.467-I(a)(4)(ii). Winter 2004 - Page 192 MICHIGAN REAL PROPERTY REVIEW
60. See Code §61. 61. Reg. §1.467-1(c)(1). 62. Reg. §1.467-1(c)(3). 63. Reg. §1.467-I(c)(3)(iv), Ex. I. For a lease with prepaid rent, see Reg. §1.467-1(c)(3)(iv), Ex 64. Interest must be explicitly charged on the amount deferred or prepaid, calculated at the same time each year and at a stated fixed rate not less than 110%of the AFR. 65. Reg. §1.467-2(c)(1). This method is not generally punitive, but assures that an imputedloan and interest is recognized. 66. Reg. §1.467-4(a)(I). 67. Reg. §1.467-I(d). 68. Code§469(c)(2)and (e)(1)(A)(i). Otherimplications for landlord "REITS"or "UPREITS."See generally Code §856(c). 69. Equal amounts of rent are determined with a present value equal to the present value of all paymentsunder the lease, discountedat 110%of the AFR.Reg. §1.467-3(b). 70. Reg. §1.467-3(b)(2). Leases with tenants having options to purchase, interest as a mortgagee,purchase options or other interests are included. 71. See Reg. §1.467-3(b)(3). 72. Code§467(c); Reg. §1.467-7. 73. Reg. 1.467-7(c). 74. Reg. §1.467-8(a). 75. Reg. 1.467-9(a)(I), (2), and Reg. 1.467-1(f). 76. Reg. §1.467-1(a)(5). MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 193
DIVIDING PLATTED PARCELS: HARMONIZING SECTIONS 108 AND 263 OF THE LAND DIVISION ACT by Peter Swiecicki*
Section 263 of the Land Division Act (the "Act") additional parcel, for up to a maximumof 11 appears to grant broad authority to a municipality to additional parcels. authorizedivision of a lot, outlot or parcel into 4 par~cels. Doesthis broad authority, however,extend to permitting (c) For eachwhole 40 acres in excess of the first 120 a division that woulddivide a parent parcel or parent tract acres in the parent parcel or parent tract, one 4 in violation of Section 108 of the Act? additional parcel. Background Theterms parent parcel or parent tract are defined in Section102 as "a parcel or tract, respectively, lawfullyin The 1996 amendmentto the Subdivision Control existence on the effective date of the amendatoryact that Act, effective March31, 1997, renamedthe Act as the addeds this subdivision," that is, on March31, 1997. Land Division Act.I It also introduced substantive amendments, significantly adding new Sections 108 "Tract" is defined as "twoor moreparcels that share and 109 to the Act.~ It left untouched Section 263, a commonproperty line and are under the same "6 which states: ownership. "Parcel" is defined as "a continuousarea or acreage"7 of land that can be described. Nolot, outlot or other parcel of land in a recorded plat shall be further partitioned or divided unless in The issue: Can Sections 263 and 108 conformitywith the ordinances of the municipality. be harmonized? Themunicipality may permit the partitioningor dividing of lots, outlots or other parcels of land into not more Section 263 grants authority for a municipality to than four parts; however,any lot, outlot or other enact an ordinancegoverning the division of a lot, outlot parcel of land not served by public sewerand public or parcel in a recordedplat into up to four parcels. Asis water systems shall not be further partitioned or readily apparent, a division could complywith such a dividedif the resulting lots, outlots or other parcels municipalordinance but fail to complywith Section 108, are less than the minimumwidth and area provided becausethe division could causea parent parcel or parent tract to be divided into more than four parcels. For for3 in this act. instance, an ownerof three contiguousplatted lots could Section 108 of the Act restricts divisions of parent seek to divide each lot into two parcels. Looklngonly at tracts into morethan four parcels. Thebasic restriction of Section 263, it could be argued that the divisions would Section 108 is set forth in Section I08(2), whichreads: be permissible,because they wouldconstitute three s~pamte divisions of individual lots into two parcels each, and (2) Subject to subsection(3), the division, together each division wouldcomply with the ordinance enacted with any previous divisions of the sameparent parcel pursuant to Section 263. However,if the three lots were or parenttract, shall result in a numberof parcels not under commonownership on March 31, 1997, they morethan the sumof the following, as applicable: wouldalso constitute a parent tract, and if Section 108 wereto apply, then a replat of the three contiguouslots (a) For the first 10 acres or fraction thereof in the wouldbe required to complywith the Act, parent parcel or parent tract, four parcels. Municipalities 8 appear divided on the issue of (b) For each whole10 acres in excess of the first 10 whether a division complying with Section 263 must acres in the parent parcel or parent tract, one
* Peter Swiecicki is a memberof the Real Property LawSection. He is Of Counselto Baker& McKenzieLLP in Chicago. His email is [email protected]. Winter 2004 - Page 194 MICHIGANREAL PROPERTYREVIEW
also comply with Section 108. Somemunicipalities clearly evidenced by the language of Section 109(1), require that an application for land division provide which repeats four times that any application reviewed information as to the parent parcel or tract. Others do under an ordinancemust meet the requirementsof Section not.9 108. Section 109(1) reads (with the language requiring compliancewith Section 108 italicized): Similarly, commentatorsare divided. In a recent article, one commentatorimplies that only un-platted (1) A municipality shall approve or disapprove parcels are subject to Section 108, while platted parcels proposeddivision within45 daysafter the filing of a may be divided by complying with the municipal completeapplication for the proposeddivision with ordinance. I° Another commentator makes no such the assessor or other municipallydesignated official. distinction.11 However,a municipality with a population of 2,500 or less mayenter into an agreementwith a county to Onesection of a statute cannot be interpreted in transfer to the county authority to approve or isolation; the statute mustbe consideredas a whole, and disapprovea division. An applicationis completeif it by comparingone portion with another, so that such contains information necessary to ascertain whether portions harmonizerather than conflict. 12 "Every word, the requirementsof Section 108 and this section are sentence and section of a statute shouldbe given effect, met. The assessor or other municipally designated if possible, in an effort to arrive at a harmoniousand official, or the countyofficial, havingauthority to consistent’ua interpretation of the act as a whole. approve or disapprove a proposed division, shall provide the person whofiled the application written The issue thus becomes whether Section 263 is notice whether the application is approved or appropriately interpreted in isolation, as permitting a disapprovedand, if disapproved,all the reasons for division of platted parcels, or whether,considering the Act disapproval. A completeapplication for a proposed as a whole, Section 263 can be harmonized. In this division shall be approved if, in addition to the article, I contendthat Section 263 cannotbe interpreted requirements of Section 108, all of the following as supersedingother provisions of the Act, and that such requirements are met: other provisions mustalso be compliedwith. Each resulting parcel has an adequate and Section109 requiresthat an applicationfor accurate legal description and is included in a division complywith Section 108. tentative parcel mapshowing area, parcel lines, public utility easements,accessibility, and other The appropriate starting point to analyze Sections 263 and 108 is Section 109, because it deals in greatest requirementsof this sectionand section 108. The detail with municipalapproval of land divisions. Section tentative parcel mapshall be a scale drawing showingthe approximatedimensions of the parcels. 109(5)of the Act14 reads: The governingbody of a municipality or the county (b) Each resulting parcel has a depth of not more board of commissionersof a county having authority than four times the width or, if an ordinance to approve or disapprove a division may adopt an referred to in subsection (5) requires a smaller ordinance setting forth the standards in section depth to width ratio, a depth to width ratio as 109(1)(b), (c) and (d). Theordinance may establish required by the ordinance. The municipality or county having authority to review proposed a fee for reviewsunder this section and section 108. divisions mayallow a greater depth to widthratio The fee shall not exceed the reasonable costs of providingthe services for whichthe fee is charged. than that otherwiserequired by this subdivision or an ordinancereferred to in subsection(5). The Significantly, this enablingSection 109(5)of the Act greater depth to width ratio shall be based on doesnot permit a municipalordinance to vary the standards standardsset forth in the ordinancereferred to in set forth in Section 108. The language of Subsection subsection (5). Thestandards mayinclude, but 109(5)explicitly excludesSection 108, by omittingSection are not required to include and need not be 109(1)(f) fromthe list of standardsth_at maybe dealt limited to, exceptional topographicor physical in the municipalordinance. conditions with respect to the parcel and compatibility with surroundinglands. The depth This intent to excludeSection 108 fromthe scope of to widthratio requirementsof this subdivisiondo matters that maybe varied by municipalordinance is also not applyto a parcel larger than 10 acres, unless MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 195
an ordinancereferred to in subsection(5) provides just as a statement was included in the Act as to the otherwise, and do not apply to the remainderof application of Sections 108 and 109. the parent parcel or parent tract retained by the proprietor. Section103 ( 1 ) continues:"A subdivisionis subjectto the platting requirementsof this act." Thus, if a proposed (c) Eachresulting parcel has a width not less than division meetsthe definition of a subdivision,it is not a that required by an ordinance referred to in division that could be governedby Section 263. subsection(5). Thedefinition of "subdivision"clearly states that a (d) Each resulting parcel has an area not less than subdivisionis a partitioningor splitting "that is not exempted that required by an ordinance referred to in fromthe platting requirementsof this act by sections 108 subsection(5). and 109.’’18 It does not add "and by Section 263."
(e) Eachresulting parcel is accessible. Next,Section 263refers to divisions of "lots, outlots or parcels." It doesnot refer to "parent tracts." Therefore, (f) The division meets all of the requirements of divisions of parent tracts are clearly not governedby Section 108. Section 263; rather they are governedby other sections of the Act. (g) Each resulting parcel that is a developmentsite has adequateeasements for public utilities from Thelimitation of Section108(2) to 4 divisionsexplicitly the parcelto existingpublic utility facilities. states’’19 that the limitation is "Subjectto subsection(3). It doesnot state that it is also subject to Section 263. Therefore,Section 109(5) providesenabling authority for a municipality to adopt an ordinance regulating Sections109(3) and 109(4)refer explicitly to parcels applications for land divisions, and the clear and express of "unplatted land."2° Thus, the legislature demonstrated languageof Section 109(1) requires that any application that it intendedthese subsectionsto applyonly to unplatted to a municipality for division of a parcel complywith land. Theclear implicationis that the remainingsubsections Section 108. Section 263also providesenabling authority. of Section 109 are to apply to both platted and unplatted Maya municipal ordinance rely solely on Section 263, land, since the distinction is madenowhere else in Section ignoringSection 109?As discussed below, the answeris no. 109. Fromthis, Section 109(1), dealing with applications for divisions, and Section 109(5), dealing with municipal Other clear and explicit language of the Act ordinances, apply both to platted and unplatted land. states that a division subject to Section 108 is Andas these subsections makeit clear that compliance not excepted from the requirements of Section with Section 108 is required, Section 108 also mustapply 108 by Section 263. to both platted and unplatted land. Clear and express language of a statute should be Fromthe provisions cited above, it is evident that followed.15 Definitions in a statute shouldbe followedas 16 Section 109 is morespecific and detailed in regulating defined. A reviewof the Act, applyingthese principles, land division than is Section 263. A specific statute reveals that Section 263 does not except compliancewith prevails wheninterpreting it in relation to an earlier- Section 108. enacted moregeneral statute. 21 Thus, Public Act 591 of Section 263 refers to "partitioning or dividing." It 1996clearly intendeda division to be subject to Sections does not refer to subdividing. Thus, on its face, Section 108and 109. Thelegislature clearly failed to include any 263 does not apply to an action that falls within the exception under Section 263 to this requirement. definition of a subdivision. Sections 108 and 109 are mandatory - the Act "[D]ividing," as used in Section 263, is subjected by repeatedly states that an application for division shall both Sections 102(d) and 103(I) "to the requirements complywith these Sections. Section 263 is permissive - Sections 108 and 109,"17Neither of these Sections of the it states that a municipality mayadopt an ordinance. "Shall" shouldbe interpreted in its ordinarysense as being Act state "except as amendedor limited by Section 263." ~ If the intent wasto create a special situation for divisions mandatory. There is no implication in Section 263 or under Section 263, application of the clear and explicit elsewhere in the Act that this permitted ordinance may standard wouldhave mandateda statementto this effect, override Sections 108 and 109, and becomethe sole standard for compliance. A municipal ordinance may Winter 2004 - Page 196 MICHIGANREAL PROPERTYREVIEW
supplementa state statute, but it maynot interfere with Third,28 public policy of a statute maybe analyzed. and2~ preempta state statute. The amendmentsto the Land Division Act were intended to promoteorderly development.Interpreting the Act to Finally, the languageof other Sectionsof the Act that create a loophole for platted property does not promote grant municipalities the authority to adopt ordinances this policy. support the interpretation that compliancewith Section 108 is required whendividing platted property. Section Anotherimportant aspect of public policy is that all 105(b) authorizes municipalities to adopt an ordinance plats have not been created equally. No distinction is "to carry out the provisions of this act.’’24 This quoted madein the Act between property platted in 2004 and language is too general to outweigh the morespecific property platted, for instance, in 1854. Bothcome within provisions of Sections 109(5) and 263. Other authorizing the definition of a plat. 29 Yet plats fromthe 19th century provisions relate to the requirementsfor approval of a underwentalmost noneof the review required of a modern plat,~ not to whetherthe plat is required. plat.a° It wouldnot serve public policy to permitdivision of a lot platted in 1854to be exemptedfrom Section 108 In summary,where the statutory language is clear on the basis that the 1854 plat somehowprovided a level and express, such language should be followed. Section of review equivalent to that of a modernplat. 109states clearly and explicitly (4 times) that a division mustcomply with Section 108. This requirementis repeated All the appropriate instruments of statutory in the definitions of division and subdivision. Wherea interpretation support the clear and express languageof proposedpartitioning or splitting does not complywith the Act that Section 263 should be harmonized with Section 108, it is a subdivision. Section 263 does not Section 108. Frankly, no basis/:an be found that would governsubdivisions. support an interpretation that Section 263 supersedes Sections 108 and 109. If this werethe case, it wouldbe Other methods of statutory interpretation equivalent to stating that Sections 108 and 109 were of support this conclusion. no effect and inapplicable. If statutorylanguage is not clear andexpress, utilization Mandatoryapplication of Section 108 is of other meansof interpretation are appropriate. In this consistentwith the Sotelo decision. case, the language of Sections 102, 103, 108 and 109 of the Act are clear and express that an application for land Therecent MichiganSupreme Court decision in Sotelo division of platted property must complywith Section v Twpof Grant,31 strongly supports these conclusions. In 108. Notwithstandingthis, it is useful to determinethat Sotelo, the municipalityreviewed an applicationfor division other meansof statutory interpretation support this and concludedthat the proposeddivision wouldviolate conclusion. Section 108(2). The SupremeCourt stated: "Thus, under the LDA,a parent parcel that wasin existence on March First, the legislative history maybe reviewedto 31, 1997, and is less than ten acres in size, cannot be determineintent.~6Nothing in the Houseor Senatejournals divided into more than four total parcels. MCL or bill analyses of the amendmentsto the Act support the 560.108(2)(a)."32The court continued: conclusionthat platted propertyis not subject to Section 108. Theparcel that resultsfrom an adjacent-parcel transfer mustmeet minimum local regulations (i.e., for lot Second, a statutory interpretation cannot lead to size), or, if thereis nolocal governmentregulation, absurdresults. ~7 Forexample, if Section263 were interpreted then whateverrequirements are imposedunder the as applicable in isolation from Sections 108 and 109, LDA.See MCL 109(1)(b) and (5). It doesnot three contiguous platted lots under commonownership that anytransfer of propertyto an adjacentparcel is on March31, 1997 could be divided into four newlots permissibleas long as it results in buildablelots. each (assumingsufficient area of each lot), effectively Becausethe division of the reconfiguredSotelo parcel creating a newsubdivision of 12 lots without replatting. resultedin a numberof divisionsto the parentparcel that exceedsthe numberof divisions permittedunder To guard against such absurdities and protect the Section108(a) of the LDA,plaintiffs wererequired integrity of the municipal zoning and planning process, comply33 with the LDA’splatting provisions. Section 263 mustbe interpreted consistently with Sections 108 and 109 and the entire LandDivision Act. Thedecision explicitly states that compliancewith a municipalordinance -- evenif it creates a "buildablelot" MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 197
by looking solely to the ordinance -- does not excuse The secondstep is to determine the numberof prior compliance with Section 108. By analogy, compliance divisionsof the parent tract or parcel.35 Coupledwith this with a municipal ordinance adopted under Section 263 is a determinationof whichdivisions were madeprior to could not excuse compliancewith Section 108. March31, 1997 and were "lawfully in existence" on such date.36 For instance, as a parent tract mustconsist of at Sections108, 109 and 263 mayreadily be least two contiguousparcels, the parent tract musthave interpretedconsistently. had at least one division prior to March31, 1997, to create the tract, and such division wouldnot count as a If all sections of a statute can be interpreted division subject to the limit of Section 108(a)(2). consistently, such a consistent interpretation is favored over an interpretationwhere the sectionsmust be interpreted The third step is to determine whetherone or more inconsistently. Sections 108, 109 and 263 mayreadily be additional divisions maybe permitted, either because10 interpreted in a consistent manner,to the effect that~any years or morehave elapsed since the prior division37 or, division of platted propertyin a municipality: probablyvery rarely, becausethere wasan exemptsplit of a38 parcel in excess of 40 acres. ¯ must complywith Section 108; ¯ Once this initial review has been completed and is subject to reviewby the municipalityin accordance complianceestablished, determinationof compliancewith with Section 109; the remaining requirements of Section 109(1), such must complywith~municipal restrictions on width, width, depth, area and accessibility requirements, is depth and area if the municipality has adopted an appropriate, as well as a determination of whetherthe ordinance under Section 109(5); and proposed division complies with an ordinance adopted under Section 263 (which could, for instance, restrict ¯ must complywith all other applicable ordinances further divisions to a maximumof two). Followingthis of the municipality, under Section 263. approach,the points discussed previously for consistent interpretationof the Act are fulfilled. Furthermore, if a municipal ordinance has been adopted, such ordinance maypermit not morethan four Oneof the difficulties under the Act is the wide divisions of a parcel, under Section 263. variety of approachesthat are or could be taken to the establishment of the parent parcel/tract and its prior A consistent interpretation of the Act is that all of divisions. For instance, one municipalityrequires that the these provisionsapply to an application for division. The application be accompaniedby a current title insurance points specified aboveprovide a consistent and harmonious commitmentfor all of the parent parcels?9 As such a interpretation for municipalreview of land divisions and commitment will only show the current owner and land division ordinances. description of the property, it leaves unansweredhow information is to be obtained and a determination made Encouraging greater harmonization of procedures as to (I) the description of the propertyand ownership for dividing platted property. March 31, 1997, (2) whether the parent parcel had commonownership with a contiguousparcel to create a Havingdetermined that Sections 108 and 263 should parenttract, and(3) divisions since March31, 1997. and can be interpreted harmoniously, what are the consequences?Compliance with the Act requires three Althoughin this examplethe munic’q:~lityis to be basic steps as part of any initial reviewof an application commendedfor taking specific action to ensure compliance for land division: with the Act in a mannermuch clearer than municipalities that require either no informationas to the parent parcel Thefirst step is to determinethe parent parcel, which or only the applicant’s statement describing the parent is dependentupon the state of title to the property on parcel, the process can be improved. The Real Property March31, 1997.Coupled with this, the state of title to all LawSection should workwith municipal associations and contiguous properties must be determined, because if the MichiganLand Title Association to developa formof there was commonownership on March 31, 1997, the title report to be delivered to municipalitiesto evidence parent tract rather than the parent parcel is relevant for ~4 compliance with Section 109(1)(f). Use of such further review. standardized title report as part of any land division application would go a long way toward harmonizing Winter 2004 - Page 198 MICHIGAN REAL PROPERTY REVIEW
interpretations and approaches, encouraging efficient ¯ adoption of up-to-date land division ordinances reviews, and minimizing disputes. that harmonize Sections 108, 109 and 263;
The replatting requirement ¯ revising applications for land divisions so that they contain the information required by Section 109; If a review of an application for land division of platted property reveals that a division is impossiblebecause agreeing with title companieson the form and types the proposedsplit(s) will constitute a subdivision, a replat of reports that can be provided to satisfy the is in order. requirements of Section 109 as to compliance with Section 108; and Prior to the 1997 Court of Appeals decision in Brookshire-Big Tree Ass’n v. Onieda Twp., 4° a new ¯ training municipal officials, lawyers, surveyors and subdivision of part of an existing plat was generally done mortgage lenders on these provisions of the Act. as a "resubdivision." The intent was to avoid the onerous requirements for replatting, which required commencement Theresult should be surer, safer real estate transactions of a court action, except for the rare situations wherethe and development, all the while fulfilling the goal of the "48 consent of all property owners of the existing plat could Act to "further the orderly layout and use of land. be obtained.41 In Brookshire, the Court of Appealsclarified that the resubdivision of one or more lots in oa plat is a Endnotes removalof such lot(s) fromthe existing plat to a newplat; 1. PA 591 1996. this constitutes a changeof boundaryof the existing plat, thereby invoking the replat requirements.42 Becauseof the 2. Section 109 was also amendedby P.A. 87 of 1997, difficulties of obtaining consent of neighboring property effective July 28, 1997. ownersfor replatting, the likely result will be the required 3. MCL560.263. 4~ commencementof a court action to achieve the replatting. 4. MCL560.108(2). Conclusion 5. MCL560.I02(i). 6. MCL560.I02(h). Improper reliance upon Section 263 to validate a division that violates Section 108 could have serious 7. MCL560.102(g). consequences. It could render sales voidable at the 8. The Act defines municipalities to include townships, discretion of the buyer44 -- effectively giving dissatisfied cities and villages. MCL560.I02(q). purchasers a put right if they are able to establish an 9. A reviewof the formsof applications for land division, improper division of a parent tract/parcel. It subjects the available on the websites of municipalities reveals that 4~ seller to potential criminal penalties or civil fines. These somemunicipalities require an applicant to provide direct risks for owners/developers result in additional, information on the parent parcel or parent tract and consequential risks for mortgagees, thereby potentially numberof previous divisions, while others do not. raising the difficulties of financing and the expense of Compare,e.g., application formsfor City of Battle Creek development. (available at http://ci.battle-creek.mi.us/ReferenceDesk/ FormsandPermits.htm#Assessing), City of Cadillac Unfortunately, the inconsistent interpretations by (available at http://www.cadillac-mi.net/departrnents_ municipalities in harmonizing Sections 108, 109 and planning.php), and City of Wayne(available at http:// 263~ only increase these risks and associated costs. In www.ci.wayne.mi.us/forms)with, e.g., City of Dearborn this respect, the inconsistent approachto dividing platted (available at http://www.cityofdearborn.org/departments/ property constitutes one of the most blatant examples of assessor/assessmentforms.shtml), City of Southfield (available at http://www.cityofsouthfield.com/ the problems caused by the difficulty in interpreting the 47 onlineservices.php),and City of Troy(available at http:// Act. As more divisions of parent parcels/tracts occur www.ci.troy~.mi.us/Assessing). over time, reviews for compliancewith the Act will become more complicated, exacerbating delays, costs and 10. David W. Charron, "Condominiumsas a Solution for Land Division Problems and Land Use Approvals," associated risks. For these reasons, discussion of the Institute of ContinuingLegal Education seminar materials process of dividing platted parcels should be encouraged, (2004). and greater harmonization of procedures among municipalities should be encouraged, including: II. David E. Pierson, "Update on the Land Division Act: 1996 P.A. 591 and 1997 P.A. 87," 25 Mich. Real Prop. Rev. 71 (Summer1998). MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 199
12. MichCiv Jur Statutes §§ 129, 157; MichLaw & Practice v. Onieda Twp., 225 Mich. App. 196, 201; 570 NW2d 2d Statutes § 101. 294 (1997). 13. Boone u. Antrim Co. Bd. Rd. Comm.,177 Mich. App. 28. MichCiv Jut Statutes § 162; MichLaw & Practice 2d 688, 694; 442 NW2d725, 728 (1989), citing, e.g., Statutes § 87. Workmanv. DAIIE, 404 Mich. 477, 507; 274 NW2d 373 (1979). See also ArrowheadDew Co. v. Livingston 29. "’Plat’ meansa mapor chart of a subdivision of land." Cry. Rd. Comm.,413 Mich. 505, 516; 322 NW2d702 MCL560.i02(a). (1982) (One section of the Subdivision Control 30. Comparethe requirementsof, e.g., MCLTitle X of 1871 "does not stand alone. It exists and must be read in with the requirements of MCL560.105, 111-120. context with the entire act, and the wordsand phrases used there must be assigned such meaningsas are in 31. 470 Mich 95; 680 NW2d381 (2004) (per curiam). harmonywith the wholeof the statute, construed in the 32. Id. at 101. light of history and commonsense.") ~ 33. Id. at 104. 14. MCL560.109(5). 34. MCL560.I02(h) and (i). 15. MichCiv Jur Statutes § 129. 35. "Division"is defined as "the partitioning or splitting of 16. MichCiv Jut Statutes § 187. a parcel or tract of land by the proprietor thereof or by 17. MCL560.I02(d) and 103(1). Section 102(d) states his or her.., successors or assigns for the purpose of a division meansa "partitioning or splitting." Thus,use sale.., or of building developmentthat results in 1 or of "partitioning" in Section 263 does not result in a moreparcels of less than 40 acres or the equivalent, and different interpretation, because partitioning is not that satisfies the requirementsof sections 108 and 109." separately defined in the Act; rather a partitioning can MCL560.102(d). be either a dividing or a subdividing, dependingupon 36. MCL102(i). the application of Sections 108 and 109. 37. MCL108(5). 18. MCL560.102(f). 38. MCL103{I). 19. MCL560.108(2). 39. See the Applicationfor LandDivision of the City of Novi 20. MCL560.109(3) and (4). (available at http://www.ci.novi.mi.us/Resources/ 21. MichCiv Jut Statutes § 107. FormsAndPermits.htm#AssessingForms). 22. MichCiv Jur Statutes § 13. 40. Brookshire-BigTree Ass’ n v. OniedaTwp., supra note 27. 23. MichCiv Jut Municipal Corporations §§ 160, 161. 41. See Marc Danemen, "Replatting and Subdivision Changes:The Frustrating Paper Chase," 25 Mich. Real 24. MCL560.105(b). The 1996 amendmentto the Act, P.A. Prop. Rev. 195 (1998). 591 of 1996, which added Sections 108 and 109, did A rep[at is defined as the process of changing the not include Section 109(5). Rather, Section 109 42. referenced this general authorizing provision, Section boundaries of a recorded subdivision plat or part 105(b). However, because of the more detailed thereof, with the exception of dividing an outlot. MCL municipal review process that was added by Section 560.102(u). Section 104(a) permits replatting without 109, the lack of a specific enabling authority for a court proceeding if all ownersof the existing plat municipalities, as well as the lack of an exculpatory consent. MCL560.104(a). Otherwise, a complaint must provision, werecriticized, and the legislature quickly be filed in circuit court to "vacate, correct or revise a passed an additional amendment,P.A. 87 of 1997, recorded plat." MCL560.222. effective July 28, 1997, which added Sections 109(5) 43. See Daneman,supra note 41, for a discussion of the and (6), MCL560.109(5) and (6). As part of replatting process. amendment,the reference in Section 109(1)(b) amendedto refer to Section 109(5) rather than Section 44. MCL560.261. 105(b). This explicit changeto refer to Section 109(5) 45. MCL560.264. clarifies that this Sectionis intendedto governmunicipal reviewof land division applications. Thebills that were 46. See note 9 supra. introducedin the legislature andeventually led to passage 47. Commentators,while disa~eeing on the interpretation of these a.mendatory acts did not contemplate of Section 263, agree on the general difficulty of amendmentof Section 263. interpreting the Act. See articles cited at notes 10, 11 and 25. MCL560.148(4); 186(1)(d), (e); 188(3); 246(1); 41, supra. 26. MichCiv Jut Statutes § 162. 48. Title of the Land Division Act, P.A. 288 of 1967, as amended. 27. MichCiv Jut Statutes § 229; Brookshire-BigTree Ass’n Winter 2004 - Page 200 MICHIGANREAL PROPERTYREVIEW
TRANSFER OF DEVELOPMENTRIGHTS IN MICHIGAN - IS IT HEREYET?.
by David Pierson and Elan Stavros*
Advocatesof newregulatory meansto curb development conservation areas, the regulations might permit no and maintain farmland and open space have long sought developmentat all; 3 for farmlandpreservation, the permitted enablinglegislation in Michiganfor "transfer of development density mayonly be one house on 60 acres;4 for historic rights" ("TDR’)programs. With a TDRprogram, a local sites, land markdesignation effectively allows only the government creates sending and receiving zones for existing, historic use.~TDRsare then providedto offset the development.Property owners and developersin a receiving dramatic loss of property value, without any cost to the zonemay build at a higherdensity or intensity by purchasing governmentimposing the restriction. developmentrights fromproperty owners in a sendingzone. Undersome forms of the program,the governmentitself At the same time, the receiving zone mayalso be maybuy the developmentrights, bank them, and resell restricted, to create buyers. For moregeneral farmland them.I preservation programs, as WilliamHussman, Chairman of the MontgomeryCounty, MarylandPlanning Board, told Traditionalzoning requires local governmentto set the Michiganlegislators: maximumintensity of use on property. If the zoningallows too much,the electorate mayexact a political price. If the You have to downsize to make a TDRprogram limit is set too low, the ownermay seek a remedyfor the work. There’s no market if the land is actually loss of use of property the market wants. TDRsseem to zonedto the density youare willing to allow. It’s offer an attractive wayout of this dilemma.With a TDR time we stopped giving awayzoning for free and program,development rights are distributed at somelevel started6 makingdevelopers pay for favorablezoning. to all properties and maybe boughtand sold. Theprogram gives solace and moneyto those with limited uses, and The MichiganLegislature has declined to pass broad development,at a price, to those whoseek moreintense authorization for TDRprograms but mayhave openedthe use.2 door to the concept, at least on a small scale. For single property, the basic conceptof clustering developmentand Therub is that while TDRprograms have an appearance consolidating open space has long been available as an of fairness, whatdrives their use in the first place is not option under planned unit development("PUD") zoning the desire to create developmentopportunity in the receiving regulations. The MichiganLegislature recently amended zonebut the restriction of developmentin the sendingzone. the zoning enabling acts to allow PUDswith open space If propertyin the sendingzone can be reasonablydeveloped, that is not contiguouswith the rest of the development. the ownerhas little incentive to send awayany development Whilenot enabling the full scopeof a TDRprogram, that rights. changeappears to put into practice the basic elementof allowing higher density in exchangefor the creation or Therestrictions can be severe. In fact, TDRswere first preservation of open space somewhereelse. This article created for programsthat denied property ownersall or examines the background of TDRsas allowed in other almost all use of their properties: Ownersof designated states, howthey havefared in the courts, and whetherthis landmarksor environmentallysensitive properties on which newlegislation providing for noncontiguousPUDs would further developmentor even all developmentwere prohibited allow local governmentsto implementfull TDRprograms were given "developmentrights" or credits they could in Michigan,with restricted sendingand receiving zones. transfer to other property. In the case of environmental
"Classic" TDRprograms
*DavidPierson is a partner with McClelland& Anderson,LLP. Heis the chairpersonof the LandUse and ZoningCommittee of the State Bar’s Real PropertyLaw Section and concentrates his practice in land use. Elan Stavrosis an associatewith McClelland& Anderson,LLP; her practice includesappellate litigation andland use. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 201
Theearliest, and accordingto most national reviews to that land to achievea public benefit." Thethings bought of the subject, still most commonuse of transfer of and sold, "developmentrights," are defined in the statute developmentrights is to allow the transfer of excess to mean "the rights to develop land to the maximum "development7 capacity" fromsites of historic landmarks. intensity of developmentauthorized by the law." The See, PennCentral TransportationCo v City of NewYork, legislation specifies the public benefits that the ordinance 438 US104 (1978). mayseek and the factors to be consideredby the governing bodyof the local governmentin creating the zonesand the Bothin conceptand in operation, the use of TDRsfor proceduresfor severance, sale, purchase, and attachment historic preservation is easy to grasp and apply. In New of developmentrights. Eachtransfer of developmentrights York,for example,the historic site is evaluatedto determine mustbe approved.Those provisions are similar to the laws the total developmentthat would be permitted under ofI~ other states with TDRprograms. currentzoning. The rights that are permittedto be transferred are simply the excess of that potential over the a~ctual Noneof the MichiganTDR bills have madeit into law. developmenton the site, translated to a floor area to land In a 2003article,14 GeraldFisher proposedthat no further ratio.SMoreover,in a fully developedurban area like New authorization is neededfor TDRprograms outside of the YorkCity, the value of those rights have a clear market, existing zoningenabling acts. Theauthor points first to the particularly given the private marketfor air rights that generallanguage in the zoningenabling acts, whichauthorize already existed. "the establishmentof districts whichapply only to land areas and activities that are involvedin a special program TDRprograms are to be distinguished from purchase to achieve specific managementobjectives and divert or of developmentright programs,which deal in moretraditional solve specific land use problems,including the regulation real propertyrights (called "PDRs,"thus addingconfusion of land developmentand the establishmentof districts in to the discussion). Withthe purchaseof developmentright, areas subject to damagefrom flooding or beacherosion." 15 the use of a parcel of propertyis limited either by outright Traditionally, that authorization has been used for just purchaseby an entity that restricts its use, or by payment those conditions: floodplains and sand dunes. In other for an easementthat limits the use of property, often words, the use has been for land with inherent qualities referred to as a "conservation easement." Remedial related to howit maybe safely used, not general control legislation to ensurethe enforceabilityof conservationand of development.The proposal, in effect, suggests the use historic preservation easementswas enacted in Michigan of restrictive overlayzones to artificially manipulatethe in 1980, at about the sametime that the Internal Revenue development otherwise permitted by standard zoning Code was amendedto encourage the donation of those districts, and for whichthe land is otherwisesuited, to easements9 to organizationsdedicated to land preservation. discouragedevelopment and thereby encouragethe transfer A statewide programprovides grants to local governments of "rights" to another area. For the ability to vary the to purchase conservation easement on farmland. The standardform of zoningdistricts with uniformuses, Fisher property owneris paid the appraised difference in value point to the statutory authorizationof special land uses and betweenthe value of the property as used for farmingand planned unit developments.16From these components,he itsI° value if sold for development. suggests, local governmentsmay create TDRoverlay zones as sending and receiving zones, for preservation and Enablinglegislation to permit local governmentsto development,with all uses in the sendingzone as special establish TDRprograms has been introducedin the Michigan land uses, and the transfer of rights to receiving zones Legislature eachsession since 1996. Thecurrent bills are managedunder planned unit development standards. styled as a "developmentmarketing rights program,"but Fisher offers no direct supportin case law, This authorhas the substanceis the sameas bills introducedin prior years. 11 been unable to find an ordinance adopted to implement this proposed form of TDRprogram. In the formproposed in the legislature in 2003,12aTDR programwould include a receiving zone, an area identified The PUD Model by ordinance"to whichdevelopment rights can be attached to increase the intensity of developmentwithout adversely Conceptually, TDRsare sometimes compared to affecting public health, safety, or welfare." Thoserights plannedunit developments,a zoning techniquethat allows would come from a designated sending zone, an area the clustering of permitteddevelopment on a portion of a identified by ordinance"where development should be less site while combining,preserving, or simply using more intense than permitted by the developmentrights attached creatively the remainderof the land for open space. On Winter 2004 - Page 202 MICHIGANREAL PROPERTYREVIEW
a larger scale, using that analogy,transfer of development TDRcases in the courts offer no real guidanceon these rights preserveopen space or agricultural land, creating or traditional zoningconcepts. Almost all reportedchallenges preserving the open space on land that is not contiguous are by the ownerof property whoseland is in the sending with the moreintensely developedproperty, usually by zone and whosepermitted uses have otherwise been greatly preserving the less dense or intense use of land in a reduced. Under this noncontiguous PUDmodel, without "preservation"or "sending"area. a sending zone, the person who sells property or an easementto create the openspace is probablyleast likely Perhapssanctioning just that model,the legislature in to complain. December,2003 allowed the developed and open space parts17 of a PUDto be separated: TDRin the Courts
Unless explicitly prohibited by the plannedunit As mostTDR programs are authorizedby state statute, developmentregulations, if requested by the the21 questionof conflict with state zoninglaw is unusual. landowner, a township may approve a planned Traditional constitutional challenges - substantive due unit developmentwith open space that is not process and taking without just compensation- have been contiguous with the rest of the planned unit brought, with the weightof authority in favor of at least development.TM those programsthat protect environmentallysensitive lands or historic sites. Thereare not a great manyof these The amendmentwas greeted by some municipal cases, althoughit is not clear to this author whetherthat officials as authority for a transfer of developmentrights reflects fewchallenges or simplya type of regulation that program.19 Whatthe modellacks, however, is a clear is not widelyused in generalzoning throughout the country, mechanismor standard for deciding how,or whether, the at least as of yet. Thegreater numberof cases are taking size, location, and qualities of the openspace land justify cases, almost all broughtby the ownerof property whose the increased density or intensity of developmenton the property is restricted and has TDRsto sell. developedparcel. Michiganstatutes and case law also do not support the creation of sendingand receiving zonesto A use restriction on real property mayconstitute a drive the marketto transfer developmentfrom one parcel taking if it is not reasonably necessary to effectuate a to another. legitimate publicpurpose, or it deprivesthe propertyof all value or so frustrates investment-backedexpectations as Michigan zoning law requires by case law and to amountto a takingo2~ In takingcases, TDRsare a "clever, statute that the regulation of uses "shall be albeit transparent, device that seeks to take advantageof uniform...throughout each district." MCL125.271 ( 1 ). a peculiarity of our takings clause jurisprudence.’’= Once The statutory authorization for PUDsdoes specifically there is a taking, the Constitutionrequires full compensation, allow "flexibility." ("The planned unit development but a regulatory taking does not occur so long as the land regulations need not be uniformwith regard to each type retains substantial, thoughnot its full, value. If valuethat of land use if equitable procedures recognizing due the regulation gives to the landownercan be counted on process principles and avoidingarbitrary decisions have the questionof whetherthere is a taking- that is, that the been followed in making regulatory decisions." MCL land retains substantial value, and has thus not been taken 125.286c). Nonetheless, the underlying assumptionis - rather than on the question of whetherthe compensation that, although arranged differently, roughly the same for the takir~g is adequate, the governmentcan get away intensity of developmentwill occur in a PUDas in the with paying muchless. 24 The answer to that question remainderof the district. Thatwould not be the case with requires a determination whether the "rights" that are a noncontiguousPUID. To effectively balance the open transferable are propertyrights preservedto the owneror space in someother place, the developmentpermitted are simply’apart of the regulatory schemeitself, to be wouldbe out of proportion to the surroundingdistrict. counted only as possible consideration toward the The sameobjection is at the heart of "spot zoning," compensationowed if the regulation effects a taking. The described by the courts as "creating a small zone of trick, in short, is to substitute this regulatorychit for the inconsistent use withina larger zone."2°Arguably,without owner’straditional real propertyrights~ enabling legislation, a noncontiguous PUDwould run afoul of the prohibition of spot zoning. The U.S. SupremeCourt has twice reviewed takings claims arising fromapplication,of a TDRprogram. Whether the Courtanswered that critical questionis the subject of, debate even on the Court. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 203
In Penn Central Transportation Co v City of New propertyrights: York,2s the ownersof GrandCentral Terminalchallenged the NewYork landmarks law that disallowed the lease of TDRs,of course, have nothing to do with the use air rights abovethe terminal for constructionof an office or developmentof the land to whichthey are (by building. Thecourt first foundthat the restrictions were regulatory decree) "attached." The right to use substantially related to the promotion of the general and developone’s ownland is quite distinct from welfare.The effect of the TDRson the questionof the effect the right to conferupon someone else an increased on the use and value of the propertyis moreproblematic. powerto use and develophis land. Thelatter is As Justice Scalia explained in his concurringopinion in valuable,to be sure, but it is a newright conferred Suitum v TahoeRegional PlanningAgency, 26 the second upon the landownerin exchangefor the taking, TDRcase to reach the SupremeCourt: rather than a reductionof the taking. In essence, the TDRpermits the landownerwhose right to use (The TahoeRegional Planning Agency)maintains and develop his property has been restricted or that Penn Central supports the conclusion that extinguished27 to extract moneyfrom others. TDRsare relevant to the question whetherthere has been a taking. In PennCentral we remarked Therest of the Courtdid not decide this question but did that because the rights to developthe airspace side squarely with the property ownerin holding that she above Grand Central Terminal had been made need not attemptto sell or value the TDRsto have a final transferable to other parcels in the vicinity (some decision8 on how her land may be used? of which the ownersof the terminal themselves owned),it was"not literally accurate to say that TheNew Jersey SupremeCourt, in deciding a challenge (the owners)have been denied all use of (their) pre- to restrictions on developmentin that state’s pinelands, existing air rights;" and that evenif the TDRswere apparentlyweighed transferable rights or credits as a factor inadequateto constitute "just compensation"if a in finding that there wasno taking.29 Asin the PennCentral taking had occurred, they could nonetheless "be case, however,the ownercould also continue an existing, taken into accountin considering the impact of admittedlybeneficial, use of its property. Whetherdensity regulation." Id., at 137, 98 S. Ct., at 2666 credits wereconsidered as evidencethat there wasnot a (emphasisfrom original). This analysis can taking is also not clear in Aptos SeascapeCorp v County distinguished from the case before us on the of SantaCruz.3° The California Court of Appealsreversed ground that it was applied to landowners who a takings awardof $3,000,000,where the lower court had owned at least eight nearby parcels, some not consideredthe value of contiguousland ownedby the immediatelyadjacent to the terminal, that could plaintiff, and remandedthe case with specific directions be benefited by the TDRs.See ld., at 115, 98 S. for the awardof "density credits" on that uplandto offset Ct., at 2654. Therelevant land, it couldbe said, the31 loss of use on the remainder. wasthe aggregationof the owners’parcels subject to the regulation(or at least the contiguousparcels); Onlyone case has found a taking in the application and the use of that land, as a whole,had not been of a TDRprogram, Corrigan v City of Scottsdale,32 and diminished...If Penn Central’s one-paragraph the decisionis notablein tworespects. First, thecourt found expedition into the realm of TDRswere not a taking in the prohibition of all developmenton only a distinguishablein this fashion,it woulddeserve to portionof theplaintiff’s property;that fact is likely to limit be overruled. Consideringin the takings calculus the decisionto its facts.~ Second,the transferof density the marketvalueof TDRsis contrary to the import credits did not constitute just compensationunder the of a wholeseries of cases, beforeand since, which Arizonaconstitution, becausecompensation must be made makeclear that the relevant issue is the extent to by4 paymentof money? which use or developmentof the land has been restricted. Indeed, it is contrary to the whole Only one case has been found overturning TDRson principlethat land-useregulation, if severeenough, substantive due process groundsand there under fairly can constitute a taking, which must be fully extremecircumstances. Fred F. FrenchIn vesting Co v City compensated. of NewYork, 39 NYS2d 587; 350 NE2d 381 (1976). block an unpopularhigh-rise developmentproject, the city Justice Scalia, joined by Justices O’Connorand Thomas, createda special park district, rezonedthe project sites to plainly state the case that TDRsare not the sameas real the newdistrict, andgranted the propertyowners transferable Winter 2004 - Page 204 MICHIGANREAL PROPERTYREVIEW
developmentor air rights usable elsewhere.Apart from the arrangement..,is that it fails to assurepreservation inventionof the newdistrict and transferable rights for a of the very real economicvalue of the development single project, the city action also limited the use of the rights as they existed whenstill attached to the project3s site to a public park. underlying property .... 350 NE2dat 387,388.
In overturningthis TDRscheme aimed at one property, The views stated in Fred F. French echo similar the NewYork Court of Appeals analyzed the appeal in expressions in older Michiganzoning case, no longer as terms like those used by Justice Scalia in Suitum, using commonin more recent cases. traditional termsfor rights in real property: Thecontrary view wasstated by the Court of Appeals Theultimate evil of a deprivationof property, or for the Ninth Circuit in Barancikv Countyof Marin~6 in better, a frustration of propertyrights, underthe upholdinga TDRprogram limiting residential density to guise of an exerciseof the police poweris that it preserveopen, agricultural land: forces the ownerto assumethe cost of providing a benefit to the public withoutrecoupment. There Baranciksuggests that at least by analogy the is no attempt to share the cost of the benefit dictumof the SupremeCourt inNollan v ~_.alifomia amongthose benefited, that is, society at large. Coastal Comrn,483 U.S. 825:107 S. Ct. 3141 Instead, the accident of ownership determines at 3148, 97 L.Ed.2d677 (1987) has application. whoshall bear the cost initially .... IT]hepublic is TheCourt pointed out that while California could nGtlikely to haveany objectionto the "cost-free" prohibit shouting"FIRE" in a crowdedtheater, it benefit. could not makesuch a prohibition and then give dispensationsto shoutto those willingto contribute In this case, the zoningamendment is unreasonable $100to the state treasury. Why,is it asked,is the and, therefore, unconstitutional because,without county’s schemefor Transfer DevelopmentRights due processof law, it deprivesthe ownerof all of different? Youcan get your developmentif you his property rights, except the bare title and a are willingto pay a price for it. Theanswer is that dubious future reversion full use. 350 NE2dat youare not being givena dispensationfrom zoning 387. by paymentof a fee to the state. Youare being permittedto accumulatedevelopment rights in the Asto the offsettingvalue of the transferabledevelopment samearea by a price paid to the ownerof the rights, the court noted: rights.
There was thus created floating development In other words, a finite amountof development rights, utterly unusableuntil they couldbe attached is permitted in the area. The county is rightly to someaccommodating real property, available indifferent as to whodoes the development.It lets by happenstanceof prior ownership,or by grant, the marketdecide the price. A purchaseof Transfer purchase,or devise, and subject to the contingent DevelopmentRights does not increase the total approvals of administrative agencies. In such amount of development possible in the rural case, the development rights, disembodied corridor. The regulation permitting the abstractions of man’singenuity, float in a limbo accumulationof transfer rights is rationally related until restoredto reality by reattachmentto tangible to the overall purposeof preservingagriculture in real property. Put another way,it is a tolerable the area. abstraction to consider developmentrights apart from the solid land from which as a matter of In sum, the apparent balance created by a TDR zoninglaw they derive. Butsevered, the development programhas a striking allure. Its acceptance depends, rights are a double abstraction, until they are however,on a willingness to accept a dramatically more actually attached to a receiving parcel, yet to be restrictive regulatoryregime. Those restrictions then force identified, acquired,and subject to the contingent ownersto buy and sell the remainingcollective development future approvalsof administrativeagencies, events "rights." whichmay never happenbecause of the exigencies of the marketand the contingenciesand exigencies of administrativeaction .... Theproblems with this MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 205
The Future of TDRsin Michigan government’sside of the table; it still mustapprove more intensive development. Can the PUDmodel drive widespread TDRprograms in Michigan?First, it mustbe said that PUDsas a means TDRprograms are an attempt to impose greater, for any development present problems. Second, can community-widerestrictions. Like conventional zoning, noncontiguous PUDsmake a TDRprogram? however,there maybe an objection to the designation of particular propertyfor greater developmentor preservation. On their face, PUDsseem an attractive modelfor Further, the so-called marketfor transferring development development:On paper, they have an apparent certainty. rights appearsentirely artificial. If youpreserve an acre of If 100 acres is zonedto permit 100 houses, the property farmland,how does that translate to increased density on ownerdevelops 100 houses clustered on half the land and other property, and what wouldyou pay for the increased leaves the rest as openspace. In practice, however,in most density and whatwould you sell it for to give up future communities,PUDs are an opennegotiation driven o’n the developmentpotential? one side by what the developer believes is economically feasible and on the other side by what the community Thenoncontiguous PUD does not directly answerthese believesis politically palatable.As a practical matter, they questions. It mayeven open new possibilities for creative require the developer to have the financing, patience, land use and preservation. It shouldnot be taken by local political savvy, and creativity to withstandthe process. governmentsas an invitation fromthe legislature to adopt Thosefactors also makePUDs a difficult target for taking full-blownTDR programs with no additional authorization. claims. Endnotes Of course, those issues maybe the easy ones. As discussedat the outset, and by the case, whatdrives a TDR See, e.g., "Maintainingthe Equilibriumof Fairness by programis the restriction of development,at least in the Transferring DevelopmentRights," Gerald A. Fisher, sendingzone. Otherwise,there is no incentive to sell, or 21 Planning and Zoning NewsNo. 5, at 6, 7 (March to buy, the extra density or developmentrights. 2003).
The 2003 amendmentsto the zoning enabling acts do Despite the intensity of debate, TDRprograms, in not authorize sendingand receiving zones, transferable generalapplication, are still limited andhave generated credits or rights, and expresslyrequire that the landowner limitedlitigation. Forthe mostpart, the courtchallenges request the noncontiguousPUD. If a local government have arisen fromthe specialized application in which wants to create a full-scale TDRprogram, it mustfirst they werefirst used: preservationof historic landmarks address the lack of authority for these elementsunder the and particularly sensitive environmentalareas. zoning enabling acts. o Suitum v Tahoe Regional Planning Agency, 520 US A local governmentmight simply restrict development 725, 731; 117 S Ct 1659, 1663; 137 L Ed 2d 980 in an area to create the effect of a "sending"zone. The (1997). ownercould purchase other property in another zone and developit moredensely or find a willing developerto use 4. Barancik v County of Matin, 872 F2d 834, 835 (CA his property as the open space portion of a PUD.That 9, 1989). potential, however,does not changethe argumentthat the restrictions on the use of propertymust be reasonable.For 5. PennCentral Transportation Co v City of NewYork, the ownerof the propertyin the restricted, sendingzone, 438 US104 (1978). the ability to moun~a substantive due process or taking challengeto the ordinanceappears little different than Quotedin "DevelopmentRights Marketor Transfer of under conventional zoning. Developments-They’reStill An’Other People’s Money’ Scheme,"Michigan Assn of HomeBuilders, Citizens Wheredevelopment is imminent, local governments ReviewOnline, S.ept 17, 2003. mayoffer PUDsas an alternative to zoning for more intensive uses. Thepossibility of noncontiguousPUDs may 7. See, e.g., Rohan, Zoning and Land Use Controls, § offer an additional option for the propertyowner. It does 14.03. not appear to changethe basic equation from the local Winter 2004 - Page 206 MICHIGANREAL PROPERTYREVIEW
8. Rohan, Zoning and Land Use Controls, 8 14.0313]; 15. MCL125.271(I) (townships); MCL125.583(2) (cities see, Penn Central Transportation Co v City of New and villages), and MCL125.201(I) (counties). York, 438 US 104 (1978). 16. MCL125.286(b), 125.286 (townships); 1980 PA197; MCL324.2140, et seq. Federal tax law 125.584(b),125.584(c) (cities and villages); and encouragesthe donation of conservationeasements to 125.216(b), 125.216(c)(counties). organizations like the Nature Conservancy.26 USC8 170(h). 17. 2003 PA 227, 228, 229.
10. 2000 PA262, MCL324.36201, et seq. Although it 18. MCL125.286(c)(3) (townships); MCL125.216(c)(3) is likely that local governmentsalready had authority (counties); and MCL125.584(b)(3) (cities andvillages). to purchaseconservation easements to preserve open space, enabling leglislation waspassed in 1996(MCL 19. "Newlaws maketransfer of development rights a 125.301, et seq., townships; MCL125.231, et seq., possibility," Capitol Currents, MichiganTownships counties; MCL125.593, et seq., cities and villages), Association (February 2004) at 3; HollandSentinel, limited, however,to agricultural land as definedin the January 14, 2004 ("’I think that’s our TDRs,’said statute. Richard Edmonds,zoning administrator of Olive Township[out of county]. ’Nowall we have to do is 11. Asthere are three Michiganzoning enabling acts, one workwith the farmers.’" eachfor townships,cities and villages, and counties, eachchange to zoning enablingis donein triplicate. 20. Penning v Owens, 340 Michigan 355, 367; 65 NW2d In this case, HB4181 and HB4182 propose pilot 831 (1954). programsfor townshipsand for cities and villages. 21. An exampleis West MontgomeryCry Citizens Ass’n 12. HouseBills 4181 and 4182 of 2003. v Maryland-Nat’lCapital Park and Planning Comm, 309 Md183; 522 A2d 1328 (1987), holding that 13. Tenstates have detailed enabling statutes for TDRs: TDRprogram could not be implemented through a Arizona- Ariz. Rev. Stat. Ann. 89-462.01(a)(12) master plan instead of by changes to the zoning (2004) (municipal TDRs);and 8 11-806(county ordinance. as amendedin 2004) Connecticut - Conn. Gen. Stat. Ann. 88 8-2e, 8-2f 22. See, e.g., PennsylvaniaCoal Co v Mahon,260 US393, (2004) 43 S Ct 158, 67 L Ed 322 (1922). Georgia - Ga. Code Ann. 8 36-66A-2 (2004) Illinois - 55 Ill. Comp.Star. 8 5/5-30004(12){2004); 23. Suitum, supra, 529 US725, 747,748; 117 S Ct 1659, and 65 Ill. Comp.Star. 8 5/11-48.2-1A(3)-{4)(2004) 1671. Kentucky-Ken. Rev. Stat. 8 100.208 (Banks-Baldwin 2004) 24. Suitum, supra, 529 US725,747, 748; 117 S Ct 1659, NewJersey - N.J. Star. Ann.§ 4:1C-49(West 2004), 1671, 1672. et seq. NewYork- N.Y. GeneralCity Law§ 20-f (McKinney 438 US104 (1978). 2004) North Carolina- N.C. GemStat. § 160A-381(a) 520 US725, 748, 749; 117 S Ct 1659, 1672; 137 (2004) L Ed 2d 980 (1997). Pennsylvania- 53 Pa. Cons.Stat. Ann. 88 10105, 11105(b)(2004) 27. Suitum v Tahoe Regional Planning Agency, 520 US Tennessee-Tenn. CodeAnn. 8§ 13-7-101, 13-7-201 725, 747; 117 S Ct 1659, 1671; 137 LEd 2d 980 (2004). (1997).
14. See, e.g., "M~,~taining the Equilibriumof Fairness by 28. 529 USat 739, 117 S Ct at 1667. The property owner Transferring DevelopmentRights," Gerald A. Fisher, in Suitumowned a residential lot on whichdevelopment 21 Planning and Zoning NewsNo. 5, at 6, 7 (March wasprohibited by regulations intended to protect Lake 2003). Tahoe. Thetrial and appellate courts found that her claim wasnot ripe for adjudication because she had MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 207
not attempted to sell the TDRsthat the regulation credited. TheSupreme Court reversed, going no further than finding that ripeness did not require that she do anythingmore than establish that there wasno permitted use for her property. Theconcurring opinion suggested the further conclusionthat the value, if any, of the TDRsmay not weigh in the determination of whether the regulation effected a taking of her property.
29. Gardnerv .NewJersey Pinelands Comm,125 NJ 193; 593 A2d 251 (1991).
30. 138 Cal. App. 3d 484; 188 Cal. Rptr. 191 (2982) (appeal dismissed).
31. 188 Cal. Rptr. at 200.
32. 149 Ariz 553; 720 P2d 528 (1985).
33. See, e.g., Aptos SeascapeCorp, supra.
34. Id., 720 P2dat 565.
35. Id., 350 NE2dat 384.
36. 872 F2d 834, 834 (CA9, 1989). Accord, Carpenter v TahoeRegional PlanningAgency, 804 FSupp1316, 1329 (D Nev1992); Gardnerv .NewJersey Pinelands Comm,125 NJ 193; 593 A2d 251 (1991). Winter 2004 - Page 208 MICHIGANREAL PROPERTYREVIEW
SEVERED MINERALS: RESTRICTIVE COVENANTS AS RESTRICTIONS ON SURFACE USE BY THE MINERAL OWNER
by Susan Hlywa Topp*
1. INTRODUCTION Theprinciples outlined abovemake it clear that the Theprolific developmentof gas and oil in northern ownerof the mineral estate has the implied right to use Michiganhas caused muchhardship to property owners the surface of the property to develop the minerals. However,this right is not unfettered. Thecourts haveheld and spawnedlitigation over surface rights. Whenthe that the severedmineral owner’s use of the surface estate mineral estate is severed from the surface estate, the must be reasonable, and must "accommodate"the surface developmentof the mineralestate creates conflict between 7 the surface estate ownerand developerof the minerals. ow~er. This article addressesthe impactof restrictive covenants The implied right of access or implied easementfor upon the mineral owner’sright to use the surface estate the severed mineral owner’suse of the surface estate is in the developmentof the minerals. Thecases of Janice dominantover the servient surface estate. This is true Terrien, ThomasHagan and Janet Thomasv Laurel Zwit, even whenthe property is subdividedinto lots subsequent et al., 467 Mich56, 59; 648 NW2d602 (2002), and The to the severance of the mineral estate. The California MableCleary Trust v The EdwardMarlah Muzyl Trust, Court of Appealsrendered such a decision in F. Glade 262 Mich.App. 485, -- N.W.2d --, 2004 WL1366029 Wallet al v Shell Oil Compaayet al.8 Thatcourt held that (Mich.App.Jun 17, 2004) (No. 244744),are discussed the mineral interest ownersmay exercise their rights in detail as part of this analysis. This article will not address developmentof the minerals "unaffected and unlimited the issue of damages, which this author has already by divisions of surface ownershipwithin" their leasehold addressedin a previousarticle.1 estates.9 In that case, the mineralshad been severedfrom the surface in 1864. Subsequentto that time, the surface il. THE DOMINANTMINERAL ESTATE estate was subdivided and conveyed to others. The There are numerousprinciples pertaining to severed subsequent purchasers acquired the property with mineralinterests that are settled law in Michiganand are knowledgeof the severedminerals. Theissue for the trial incorporatedinto the analysisin this article: 1) oil andgas court waswhether the rights of the mineralinterest owner mineralinterests are part of the realty until suchtime as could be restricted as a result of the subdivision of the they are severed therefrom;z 2) the ownership of the property and conveyanceof the smaller parcels to others. mineralinterests can be severed fromthe ownershipof the Thecourt held that: surface estate;3 3) the severanceof mineralinterests from the remainder of the land may be effectuated by a Eachsubsequent purchaser of a subdivisionthereof, reservation or exception in the deed of conveyance;4 4) taking with notice of the prior sale and reservation uponthe severanceof title to the mineralinterest fromthe of rights, takes knowingthat his surface ownership remainingland, the mineral estate and the surface estate maybe burdenedin part, and, in very rare cases each becomefreehold estates in fee simple and are perhaps,in its totality, by the reasonableexercise subject to laws of descent, devise, and conveyance;~ and of the rights of the ownerof the oil and mineral 5) the ownerof the severedmineral interests maylease the estate; and this without regard to whetheror not interests. Underan oil and gas lease, the lessee acquires the oil or mineral underlies the particular subdivision,or whetherthe facilities locatedthereon the right to use and occupythat portion of the surface of ° the land that is reasonablyneeded for the explorationof serve facilities located withoutthe subdivision? oil° and gas.
* SusanHlywa Topp is the principal of ToppLaw PLC in Gaylord, Michiganand focuses her practice on environmental, natural resource, real estate developmentand gas/oil matters. She is a 1978cure laude graduate of WayneUniversity LawSchool. Before going into the practice of law, she was employedfor 12 years as an EnvironmentalConservation Officer with the MichiganDepartment of Natural Resources. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 209
Thecourt further held that the mineralinterest owner Therecent MichiganSupreme Court decision in Jan ice could use any part of the surface estate in connectionwith Terrien, ThomasHagan and Janet Thomasv Laurel Zwit, the placement of facilities required to exercise his et al., further emphasizesthe prohibition of commercial development rights and that subsequent subdivisions uses~ withinsubdivisions restricted to residential purposes. created on the surface could"no wiserestrict his placement In the Terriencase, the court held that a covenantbarring of suchfacilities to serviceoil operationsrelating to that any commercialor business enterprise is broaderin scope portion of his oil and mineral estate underlying each than a covenant permitting only residential uses. The individualsubdivision." 11 court further found that such covenants do not violate Michiganpublic policy and are enforceable.22 Not only did The F. Glade Wall case involved land that was the defendants in the Terrien case covenant not to use subdividedafter the mineral estate had been severed from their property for non-residential uses, but they also the surface. But whathappens when there are restrictive covenanted not to use their property for commercial, covenants encumberingthe surface estate prior tO the industrial or businessuses. Therestriction on commercial severanceof the mineralestate? This situation creates two or businessuses proscribesactivities that, althoughperhaps competingeasements encumbering the surface estate: the residential in nature, are commercial,industrial or business implied easementfor the benefit of the mineral ownerand in2~ nature as well. the restrictive easementfor the benefit of the property owners.In this scenario, is the severed mineral owner’s "Commercial"is commonlydefined as "able or likely right to use the surface estate subject to the restrictive to yield a profit." "Commercialuse" is defined in legal covenants? parlance as "use in connectionwith or for furtherance of a profit-makingenterprise." "Commercialactivity" is defined II!. THE LAWOF RESTRICTIVE COVENANTS in legal parlanceas "anytype of businessor activity which is carried on for a profit." "Business"is commonlydefined To analyze this issue, we mustreview real property as a "person engagedin a service" and in legal parlance law on restrictive covenants. TheMichigan Supreme Court as "an activity or enterprise for gain, benefit, advantage has held that restrictive covenantsconstitute a right in or livelihood."~4 Therefore,in its broadsense, commercial every lot ownerin the nature of a negative easementon activity includes any type of businessor activity that is everyother lot in the development.12Arestrictive covenant carried~ on for a profit? is an interest in real propertyin the natureof an easement 13 that runs with the land. It is an easementpassing its The Terrien court found that the operation of a benefits and its obligationsto all purchasersof the land, family day care homewas a commercial use and such 14 subject to its affirmative or negative mandates. A operations subtracted fromthe general plan of a private, restrictive covenantis a reciprocal negativeeasement that noncommercialresort area that wasoriginally intended.26 is a retained incorporealright in the land conveyedby the The restrictive covenants were a strong and emphatic grantor, whichlessens that "bundle of rights" normally statementof the restriction’s intent to prohibit any type of attached to land conveyedto a grantee.15 The extent to commercialor businessuse of the properties.~7The Terrien .whichan easementburdens the servient estate is determined court emphasizedthat "[t]his all comesdown to the well- 16 by the wordsthe parties use to create the easement. understood proposition that a breach of a covenant, no Restrictive covenantsare to be strictly construedagainst matter how minor and no matter how de minimus the 17 those creating them. damages, can be the subject of enforcement. As this Court said in Oosterhousev Brummel,343 Mich283, 72 In particular, the courts have strictly construed N.W.2d6 (1955), ’If the constructionof the instrument restrictive covenantsthat limit the use of the propertyto clear and the breach clear, then it is not a question of residential purposes. The MichiganSupreme Court has damage,but the mere circumstanceof the breach of the emphasizedthat the enforcementof restrictive covenants covenantaffords sufficient groundfor the Courtto interfere by persons whopurchase property in a subdivision where by"28 injunction. the use of the propertyis limited to residential purposesis 18 a valuable property right. Restrictions limiting use to The Terrien court also found that enforcement of residential purposesprohibit non-residential use of the covenantsprohibiting commercialactivity doesnot violate 19 land subject to them. Even interval ownership of public policy. Even though the activity sought to be condominiumshas beenfound to violate restrictions limiting restricted, (the operation of the family day care home) 2° propertyuse to residential purposes. was permitted by law that did not meanthat private covenants barring business activities were contrary to Winter 2004 - Page 210 MICHIGAN REAL PROPERTY REVIEW
public policy. 29 The failure to recognize this distinction Therefore,it is not surprising that courts in jurisdictions would accord the judiciary the power to examine the outside of Michigan have held that when restrictive wisdomof private contracts in order to enforce only those covenants are recorded on the property prior to the contracts it deemedprudent. The court stated: "[l]t is not severance of the mineral estate, the mineral estate is ’the function of the courts to strike downprivate property burdened by the restrictive covenants.36 Courts outside of agreements and to readjust those property rights in Michiganhave also found that restrictions limiting uses to accordance with what seems reasonable upon a detached residential purposes prohibit the use of such property for judicial view.’ Oosterhouse, supra at 289-290, 72 N.W. the drilling of oil and gas wells and the property is not 2d 6. Rather, absent somespecific basis for finding them subject to the ordinary right of an oil and gas lease to the unlawful, courts cannot disregard private contracts and extent37 of drilling an oil and gas well thereon. covenants"3° in order to advance a particular social good. "As we said in Oosterhouse, supra at 288, 72 N.W. 2d 6, In Property Ownersof Leisure Land, the court held ’[w]e do not substitute our judgment for that of the that the mineral owner could not be limited by restrictive parties, particularly where,as in the instant case, restrictive covenants that were imposed by the surface owners after covenants are the means adopted by them to secure unto the minerals were severed.38 The court stated "since the themselves the development of a uniform and desirable restrictive covenants were imposedsubsequent to the residential’’’31 area. severanceof the minerals in and under the subdivision, they do not determinethe scope of the implied surface The court further found that there was a strong easementsthat are incidental to the ownership of the competing public policy that is well grounded in the minerals.’’39 commonlaw of Michigan supporting the right of property owners to create and enforce covenants affecting their In a case of first impression in Michigan,the Michigan property.32 A covenant running with the land is a contract Court of Appeals recently held in The Mabel Clearg Trust 4° created with the intention of enhancing the value of the v The Edward Marlah Muzgl Trust that restrictive property and, as such, is a valuable property right. 33 The covenants determine the scope of implied surface easements general rule of contracts is that competent persons shall that are incidental to the ownership of minerals that were have the utmost liberty of contracting and that their not severed from the surface of the subdivision when the agreementsvoluntarily and fairly madeshall be held valid restrictive covenants were imposed. Mabel Cleary is the and34 will be enforced in the courts. flip side of Leisure Landas, unlike the plaintiff in Leisure Land, the plaintiff in Mabel Cleary enforced restrictive Thecourt foundthat restrictions for residential purposes, covenants that were imposed prior to the severance of the if clearly established by proper instruments, are favored by minerals. definite public policy. The court stated: "They expressly prohibit non-residential uses, as well as commercial, In Mabel Cleary, the defendant developers purchased industrial or business uses. Clearly, the intention is to limit property now known as Sturgeon River Estates from the use of the property in order to maintain a residential Otsego Ski Club ("Otsego’) in 1996. Whenselling the neighborhood of a specific character. This Court has not property to the defendant developers, Otsego retained an hesitated in proper cases to restrain by injunction the undivided 50 percent of the minerals and conveyed the invasion of these valuable property rights. It is the function other 50 percent of the minerals to the defendantdevelopers. of the Courts to protect such rights through the enforcement The defendant developers developed the property into the of covenants."35 Sturgeon River Estates Subdivision and designed and recorded restrictive covenants applicable to all property IV. APPLICATION OF RESTRICTIVE within SturgeonRiver Estates, except for Otsego’s undivided COVENANTS TO THE MINERAL ESTATE 50 percent mineral interest. 41 The restrictive covenants were recorded in 1997. As the defendant developers sold Becausethey are easements-interests in real property- the lots in the subdivision, they retained the mineral their first recordation gives restrictive covenants priority rights, thereby severing their 50 percent mineral interest over any other easements thereafter recorded or created. from the surface estate when each lot was conveyed to The property ri.o~*o and reciprocal negative easements the purchaser. contained in resh,~ e covenants apply to and govern the estate existing at the time of their recording. The plaintiff purchased three lots in Sturgeon River Estates from the defendant developers. The plaintiff purchased the property in reliance upon the restrictive MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 211
covenants that prohibited all commercialactivity and includingaccess, ingress and egress sufficient in restricted the use of the propertyto residential purposes size43 to meetdevelopers’ needs. only. After the last lot in the subdivisionwas sold, the defendantdevelopers leased their mineralinterest to Paxton The trial court held that the developmentof the Resourcesfor the exploration and developmentof Antrim minerals within the subdivision was not a "commercial activity" andwas not precludedby anythingin the restrictive gas within the subdivision. Whendevelopment of the 44 mineralsthrough the drilling of Antrimgas wells, laying of covenants. Additionally, the trial court held that the pipelines, and construction of access roads within the easementretained by the developers on the east side of subdivision wasinitiated, litigation ensuedagainst the the propertyspecifically allowedthe drilling of an Antrim defendant developers and Paxton Resources. gas well. Thetrial court granted summarydisposition in favor of defendants.4~ The plaintiff claimed fraudulent misrepresentation, breach of contract, misrepresentation or fraud by real The plaintiff appealed and the MichiganCourt of estate broker, conspiracy, negligent misrepresentation, Appealsaffirmed in part and reversed in part. Thecourt trespass, nuisance,and breachof warrantyof title against held that it is clear that the developer’s50 percentmineral the defendantsand also sought injunctive and declaratory interest is burdenedby the restrictive covenants,as the relief° Theplaintiff claimed,among other things, that the covenants were in place before the developers severed developmentof the mineralestate violated the restrictive their mineralinterest fromthe surfaceestates.4~ Therefore, covenants. Specifically, the plaintiff claimed that the those restrictive covenants determine the scope of the developer’smineral estate is subject to the restrictive surface use that can be undertakenby developers in the covenants, as the restrictive covenants were recorded developmentof their undivided50 percentmineral interest. uponthe propertyprior to the severanceof the developer’s Despitethis finding, the court then questionablyheld mineralinterest; the drilling of an Antrimgas well within that: 1) the developmentof gas well heads in general is the subdivision wasa commercialactivity that violated not prohibited by the restrictive covenants because the the prohibitionagainst commercial activity in the restrictive prohibition against commercial activity within the covenants; the easement retained by the developers on subdivision wouldprohibit gas exploration if a resident the east borderof the sites did not specifically providefor undertooksuch an operation. Since the developers,through an Antrimgas well; and even if the easementprovided for its lessee Paxton,would be the entity chargedwith operating an Antrim gas well, the gas well in question was not the commercialenterprise (and not the residents) this located on the east border of the sites because it was provision of the restrictive covenantswould not prevent drilled 186 feet west of the east border of the property. developersfrom developing their mineralinterest; and 2) the covenantsclearly provide for mineral developmentin Twomain provisions of the restrictive covenantsare 47 the focus of the MabelCleary case. The first provision the formof gas wells. pertains to the limitation for residential purposes: Althoughthis author disagrees with portions of the All sites shall be usedfor single familyresidential MabelCleary opinionas noted above, the case is still an purposesonly. All structures are to be styled in importantdecision for Michiganreal property and oil and keeping with the plans for development. Care gas law. TheMabel Cleary opinion clearly provides that mustbe exercised to maintainthe natural beauty the developmentof the mineralestate is subjectto restrictive of the site. No commercialenterprise shall be covenantsthat are recordedon the property prior to the conductedthereon. Said premises maybe leased severanceof the mineral interest (i.e., while the mineral or rented in wholeor in part fromtime to time for estate is still part of the surfaceestate) andtherefore must residential42 purposesonly. be in conformancewith those restrictive covenants. The subordination of the mineral rights to the restrictive The second provision at issue is an easement for covenantsis crucial in protecting the rights of those who mineral developmentthat wasretained by the developers purchase property in reliance upon those covenants. on the east side of the property. That provision reads in pertinent part: Endnotes 1. See Susan Hlywa Topp, Severed Minerals: Are Surface Aneasement, sufficient in size, for a well head Owners Entitled to Damages for Diminution of Their private gas line, and or oil well shall be reserved Property Value? 78 Mich. B.J. 148 (1999). by the developeron the east border of the sites Winter 2004 - Page 212 MICHIGAN REAL PROPERTY REVIEW
2. Jaenicke v Davidson, 290 Mich 298; 287 NW472 23. M. at 62-63. (1939); Eadus v Hunter, 268 Mich233; 256 N.W.323 (1934). 24. Terrien at 64, citing RandomHouse Webster’s College Dictionary and Black’s LawDictionary. 3. VanSlooten v Larsen, 410 Mich 21; 299 NW2d704 (1980), app dis Craig v Bickle, 455 U.S. 901; 102 Sct 25. Terrien, supra at 64. 1242; 71 L.Ed.2d 440 (1982); Southwestern Oil Co v 26. Id. Wolverine Gas and Oil Inc, 181 MichApp 589 (1989}. 27. Id. 4. Rathbun v State, 284 Mich 521; 280 NW35 (1938); Stevens Mineral Co v State, 164 Mich App692; 418 28. Id. at 65. NW2d130 (1987). 29. Id. at 69. 5. /d. 30. Id. at 69-70, citing Oosterhousev Brummel,343 Mich 6. VanAlstine v Swanson, 164 Mich App 396; 417 N.W. 283, 72 NW2d6 (1955). 2d 516 (1987). 31. Terrien, supra at 70. 7. See generally Williams & Meyers. Oil and Gas Law (2000); see also Christopher M. Alspach, Surface Use 32. Id. at 70-71. by the Mineral Owner: HowMuch Accommodationis Id. at 71, citing City of Livoniav Dep’tof Social Services, Required Under Current Oil and Gas Law?55 Okla. L, 33. Rev. 89 (2001) for a summaryof such case law. 423 Mich 466, 378 NW2d402 (1985). F. GladeWall et al v Shell Oil Companyet al, 209 Cal 34. Terrien, supra at 71, citing TwinCity Pipe Line Co. v 8. Harding Glass Co., 283 U.S. 353, 356, 51 S.Ct. 476 App2d 504; 25 Cal Reporter 908 (1962, hearing denied January 8, 1963). (1931). 35. Terrien, supra at 72. 9. Id at 516. Reed v Williamson, 87 NW2d18 (Neb. 1957); Property 10. Id at 913. 36. Ownersof Leisure Land,Inc. et al v Woolf& Mcgee,Inc, 11. Id at 514. 786 SW2d757 (Tex. Ct. App. 1990). 12. Cooper v Kovan, 349 Mich 520, 84 NW2d859 (1957). 37. Reed v Williamson, supra quoting Southwest Petroleum Co. v Logan, 180 Okla. 477, 71 P2d 759, 760 (1937), 13. Austin v Van Horn, 245 Mich344, 222 NW721 (1929). also citin9 Arlt. v King, 328 Mich. 645, 44 NW2d195 14. Webb v Smith, 204 Mich App 564, 516 NW2d124 (1950); Redfern LawnsCivic Assoc v Currie Pontiac (1994), appeal after remand on other grounds, 234 Co., 328 Mich463, 44 NW2d8 (1950); WestBIoomfield Mich App 203, 568 NW2d378 (1997). Co. v Haddock, 326 Mich 601, 40 NW2d738 (1950). 38. Leisure Land, supra at 759 (emphasis added). 15. Central Advertising Companyv MicMganState Highway Commission, 12 Mich App 314, 162 NW2d834 (1968), 39. M. Aff’d 388 Mich 1, 172 NW2d432 (1969). 40. The Mabel Cleary Trust v Tl~e EdwardMarlah Muzyl 16. Unverzagtv Miller, 306 Mich260, 10 NW2d849 (1943). Trust, 262 Mich.App. 485, - N.W.2d -, 2004 WL 1366029 (Mich.App. Jun 17, 2004) (NO. 244744). 17. Kaplan v City of Huntington Woods,357 Mich612, 99 NW2d514 (1959). 41. The court found that the restrictive covenants do not encumberOtsego’s 50%minerals interests because the 18. Role v Robinson, 415 Mich345, 329 NW2d704 (1982); restrictive covenants were recorded after Otsego’s Cooper v Koven, 349 Mich 520, 84 NW2d859 (1957). minerals had been severed from the surface estate. M. 19. Bassett Bldg. Co. v JehovahEvangelical Church, 371 42. Sturgeon River Estates Covenants, Conditions and Mich 459, 124 NW2d236 (1963). Restrictions, recorded at Liber 0659, Page 738, Ostego 20. Joseph O’Conner et al and Shanty Creek Lodge CountyRecords, State of Michigan. Association, Inc. v Resort CustomBuilders, Inc, et al, 43. M. 459 Mich 335, 591 NW2d216 (1999). 21. Janice Terrien, ThomasHagan and Janet ~’homas v 44. The MabelCleary Living Trust, by Cleland d. Leask, SuccessorTrustee v Daled. Smith Broker,Inc, a Michigan Laurel Zwit, et al., 467 Mich56, 648 NW2d602 (2002). corporation, William d. Muzyl, The Joint Revocable 22. Id. at 59. Living Trust of Edwardand Marlah Muzyl, by William MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 213
Muzyl, Successor Trustee, Paxton Resources, LLC, a Michigan limited liability company, and Thomasand Susan Tomkow,Otsego Circuit Court, Case No: 01- 9470-CZ(D) (October 16, 2002). 45. Id. Thetrial court also held that non-partyOtsego, which had also leased their 50%mineral interest to Paxton Resources, could develop their half of the minerals irrespective of the restrictive covenants. 46. Supra note 40. 47. Id. The plaintiff has filed an application for appeal, which is pending, to the Michigan SupremeCourt on these issues. ~ Winter 2004 - Page 214 MICHIGANREAL PROPERTYREVIEW
A PROGRESS REPORT ON THE PROMULGATION OF RULES FOR "ALL APPROPRIATE INQUIRY" UNDER CERCLA
by R. Craig Hupp*
Congress, in 2002, required the USEnvironmental of the evidence that the release and resulting damages Protection Agency(USEPA) to promulgate regulations "werecaused solely by an act or omissionof a third party defining howprospective purchasers of property should other than ... one whoseacts or omission occurs in perform "all appropriate inquiry" into potential connection with a contractual relationship with the contaminationon real property. After a negotiated rule- defendant."6 Typicallypreexisting contaminationis caused making process, a USEPA-appointed committee by a third party, so at first glanceit wouldappear that a recommendeda set of rules to USEPA.On August 26, newowner or operator shouldnot be liable for preexisting 2004, USEPApublished a Notice of Rulemakingin the contaminationcaused by another. But there is no protection FederalRegister based on the draft rules fromthe negotiated if this third party had a contractual relationship with the rule-making processI and initiated a public comment newowner or operator. CERCLAdefines deeds, leases period that closed Nobember30, 2004.2 The draft rules and other instrumentstransferring ownershipor possession are accompaniedby a lengthy preamble that should be as contractual relationships. 7 Because a newowner or regarded as required reading. The recommendedrules operator typically has a deed or lease from a prior owner include a numberof small but significant changesin the or operator, that contractual relationship brings the new current process, put additional burdenson the preparer of owneror operator back into the liability scheme.However, the environmental assessment, and establish the there is an exception to the definition of contractual professional qualifications for individuals whoperform relationship that excludesfrom that definition transactions assessments.However, it is not clear that the rules, if wherethe contaminatedproperty wasacquired or occupied adopted,will improveeither the accuracyor quality of the after the hazardoussubstance was disposed on the property assessmentprocess. and the newowner or occupant, at the time the owner/ operator acquired the property, "did not knowand had no 1. A Brief History of EnvironmentalDue Diligence reason to know"that a hazardous substance had been disposedof at the property.8 A newowner can only claim CERCLAas originally enacted provided for strict not to knowor have had no reason to knowif the new liability for ownersand operatorsof facilities for clean-up 3 ownerundertook "all appropriate inquiry" ("AAI")before costs incurred by federal and state governments.Current acquisition.9 Thenew owner who performs all appropriate ownersand operators wereliable even if the propertywas inquiry and discovers nothing to suggest hazardous contaminatedbefore the current owneror operator acquired substanceswere disposed of at the propertyis the elusive or occupied the property. To ameliorate the draconian innocent purchaser. effect of this liability, CERCLAwas amendedin 1986 by the Superfund Amendmentand Reauthorization Act of SARA,which amendedCERCLA to create the innocent 1986("SARA"). purchaserdefense, requires an inquiry that is "consistent with good commercialor customarypractice in an effort As amended by SARA, CERCLAhad several to minimizeliability," taking into account: exceptionsto its strict liability scheme,one of whichis knownas the "innocentpurchaser" or "innocentlandowner" defense. The term innocent purchaser is not used in "[A] ny specialized knowledgeor experienceon the CERCLAand the defense arises out of the interplay part of the defendant, the relationship of the betweenthe liability section, §107,4 and the definition of purchase price to the value of the property if "contractual relationship." § 101(35)(A).s Oneliability uncontaminated, commonlyknown or reasonably exceptionarises if a potentially liable person(either an ascertainable informationabout the property, the owneror an opt ,’) can establish by a preponderance obviousnessof the presenceor likely presenceof
*BodrnanLLP. This article also appears in the winter issue of the MichiganEnvironmental Law Journal, the online journal of the EnvironmentalLaw Section of the State Bar of Michigan. MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 215
contamination at the property, and the ability to specifically provide that a Phase II may be used to detect such contamination by appropriate eliminate RECsidentified by a Phase I. inspection.’u° 2. In 2002, Congress Stepped Into the Due This amendment to CERCLAspawned a major Diligence Debate environmental due diligence industry. The customary environmentaldue diligence practice that developedbecame There remained some concerns whether the ASTM knownas a Phase I Environmental Site Assessment and standard would be recognized by the regulators and the a rough standardization developed. Typically a Phase I courts as "all appropriate inquiry." That lead to the did not include environmental sampling. Instead, if the effort in the Brownfields Act to mandate a standard by Phase I study resulted in the conclusion that there had regulation to provide, at least in theory, more certainty been or might have been a release of hazardous substances, as to the level of environmental due diligence that would environmental sampling was recommended to verify be deemedto satisfy all appropriate inquiry. While only whether a release had occurred. That typically was done time will tell whether this legislative intent to provide under a separate scope of work that became knownas a more certainty than that provided by E 1527 will be Phase II Environmental Assessment. Although the scopes successful, the language is not without ambiguity and of work for Phase Is and Phase IIs converged on fairly thus is unlikely to provide absolute certainty as to the similar practices, there were concerns that there was not necessary scope of AAI. a clearly-defined and agreed-uponstandard that regulators and courts would recognize as meeting CERCLA’s In January 2002, Congress amended CERCLAwith requirements for "all appropriate inquiry." the Small Business Liability Relief and Brownfields Revitalization Act of 2001 (the "Brownfields Act").12 The As the result of this concern, the AmericanSociety purpose of Title II, Subtitle B, Brownfields Liability for Testing Materials developeda standard-setting process. Clarifications, of the BrownfieldsAct is to address liability That culminated in ASTM’s adoption of Standard E issues affecting potential owners and operators of 1527-97, "Standard Practice for Environmental Site contaminated property. The Brownfields Act attempts to Assessment: Phase I Environmental Assessment Process." bring some clarification to the level of due diligence That standard was updated in 2000 and reissued as E required of potential owners and operators attempting to 1527-00. The purpose of E 1527 is to determine whether qualify for the "innocent purchaser" exemptionto CERCLA’s a piece of property is affected by "Recognized strict liability scheme. The BrownfieldsAct requires that Environmental Conditions." A Recognized Environmental USEPAundertake rule makingto define the "all appropriate Condition ("REC") is defined as "the presence or likely inquiry" that a potential owner and operator must presence of any hazardous substances or petroleum products undertakeo la The Act adopted the current ASTMPhase on a property under conditions that indicate an existing I standard as an interim standard for AAIpending adoption release, a past release, or a material threat of a release of of14 a final rule. any hazardous substances or petroleum products .... -11If a property is subject to a RECas discovered and reported AAI is relevant not only to the innocent landowner by the environmental due diligence, then the prospective defense but is also relevant to new liability exemptions purchaser/occupant would have reason to know that a created by the Brownfields Act, knownas the contiguous release or threat of release might have occurred or exist on property exemptionand the bona fide prospective purchaser the property, disqualifying the prospective purchaser from exemption 15 respectively, and to brownfields site status as an innocent purchaser. The converse is also true; characterization16 and assessment grant programs. a "clean" Phase I would support an innocent purchaser defense even if pre-existing contamination were discovered 3. The New Liability Scheme For Prospective after acquisition. In somecases, a RECidentified in the Purchasers Phase I would be based on the possibility of a prior release - for example, soil staining that might be residue (a) Elements of AA! of the release of a hazardous substance. It has been The17 Act sets forth 10 elements for AAI. accepted practice that some RECscan be eliminated by further inquiry (i.e., by a Phase II), including, where (i) Preparation by an environmental appropriate, sampling that demonstrated that the condition professional; giving rise to the RECwas not in fact associated with a release or threat of release, although E 1527 does not Winter 2004 - Page 216 MICHIGAN REAL PROPERTY REVIEW
(ii) Interviews with past and present owners purchaser discovers, notwithstanding due diligence, that and occupiers of the property and in some the property has had a release, the innocent purchaser (as instances, neighbors; well as the contiguous owner and the bona fide prospective purchaser) must stop any continuing release, prevent any (iii) Review of historical information to threatened future release and prevent or limit exposure to determine previous uses and occupancies any previously-released hazardous substance. 2° This since the property was first developed; requirement is similar to the "due care" requirements under Part 201 of Michigan’s Natural Resources and (iv) Searches for recorded environmental liens; Environmental Protection Act.21 This aspect of AAI was discussed2z in the Michigan Environmental Law Journal, (v) Reviewof federal, state, tribal and local and will not be discussed further here except to note the records; following. The preamble to the proposed rules warns (vi) Visual inspection of the property and repeatedly that data gaps not appropriately addressed in adjacent properties; the AAI process can create a circumstance where a purchaser otherwise qualified as an innocent landowner (vii) Incorporation of specialized knowledgeor or a bona fide prospective purchaser can lose its exemption information by the property acquirer; from liability because it will not have enoughinformation to meet the statutory requirement that it take reasonable (viii) Relationship of the purchase price to the steps to stop on-goingreleases after acquiring the property. value of the property if uncontaminated; (c) The Process for Developing the AA! Rules Commonly known or reasonably and Status of the Rulemaking ascertainable information about the property; and In April 2003, USEPAgave notice in the Federal Registeff~ that its was establishing a Negotiated Rulemaking (x) Degree of obviousness of contamination Committee on All Appropriate Inquiry pursuant to § and the ability to detect contamination by 9(a)(2) of the Federal Advisory Committee ~4 The appropriate investigation. USEPAappointed a wide variety of stakeholders to the Committeeand charged with recommendinga set of rules The Act directs USEPAto effectuate these criteria by December, 2003. The Committee included byTM adopting implementing rules by January 2004. representatives from about 25 non-federal organizations, USEPAmissed this deadline and the final rule is still including associations representing the banking, real estate, months away. housing, environmental, and environmental consultant industries and representatives from a number of federal (b) Concepts Addedby the Brownfields Act to the Scope of Due Diligence agencies - for example, the Department of Housing and Urban Development. The first committee meeting was The Brownfields Act includes as criteria for AAI held25 on April 29 and 30, 2003. several inquiries/factors that go beyondthe ASTMstandard (which standard failed to incorporate these statutory At its sixth meeting on November12 to 14, 2003, the elements defined by SARA): Committee adopted a consensus draft of rules for AAI (the "ConsensusDraft"). The ConsensusDraft is envisioned IT]he specialized knowledgeor experience of the as a new regulatory section, 40 C.F.R. 312, "Standards prospective purchaser, the relationship of the For Conducting All Appropriate Inquiries." The USEPA purchase price to the value of the property if the reviewed the recommendations, wrote a preamble and property were not contaminated, commonlyknown initiated the rulemakingprocess. The proposed rule follows or reasonable ascertainable information about the Consensus Draft. It was expected that formal rule the property, the degree of obviousness of the making would begin in June 2004,26 but USEPAdid not presence or likely presence of contamination at publish the draft rule until late August, 2004. the property and the ability to detect the contamination19 by appropriate investigation. 4. Summaryof the Consensus Draft AAI Rule
The BrownfieldsAct also grafted a remedial requirement For properties purchased before May31, 1997, the onto the definition of due diligence. Once an innocent Brownfields Act provides that a court must consider the MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 217
defendant’s specialized knowledgeor experience, the professional, depending on the task) must gather all relationship of the purchase price to the value of the informationthat is publicly available, obtainablewithin a property if uncontaminated,commonly-known information reasonable time and cost and which can practicably be about the property, the obviousnessof the contamination, reviewed, and review and evaluate the thoroughnessand and the ability of the defendantto detect contamination reliability of the informationgathered, a~ Data gaps must by appropriate investigation.27 For properties purchased be identified, sources of informationconsulted to fill in after May31, 1997, the BrownfieldsAct adopted E-1527- the data gap mustalso be identified, and the environmental 97 as an interim standard until USEPApromulgates the professional must commenton the significance of the new AAIrules. 2~ USEPAthen adopted E-1527-00as an data gapP4 Samplingmay be conducted to address data interim AAI standard until the new AAI rule is gaps~ but is not required. promulgated.2° Theenvironmental professional mustprepare a written The procedures recommendedin the Consensu~Draft report, including 1) an opinion whetherthe inquiry has have muchin commonwith the ASTMstandard in terms identified a CIRon, at, in or to the subject property, 2) of general scope and record review. Those parts of the a discussion of any data gaps and whether they have ConsensusDraft will not be discussedin any detail here. affected the ability to identify a CIR, and 3) the Thefocus here will be on several areas that go beyondor qualifications of the environmentalprofessional and a differ from the ASTMstandard. It must be emphasized certification that the environmentalprofessional has the there are manydifferences that, although minor and qualifications required by the regulations and that the beyondthe scopeof this article, mustbe carefully observed professional has followed the AAI standards and in performingthe newAAI process. procedures.~6 Weanticipate that AAIreports will frequently conclude that data gaps prevent the environmental (a) The Scopeof AA! professional fromopining that there are no CIR’son the Property. TheConsensus Draft applies to persons attemptingto qualify for the exemptionsof innocent purchaser, bona Thescope of the environmentalprofessional’s inquiry fide prospective purchaserand contiguousproperty owner is set forth in PR 312.21(b) and subsequent rules and (hereinafter "qualifyingpersons"). includes interviews with present and part owners and occupants,~7 review of governmentrecords, 38 visual A qualifying person must commissionan inquiry "to inspection~9 of the property and adjoining properties, identify conditions indicative of releases or threatened 3° commonly known or reasonably ascertainable releases on, at, in, or to the subjectproperty" (a "CIR"). information,4° and the degree of obviousnessand ability Therecommended standards "are not intended to require to detect contamination.41 In addition, the inquiry must identification of quantities or amounts,either individually take into accountinformation provided to the environmental or in the aggregate, of hazardous substance ... that professional as the result of inquiries conductedby the because of said quantities and amounts,generally would TM qualifyingperson, includingthe presenceof recordedliens not pose a threat to humanhealth or environment. In and informationavailable becauseof the qualifyingperson’s other words, a qualifying person is not charged with specialized knowledgeor experience.42 determiningwhether de minimislevel of contaminationis present. Bycomparison, E-1527 excludes from the definition (b) Differences With ASTME1527 of RECs,those concentrationsthat are so small as to be unlikely to pose a material risk of harm or lead to There are minor differences between the AAIand environmental32 enforcement. E1527that include but are not limited to: Therequired investigation consists of an inquiry by an (i) Educationaland experiential qualifications environmentalprofessional pursuant to a scope of work for an environmentalprofessional must be set forth in ProposedRule ("PR") 312.21, collection established; additional informationby qualifying personsunder a scope of workdefined at PR312.22, and a search for recorded (ii) There is a requirementto check local and environmentalliens by the qualiQing person, which is tribal regulatory records as well as state providedto the environmentalprofessional. In carrying and federal records; out the standards and practices, the responsible person (either the qualifying person or the environmental (iii) Use history goes back to first developed use, not 1940, but the proposedregulation Winter 2004 - Page 218 MICHIGAN REAL PROPERTY REVIEW
leaves it to the environmentalprofessional’s In addition, the Consensus Draft places the judgmentas to which historical sources are responsibility on the qualifying person, not the environmental reviewed; professional, to determine whether there have been recorded environmental43 liens. Search distances for various environmental indicators vary from the ASTMstandard; (d) Shelf Life of an AA! Inquiry
Registries of environmental land use The recommendation provides that an AAI inquiry restrictions and engineering controls may be relied upon if conducted within one year before applicable to the property must be reviewed; purchase, provided that the interviews, visual inspections and record review obligations were conducted or updated (vi) Neighboring property owners must be within 180 days prior to purchase.~ The results of an AAI interviewed when assessing abandoned inquiry can be transferred to someone other that the properties; and original user and can be included in the new user’s AAI inquiry so long as the new user meets its AAIobligations AAIapplies to residential properties in (vii) and has appropriately updated the interview, visual commercial use, not just rentals of more inspections4~ and record review if necessary. than four units. (e) Degree of Obviousness of Contamination The reader is encouraged to compare ASTME1527 and Ability to Detect it by Appropriate and PR 312 carefully because the above list does not Investigation capture all differences. In scoping an inquiry to meet the proposed AAI Given the size of the environmental due diligence regulations, the environmental professional and the industry, it should be no surprise that of the foregoing qualifying person must consider the degree of obviousness criteria, it was the criteria defining the minimum of contamination and the ability to detect it. In other qualifications of the environmental professional that words, what is the likelihood the property is contaminated generated the most debate. After months of debate, the and howhard would it be to discover the contamination ConsensusDraft recommendedthe criteria based on several through sampling or other means? The proposed regulation combinations of education, licensure, training and directs the environmentalprofessional and qualifying person experience. to consider the information discovered through record review, visual inspection, etc. (c) The Purchaser’s Specialized Knowledge Experience The draft regulation does not require sampling as part of an AAIinquiry and the committeespecifically declined The Brownfields Act and the Consensus Draft put a to adopt such a requirement. The draft regulation does new obligation on the qualifying person. Past practice has require that data gaps be identified and that the been to put the burden solely on the environmental environmental professional commenton the significance professional performing the Phase I to identify RECs. Now of data gaps with regard to the ability to opine whether the qualifying person must add to the inquiry any CIRs are present. 46 The qualifying person and the information available because of the qualifying person’s environmental professional must consider "the ability to specialized knowledgeor experience. This could be extensive. detect’’47 contamination by appropriate investigation. A manufacturing company acquiring another company’s Further, it requires the environmentalprofessional to include plant could be expected to have substantial knowledgeof "an opinion regarding additional approprtate investigation, potential causes and locations of releases of hazardous if any.’’48 Again, at several locations in the preamble, substances. Presumably, such a qualifying person would USEPAwarns of the consequences of not identifying on- be expected to apply its ownknowledge of the typical use, going releases on the property and advises purchasers to handling and disposal of hazardous substances in its keep that in mind when deciding whether to sample. industry whenevaluating the likelihood of a CIR. In some Taken together, these proposed regulations will certainly cases, the qualifying person might even have moreindustry- lead to conclusions that there are data gaps that can be specific knowledge than the environmental professional filled by sampling and analysis. about the general likelihood of releases and disposals. MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 219
For any property where solvents or hazardous 11. ASTM1527-00, ¶ 1.1.1. substances were used in any kind of volume or for any 12. Small Business Relief and Brownfields Revitalization duration, it is possible that in hindsight a trier of fact Act of 2001, Pub.L. 107-118, 115 Stat.2356 (2002). would conclude that a purchaser who knew of that use was on notice before acquisition of the likelihood of 13. BrownfieldsAct, § 223(2)(B)(ii). contamination, even if the AAIreport is equivocal because 14. BrownfieldsAct, § 223(2)(B)(iv)(ll). of data gaps. The currently-prevailing practice of performing Phase lls to fill in data gaps is strong evidence of the 15. BrownfieldsAct, § 221, codified at 42 U.S.C. 9607(q) ability to detect muchsuspect contamination by sampling and (r)(1). and analysis and that it is accepted commercialpractice 16. BrownfieldsAct, 42 U.S.C. 104(k)(2). to do so. Thus, although the regulations duck the question of whethersampling is "required," manyqualifying l~arties 17. Section 223 of the Brownfields Act, 42 U.S.C. will have to answer the question and that answer will 9601(35)(B). frequently be "yes." 18. Brownfields Act, § 223(2)(B)(ii), I§ 5. Summary 19. 42 U.S.C. § 101(35)(B)(iii)(Vll-X). 20. BrownfieldsAct § 223(2)(B)(i)(I), codified at 42 The proposed AAIrules are a fairly straightforward 9601(35)(B)(I). implementation of the 10 factors set forth in the Brownfields Act. The Act itself creates several burdens 21. MCL324.20107a. and obligations that go beyondcurrent practice. Potentially 22. Dunsky, Progress Report on EPA’sImplementation of most troublesome is the requirement that the due diligence The Small Business Liability Relief and Brownfields take into account the qualifying person’s specialized RevitalizationAct, 20 Mich.Envtl. L.J. (3), p. 11 (2002). knowledgeor experience. This will increase the risk of 20! 23. 68 Fed Reg. 10747 (April 7, 2003). 20 hindsight: "Given your knowledge, experience and/or prior history, you should have known.... " Timewill tell 24. 5 U.S.C. 9(a)(2). whetherthe newAAI regulations will provide the prospective 25. Backgroundon the Committeeand its recommendations purchaser with any more comfort or certainty than ASTM can be found at http://www.epa.gov/swerosps/bf/ E 1527-00. The author is not optimistic on this point. regneg.htm.
Endnotes 26. To stay current with the Brownfields Act and the AAI rulemaking, the ASTMis updating E 1527-00 through its E 1527 Task Group. I. 69 Fed. Reg. 51541 (August 26, 2004). For detailed information on specific aspects of the proposedrule, 27. BrownfieldsAct, § 223(2)(B)(iv)(1). contact Patricia Overmeyerof EPA’sOffice of Brownfields Cleanup and Redevelopment at 202-566-2774, 28. BrownfieldsAct, § 223(2)(B)(iv) [email protected] information on 29. 68 Fed. Reg. 24888-891 (May 9, 2003). the developmentof the rule is available at http:// www.epa.gov/brownfields/regneg.htm. 30. Proposal Rule ("PR") 312.20(d). 2. 69 Fed. Reg. 56016 (September 17, 2004). 31. PR 312.20(g). 3. 42 U.S.C. 9607(a). 32. ASTME 1527-00, ¶ 1.1.1. 4. § 107, 42 U.S.C. 9607. 33. PR 312.20(e). 5. § 101(35)(A), 42 U.S.C. 9601(35)(A). 34. PR 312.20(f). 6. 42 U.S.C. 9607(b)(3). 35. Id. 7. 42 U.S.C. 9601(35)(d). 36. PR 312.21(c) and (d). 8. 42 U.S.C. 9601 (35)(A)(i). 37. PR 312.23. 9. ld. 38. PR 312.26. 10. 42 U.S.C. 9601 (35)(B) (before amendmentby 39. PR 312.27. BrownfieldsAct). 40. PR 312.30. Winter 2004 - Page 220 MICHIGAN REAL PROPERTY REVIEW
41. PR 312.31. 42. PR 312.25, 312.28. 43. Note that under CERCLAand Part 201, environmental liens arise upon the government’sexpenditure of funds. 42 U.S.C. 9607(I); MCL324.20138(1). Thus the conservative inquiry, although not required by the ConsensusDraft, is whether remedial funds have been spent and not whether an environmental lien has been recorded. 44. PR 312.20(b). 45. PR 312.20(c). 46. PR312.21(c)(2). 47. PR 312.31. 48. PR 312.31(b). MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 221
NEW LEGISLATION IMPACTS TAX TREATMENT OF PRINCIPAL RESIDENCE CONVERTED FROM A 1031 REPLACEMENT PROPERTY
by Dawn M. Patterson*
On October 22, 2004, President Bush signed into law Endnotes the American Jobs Creation Act of 20041 (the Act), I. H.R. 4520 whichapplies to sales after that date. Section 840 @f the Act specifically relates to Internal Revenue Code (IRC) 2. SEC. 840. RECOGNITIONOF GAIN FROMTHE SALE Section 1031 tax-deferred exchanges by addressing the OF A PRINCIPALRESIDENCE ACQUIRED IN A LIKE- KIND EXCHANGEWITHIN 5 YEARSOF SALE. recognition of gain upon the sale of a principal residence originally acquired as a replacement property in an IRC (a) IN GENERAL.~Section121(d) (relating to special Section 1031 tax-deferred exchange.2 The Act disallows rules for exclusionof gain fromsale of principalresidence) any exclusion of gain if a taxpayer sells the homewithin is amendedby adding at the end the following new five years of the closing date of the replacementproperty. paragraph: "(10) PROPERTYACQUIRED IN LIKE-KIND EXCHANGE.--Ifa taxpayer acquired property in an This amends IRC Section 121 (d) and creates new exchangeto whichsection 1031 applied, subsection (a) 3 requirements for converted 1031 replacement property. shall not apply to the sale or exchangeof such property if it occursduring the 5-year period beginningwith the Prior to the Act, a taxpayer whoacquired replacement date of the acquisition of such property." property through a like-kind exchange and thereafter (b) EFFECTIVEDATE.--The amendment made by this properly converted it to his principal residence could section shall apply to sales or exchangesafter the date qualify under IRC Section 121 for a $250,000 or $500,000 of the enactmentof this Act. exclusion4 if the taxpayer ownedand used the property as the taxpayer’s residence for at least two of the five years 3. Luberto, Michael A. Tax-deferred Exchangesof Second ending on the date of the sale or exchange.S Although the Homesand Mixed-UseProperties, 31 Mich Real Prop Rev 35 (2004) at 37. two-year use requirement remains unchanged, the Act nowrequires the taxpayer to ownthe property for at least 4. IRC Section 121 provides that a single taxpayer may five years from the date of acquisition of 1031 replacement exclude up to $250,000of the capital gain and married property to qualify for the principal residence exclusion. couples, filing jointly, mayexclude up to $500,000of the gain. The consequences of the mere timing of the real 5. Section 1.121-I(c)(I). The two years mayconsist of estate closing involving property affected by this new full monthsor 730 days. legislation exemplify the importance of considering all 6. Patterson, Dawn M. Explore the Benefits of exclusion or deferral options available prior to reaching Consideration of IRCSections 121 and 1031Before the closing table. 6 The difference of a few days or months tl~e Seller of Real Estate Reachesthe ClosingTable, 32 can result in an extreme tax saving strategy. Mich Real Prop Rev 150 (2004)
*DawnM. Patterson is an Assistant Vice President and State Counsel for Stewart Title GuarantyCompany (www.stewart.com). She is the Michigan Division Manager for Asset Preservation, Inc. (www.apiexchange.com), an IRC Section 1031 qualified intermediary. She is the author of Explore the Benefits of Consideration of IRC Sections 121 and 1031 Before the Seller of Real F_state Reaches the Closing Table, 32 Mich Real Prop Rev 150 (2004) and the co-author of an article entitled Michigan ~,liminates Witness Requirement, 29 Mich Real Prop Rev 75 (2002). She was admitted to the State Bar of Michigan in 1995 after graduating from University of Detroit Mercy School of Law. She is a memberof the Education Committeeof the Michigan Land Title Association, the Title and ConveyancingCommittee of the Real Property LawSection of the State Bar of Michigan, and the Real Estate Committeeof the Oakland County Bar Association. Ms. Patterson maybe reached in the Southfield, Michigan office at 800-221-8710, x-108 or [email protected]. Winter 2004 - Page 222 MICHIGANREAL PROPERTYREVIEW
CASE COMMENTS
by Patrick A. Karbowski and Vanessa Lozzi
City homeinspection ordinancefound invalid becauseit did not showthat the delay in bringingthe action and unenforceablefor lack of approved resulted in the kind of prejudicethat wouldsupport a laches guidelines defense.
Castle Inv. Co. v. City of Detroit, __ Mich__; 688 NW2d77, (2004 MichLexis 2210), involved the long Restrictive covenantscannot be amendedas to standingpractice of the City of Detroitto require"pre-sale" one lot without unanimousconsent of all owners inspectionsof homes.Plaintiff filed suit against defendant for damagesfor funds paid for homeinspections made In Matta v. DeadRiver Campers,Inc., __ MichApp under the inspection ordinance. Theinspection ordinance __; __ NW2d__ (2004 Mich App Lexis 2433), the requiredthat buildingsbe foundin compliancewith guidelines MichiganCourt of Appealsreversed and remandeda case approved by the city council. The city council never involvingrestrictive covenantsfor further proceedings.In approvedany suchguidelines. Plaintiff alleged that because a case of first impression, the court concluded that the city council never approvedthe guidelines the home amendmentsto the covenantsthat affect less than all of inspectionordinance was invalid and unenforceable.Plaintiff the lots subject to the covenantsrequired the unanimous movedfor summarydisposition pursuant to MCR2.116 consent of the affected property owners, even though a (C)(10). Defendant responded with a cross motion supermajorityof the ownerswithin the subdivisionapproved summaryjudgment arguing that plaintiffs challengeto the the amendments.The case arose fromplaintiffs’ efforts to ordinanceis barred by laches and collateral estoppeLThe enforcerestrictive covenantsagainst defendant.The covenant trial court and court of appeals concludeddefendant was at issue limitedthe use of the subjectlots at issue to single entitled to summarydisposition on the groundof laches. family residential purposesand incidental recreational The MichiganS.upreme Court reversed and remandedthe uses. Defendantowned a lot that had been used since the case to the court of appeals for further consideration.The 1970sas a public access site. Whilethe litigation was MichiganSupreme Court concluded that the ordinance pending, defendant attempted to exemptits lot from the could not lawfully be enforced because the city council covenant by amendingthe restrictive covenants as to neverapproved the guidelines. Thecourt also held that the defendant’s lot only. Defendant’samendment was approved city did not meetthe standards for summarydisposition by a supermajorityof the lot owners.Plaintiffs arguedthat MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 223
the restrictive covenants could not be removedfor one lot, charged by a register of deeds office for providing a copy while leaving them intact for the remaining lots, without of a document cannot be considered a ’tax’ under any the approval of all of the affected lot owners. The court reasonable meaning of the term." of appeals agreed, holding that the amendmentprocedure in the restrictive covenants was intended for uniform Referendumvote to re-zone not arbitrary and changes applicable to all lots. Thus, the court of appeals ruled that the trial court erred by holding that the defendant capricious despite developer’s $700,000 contribution to community could, by a supermajority vote, revoke a restrictive covenant as to one particular lot. The court stated, "Permitting non uniform amendments and exemptions by majority or In NewmanEquities v. Charter Twp. Of Meridian, supermajority vote would destroy this crucial aspect of __ Mich App __.; __ NW2d ~ (2004 Mich App covenants and thus underminethe entire system of private Lexis 2793), plaintiff real estate developer, as part of an regulation of real property in Michigan." agreement with the township and other property owners, donated, at a cost of almost $700,000, land and contributed to construction of a road that would help relieve traffic Register of Deedspermitted to contractually problemsassociated with a nearby regional mall. Plaintiffs’ restrict title companyfrom providing copies of land wasoriginally zonedfor residential purposes, but, after documentsto third parties plaintiff’s donation, the land was rezoned for commercial use. Shortly after the rezoning, the voters of the township In Lapeer County Abstract & Title Co. v. Lapeer reversed the rezoning through a referendum vote and the County Register of Deeds, __ Mich App ; parcels at issue reverted to their previous residential zoning NW2d__ (2004 Mich App Lexis 2792), the Lapeer designations. Plaintiff filed suit alleging that the referendum CountyRegister of Deeds conditioned the sale of microfilm was unconstitutional because the re-zoning arising from the or bulk copies (sold at a bulk discount price) of documents voters’ referendum was unreasonable, arbitrary and it maintains for the public on the plaintiffs’ agreementnot capricious. The trial court agreed and reversed the voter’s to provide copies of the documents on the microfilm or referendum. On appeal, the court stated there was a from the bulk copies to third parties. Plaintiffs wouldbe legitimate difference of opinion as to the best zoning allowed, however, to purchase individual copies of designation for the parcels and that the zoning by referendum documents for the ordinary price of one dollar per copy was not unreasonable, arbitrary and capricious. The voters withoutthis condition. Plaintiffs alleged that this contractual resolved the issue and the court had to defer to their condition violated the Inspection of Records Act {"IORA"). judgment. The dissent disagreed, noting that the zoning by Plaintiffs, whohad also filed a request for the microfilm referendum was subject to the same review as zoning by under the Freedom of Information Act ("FOIA"), which a legislative body. Thedissent also noted that the township, was refused by defendants, contended that the defendants’ having encouraged plaintiff to invest almost $700,000 in policy was a violation of FOIA.Plaintiffs also contended communityimprovements, could not "not now ’avoid the that the one dollar per copy charge was a tax in violation inevitable result of its actions.’" of the Headlee Amendmentto the Michigan Constitution (Const 1963, art 9, section 31). As to the alleged IORA Trespass-nuisance claim barred on the basis of violation, the court of appeals disagreed with the trial government immunity; inverse condemnation court’s analysis and held that the defendants, as an cannot not arise from negligent failure to act exercise of the general power to contract, had the constitutional and statutory authority to enter into "special In Hinojosa v. Department of Natural Resources, ~ arrangement"contracts such as the one at issue. The court Mich App __; __ NW2d __ (2004 Mich App Lexis of appeals agreed with the trial court’s analysis of the 2335), the Michigan Court of Appeals affirmed the trial alleged FOIAviolation. The court of appeals reasoned that court’s decision granting summarydisposition to defendant. there was nothing in FOIAthat required the defendants to Plaintiffs filed suit against the Department of Natural provide microfilm copies of the requested documents, and Resources ("DNR")after plaintiffs’ homes were damaged that the specifics of the IORAtrumped the general nature as a result of a fire that took place on_neighboringproperty of FOIA,thus allowing defendants the discretion to provide ownedby the DNR.The DNRtook title to this neighboring the plaintiffs with the requested documentsin paper form property by virtue of a tax sale and failure to redeem. Fire at one dollar per copy. The court of appeals rejected the at the house on the DNR’sproperty spread to the plaintiffs’ claims under the Headlee Amendmentstating "the fee homesand the plaintiffs sued the DNRclaiming trespass, Winter 2004 - Page 224 MICHIGANREAL PROPERTYREVIEW
nuisanceand taking/inversecondemnation. Prior to the fire that damagedplaintiffs’ homes,the City of Detroit had filed a lis pendensgiving notice that the DNRproperty would"be demolishedas an unsafe structure" because of a prior fire. OnMarch 19, 2002 the house on the DNR property burned again, damagingplaintiffs’ homes. Plaintiffs’ trespass-nuisancetort claimwas barred in the basis of governmentimmunity. The court held that there wasno exceptionfor the tort of trespass or nuisanceto the doctrine of governmentalimmunity. Regarding the taking/ inverse condemnationclaim, the appellate court held that plaintiffs’ complaintdid not allege "any overt activity whichinterfered with plaintiffs’ enjoymentof their property." Theappellate court agreedwith the trial court that plaintiffs had not alleged a "taking" of property that required just compensationbecause the state took no affirmative action towardthe neighbors’property. Theappellate court stated that at mostthe state failed to abatea fire hazardnuisance, a claim which is barred by governmentalimmunity.
Statementsin Sellers’ DisclosureStatement providesufficient evidenceto create a genuine issueof materialfact
In Bergen v. Baker__ Mich App __; __ NW2d __ (2004 Mich App Lexis 3151), the court of appeals reversedthe decisionof the trial court that grantedsummary disposition in favor of defendantsunder MCR 2.116(C)(10) and deniedplaintiffs’ motionfor reconsideration.Plaintiffs purchaseda homefrom defendants in 2001. Followingthe purchase, plaintiffs discovereda significant leak in the glass-panedroof of the "hot tub" room. Prior to closing on the purchase of the home, plaintiffs reviewed the statutorily-mandatedseller’s disclosurestatement and hired a professionalhome inspector to inspectthe home.Plaintiffs proceededto purchasethe homeunder an "as is" contract. Thecomplaint filed by plaintiffs alleged fraud, negligent misrepresentation and breach of contract. The seller disclosure statement acknowledgedcertain defects in the home,but the plaintiffs alleged, and the court of appeals agreed,that there wassufficient evidenceto survivesummary disposition on the issue of whetherthe defendantsmisled the plaintiffs by not fully disclosingthe extent of the defects disclosed on the seller disclosure statement. Theopinion by the court of appeals contains a thoroughdiscussion of the MichiganSeller DisclosureAct. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 225
CONTINUING LEGAL EDUCATION
by Brian P. Henry Chairperson And Arlene R. Rubinstein Administrator
HOMEWARD BOUND
FEBRUARY 3, 2005 "What Every Real Estate Practitioner Needs to Know About Title Insurance" 3:30 - 6:30 p.m.
Michael A. Luberto of Chirco Title Companyand Douglas G. Smith of LandAmericaFinancial Group will give an overviewof the regulation of title insurers, and howto review a commitmentfor title insurance. Theseminar will give you an in-depthunderstanding of title insurancepolicies, includinga widevariety of endorsementsavailable to yourclient. Theseminar will also address the role of title insurers as escrowagents.
Thetopic will explore the provisions of the Commitmentand Policies, the coverages, the exceptionsand exclusionsfrom coverage,basic endorsementsand settlement services offered by the title industry.
Walk-ins are welcomeat the Troy location! Wemeet at the ManagementEducation Center, 811 W. Square Lake Road in Troy. Registration is $80 for Section membersand $90 for non-section members.Please call Arlene Rubinstein at 248-644-7378or e-mail at [email protected] further information.
March 3, 2005 "Groundbreakers" Breakfast Roundtable! "Cornucopia of Leasing Clauses and Concerns" 8:00 - 9:30 a.m.
Our second Breakfast Roundtable Session will be held on March3, 2005 at the TownsendHotel, I00 Townsend Street, Birmingham.The Programwill begin at 8:00 a.m. and end at 9:30 a.m. A full breakfast will be served. $45 for section members/S55for non-section members.At the door the cost is $55 for Section members/S65for non-section members.Space is limited!
ProgramChairperson: KennethF. Posnerof Couzens,Lansky, Fealk, Ellis, Roeder& Lazar, PC Winter 2004 - Page 226 MICHIGAN REAL PROPERTY REVIEW
Roundtable Discussion Topics and Leaders:
Current Issues in O~’Ice Leasing Mark P. Krysinski of Jaffe, Raitt, Heuer & Weiss, PC
Current Issues in Industrial and CommercialLeasing Howard B. Goldman of Butzel Long, PC
Current Issues in BankruptcyClauses and Litigation Andrew S. Conway of Honigman Miller Schwartz and Cohn LLP
What Your Lease Really Should Say About Condemnation Alan Ackerman of Ackerman & Ackerman, PC
Lease Options - Getting it Right Dennis M. Gannan of Dennis M. Gannan PLLC
Current Issues in Retail Leasing Alan M. Hurvitz of Honigman Miller Schwartz and Cohn LLP
Subordination, Non-Disturbance, and Attornment Agreements, and Estoppel Letters David G. London of Honigman Miller Schwartz and Cohn LLP
For further information, please call Arlene Rubinstein at 248-644-7378.
2005 Winter Conference Florida Law for Michigan Real Estate Attorneys March 10-12, 2005 The IVattonal Hotel Miami Beach, Florida
Thanks to our sponsors!
Concorde Exchange Group Investment Property Exchange Services, Inc. Berger Singerman, P.A. Ruden, McCIosky, Smith, Schuster & Russell, P.A.
This year’s Winter Conference will be held March10-12, 2005 at The National Hotel in MiamiBeach, Florida Set in the heart of the Art DecoHistorical District, The National Hotel is located just south of 17th Avenueon Collins Avenue on the ocean with direct beach access. Only minutes awayfrom the best restaurants, galleries, boutiques and nightclubs makethis a fantastic location for fun, sun and meetings! Authentically restored to showcaseits fine deco features, The National Hotel is knownfor its originally preserved pieces, spectacular tropical pool, its wine club and the 1930s Press Roombar just off the lobby. Go to the website at www.nationalhotel.com. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 227
ManyMichigan residents and companiestransact business or purchase property in Florida. To assist clients and effectively workwith local Florida counsel, it is valuable for the Michiganattorney to be knowledgeableand conversant about howFlorida real estate law maydiffer from Michiganreal estate law. Join the Section in South Beachfor this two-dayprogram covering a variety issues concerningFlorida law. This is one conferenceyou will not want to miss!
To register for the conference, please send your registration fee of $400 ($450 for nonmembersof the Section) payable to State Bar of Michiganand mail to P.O. Box 473, Birmingham,Michigan 48012. Wehave a limited amountof roomsreserved at The National Hotel. All roomreservations must be madewith the hotel directly. Please call 1-800-327-8370and request the Real Property Section Winter Conferencegroup.
A Winter Conferencebrochure has beenenclosed in this issue.
For further information please call Arlene Rubinstein 248-644-7378or email [email protected]
Mark your Calendars! THIRTIETH ANNUAL SUMMER CONFERENCE GrandTraverse Resort Acme, Michigan July 20 - 23, 2005
Wewould like to thank our sponsorsto date! Patron Sponsor First AmericanTitle Insurance Company
WednesdayEvening Reception Sponsor Fidelity National Title InsuranceCompany
Thursday Evening Reception Co-Sponsor LandAmerica(Commonwealth, Lawyers Transnation Insurance Co.)
Conference Level Sponsor Stewart Title GuarantyCompany
Breakfast Roundtable Sponsor Associated Environmental Services LLC
Real Estate Transactions: From Dirt to Development
Richard D. Rattner of Williams, Williams, Ruby& Plunkett, PC in Birminghamand RonaldE. Reynoldsof Berry, Reynoldsand Rogowski,PC in FarmingtonHills are in the process of planning an informative programfor this year’s SummerConference. Thursday morning’s program will focus on what happens in a real estate deal after the handshake...from Letters of Intent to the Purchase Agreement.Robert A. Berlowof KickhamHanley PCin Royal Oak will moderatea discussion of this topic, completewith a role-playing demonstrationof negotiating techniques for commonly-encounteredproblems. Winter 2004 - Page 228 MICHIGAN REAL PROPERTY REVIEW
Workshoptopics will follow certain important stages of development, including presentations that explore the following: (a) Understanding Land Division: Should YouSimply Divide and Conquer. . . Or Do SomethingElse?; (b) Civil Engineering Your Way Through the Physical Due Diligence Process (Title, Survey, Environmental and Land Use Checklists from the Perspective of a Civil Engineer); (c) Assisting Your Client to "Follow the Financing!"; and (d) the NewWorld of the Use of ADRDuring The Negotiating Process...Not After The Deal Has Failed.
As always, we will start Thursday and Friday morning with the Roundtable Discussions on several related real property issues. Saturday morningwe will have a special presentation. Registrants and guests are invited to have breakfast with Brian Dickerson, Columnistwith the Detroit Free Press. This session will begin at 9:00 a.m. and end at 10:30 a.m.
Look for further information on the SummerConference in March. COURSE CALENDAR
Set forth below is a schedule of continuing legal education courses sponsored or co-sponsored by the Real Property Law Section through April 2005.
Key: HB = Homeward Bound ICLE -- Courses co-sponsored by the Institute of Continuing Legal Education
Date Location Program Topic
February 5 MSU Management Education HB Real Estate Practitioner’s Center, Troy Guide to Title Insurance
March 3 Townsend Hotel Breakfast Leasing Clauses Roundtable & Concerns
April 7 MSU Management Education HB Ground Leases Center, Troy
Further information in all HomewardBound Seminars and the SummerConference can be found in the Internet at http://www.michbar.org/realproperty/ICLE Courses at http://www.icle.org/ MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 229
REAL PROPERTY LAW SECTION STATE BAR OF MICHIGAN SPECIAL COMMITTEES CHAIRPERSONS AND COUNCIL COORDINATORS 2004-2005
Committee Chairnerson , Coordinator
Alternative Dispute Martin Weisman Patrick Karbowski Resolution Weisman,Young, Schloss Butzel Long, PC & Ruemenapp, P.C. 100 BloomfieldHills Pkwy., Suite 200 30100 Telegraph Road, Suite 428 BloomfieldHills, MI 48304-2949 Bingham Farms, MI 48025-4564 (248) 258-1427- telephone (248) 258-2700- telephone (248) 258-1439- fax (248) 258-8927- fax [email protected] [email protected]
AsherN. Tilchin (Vice Chair) Tilchin, Hall & Reynolds,P.C. 31731 Northwestern Hwy# 106 FarmingtonHills, MI 48334-1654 (248) 855-0995- telephone (248) 855-0850- fax [email protected]
Bankruptcy Debtor Rozanne M. Giunta Vicki Harding Creditor Rights LambertLeser CookGiunta Milster Pepper Hamilton, LLP & Gannon PC 100 RenaissanceCtr FI 36 309 DavidsonBuilding Detroit, MI 48243-1114 916 Washington Avenue (313) 393-7324- telephone Bay City, MI 48708 (313) 259-7926- fax (989) 893-3518- telephone [email protected] (989) 894-2232- fax [email protected]
CommercialLeasing KennethF. Posner MarkP. Krysinski and Managementof Couzens,Lansky, Fealk, Ellis, Jaffe, Raitt, Heuer & Weiss, PC Real Estate Roeder & Lazar, PC One WoodwardAvenue, Suite 2400 39395 W12 Mile Rd Ste 200 (248) 851-3434- telephone FarmingtonHills, MI 48331 (248) 851-4743- fax (248) 489d8800x331 - telephone [email protected] (248) 324-4987- fax [email protected] Winter 2004 - Page 230 MICHIGANREAL PROPERTYREVIEW
SPECIAL COMMITTEES(continued)
Environmental Law Patricia Paruch Howard A. Lax and Energy Law Kemp,Klein, Umphrey, Lipson Neilson Cole Seltzer & Garin PC Endelman & May, PC 2301 W. Big Beaver Road, Suite 525 201 WBig Beaver Rd Ste 600 Troy, MI 48084-3320 Troy, MI 48084-4136 (248) 649-7200- telephone (248) 528-1111- telephone (248) 649-7373- fax (248) 528-5129- fax [email protected] [email protected]
Federal Tax Aspects William B. Acker Dennis W. Hagerty of Real Estate Kemp, Klein, Umphrey Metropolitan Title Company Transactions & Endelman, PC 622 E Grand River 201 West Big Beaver Road, Suite 600 Howell, MI 48843 P.O. Box 4300 (517) 548-3130x210 - telephone Troy, MI 48099-4300 (517) 548-349 - fax (248) 528-1111- telephone [email protected] (248) 528-5129- fax [email protected]
Legislation Patrick Karbowski David W. Charron Butzel Long, PC Charron & Hanisch, PLC 100 BloomfieldHills Pkwy., Suite 200 5242 Plainfield Avenue,N.E., Suite D Bloomfield Hills, MI48304-2949 Grand Rapids, MI 49525 (248) 258-1427- telephone (616) 363-0300- telephone (248) 258-1439- fax (616) 363-0339- fax [email protected] [email protected]
Real Estate Ownership Jeffrey A. Supowit C. Leslie Banas and Investment AmericanCommunity Developers Inc. HonigmanMiller Schwartz & Cohn Entities 20250 Harper Avenue 32270 Telegraph Road, Suite 225 Detroit, MI 48225-1713 Bingham Farms, MI 48025 (313) 881-8150- telephone (248) 566-8406- telephone (313) 884-0722- fax (248) 566-8407- fax [email protected] [email protected]
Residential AnthonyJ. Viviani Howard A. Lax Transactions Stewart Title Guaranty Company Lipson Neilson Cole Seltzer& Garin PC 26211 Central Park Boulevard 2301 W. Big Beaver Road, Suite 525 Suite 304 Troy, MI 48084-3320 Southfield, MI 48076 (248) 649-7200- telephone (248) 368-9900 x226 -telephone (248) 649-7373- fax (248) 368-9950- fax [email protected] [email protected] MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 2~1
SPECIAL COMMITTEES(continued)
State and Local David E. Nykanen Ronn S. Nadis Taxation Steinhardt Pesick & Cohen, PC Taubman, Nadis & Gorosh, PC 28400 Northwestern HwySte 120 29201 Telegraph Road, Suite 510 Southfield, MI 48034-8346 Southfield, MI 48034-7648 248) 356-5888- telephone (248) 354-1190- telephone 248) 356-5889- fax (248) 354-1259- fax [email protected] [email protected]
Paul McCord(Vice Ghair) Miller, Canfield, Paddock& Stone 150 W. Jefferson, Suite 2500 Detroit, MI 48226 313/496-7621- telephone 313/496-8452 - fax [email protected]
Titles and Michael A. Luberto David W. Charron Conveyancing Chirco Title Co Charron & Hanisch, PLC 26800 Harper Ave 5242 Plainfield Avenue,N.E., Suite D Saint Clair Shores, MI 48081-1910 Grand Rapids, MI 49525 (586) 772-7020- telephone (616) 363-0300- telephone (586) 772-7549- fax (616) 363-0339- fax [email protected] [email protected]
Water Law James Y. Stewart LawrenceR. Shoffner Butzel Long, P.C. Lawrence Shoffner, PLLC 100 BloomfieldHills Parkway,Suite 200 Buhl Building Suite 1550 BloomfieldHills, MI48304 Detroit, MI 48226-3601 (248) 258-1616- telephone (313) 510-9529- telephone (248) 258-1439- fax (313) 343-0562- fax [email protected] [email protected]
Zoning and Land Use David E. Pierson Mark F. Makower McClelland & Anderson, LLP Dickinson Wright, PLLC 1305 S. WashingtonAvenue, Suite 102 38525 WoodwardAve., Suite 2000 Lansing, MI 48910-1689 BloomfieldHills, MI48304 (517) 482-4890- telephone (248) 433-7505- telephone (517) 482-4875- fax (248) 433-7274- fax [email protected] [email protected] Winter 2004 - Page 232 MICHIGANREAL PROPERTYREVIEW
REAL PROPERTY LAW SECTION STATE BAR OF MICHIGAN STANDING COMMITTEES 2004-2005
BUDGET AND FINANCE
David WoCharron, Chairperson C. Leslie Banas Mark F. Makower
ON COMMITTEES
David W. Charron, Chairperson Patrick Karbowski,Vice-Chairperson LawrenceF. Shoffner
CONTINUING LEGAL EDUCATION
Brian Henry, Chairperson William B. Acker Robert A. Berlow Lawrence M. Dudek Ronald Eo Reynolds MarkKrysinski Patrick A. Karbowski Carol Ann Martinelli RobertR. Nix, II David E. Nykanen Jack D. Shumate Thomas C. Simpson Mark F. Makower
LAND TITLE STANDARDS COMMITTEE EMERITUS MEMBERS
Robert D. Mollhagen, Chairperson WilliamE. Hosler, III Robert R. Nix, II John R. Baker Russell E. Prins, Vice Chairperson Janet L. Kinzinger Brian J. Page Maurice S. Binkow Ronald T. Barrows Gerard K. Knorr James E. Reed James W. Draper James R. Brown Lawrence Dudek Kevin T. Smith Carl A. Hasselwander John G. Cameron, Jr. Catharine B LaMont Ronald M. Stem Russell A. McNair,Jr. Melissa N. Collar James P. Lanzetta Margaret Van Meter Saverio Mistretta WilliamH. Darl~ee James M. Marquardt Allen Schwartz Stephen E. Dawson Douglas S. McDougal Thomas C. Simpson Dennis W. Hagerty Stephen E.McMillan Gary A. Taback Anne H. Hiemstra John E. Mogk Nicholas Volino MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 233
STANDING COMMITTEES(continued)
MEMBERSHIP
David W. Charron, Chairperson Vicki R. Harding
NOMINATING
2003-2004 Committee Was:
Robert R. Nix II, Chairperson Mark F. Makower Gail Anderson Carol AnnMartinelli David Pierson
PRO BONO
Carol AnnMartinelli, Chairperson Vicki R. Harding David Lo Haron Patrick A. Karbowski Joel D. Kellman
PUBLICATIONS
GeorgeR. Siedel, Chairperson David Charron Mark F. Makower Winter 2004 - Page 234 MICHIGANREAL PROPERTYREVIEW
REAL PROPERTY LAW SECTION STATE BAR OF MICHIGAN
AD HOC COMMITTEES 2004 - 2005
RECORDING REQUIREMENTS
Vicki R. Harding, Chairperson James N. Candler, Jr. Carol AnnMartinelli RobertR. Nix, II WilfredA. Steiner, Jr.
E-REAL ESTATE TRANSACTIONS LONG RANGE PLANNING
Technology: Vicki R. Harding, Chairperson Howard A. Lax Arlene Rubinstein LawrenceM. Shoffner
Membership: LawrenceDudek, Chairperson Mark F. Makower David Charron Jerome Pesick Carol AnnMartinelli Ronn Nadis Leslie Banas ThomasC. Simpson
CLE: MarkKrysinski, Chairperson Ronald Reynolds Robert Berlow Patrick Karbowski William Acker David Nykanen MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 235
MICHIGAN REAL PROPERTY REVIEW CUMULATIVE ARTICLE INDEX (THROUGH VOLUME 32)
Articles are indexed underthe following subject headings: Bankruptcy Partnerships, Corporationsand Broker and MortgageServices Limited Liability Companies Civil Rights PremisesLiability Condominiums,Subdivisions, Probate and Estate Planning Cooperatives and PUD’s ~ ProfessionalResponsibility Construction Property Sales Agreements Eminent Domain Residential Transactions Environment Taxation Foreclosure/Forfeiture Titles and Conveyancing Leasing Water Mortgageand Lending Issues Zoning and Land Use Oil, Gas and Mineral Rights Miscellaneous
BANKRUPTCY THE BANKRUPTCYESTATE AND THE ENTIRETIES ESTATE IN MICHIGAN: AN UNEASYMARRIAGE OF LEGALFICTIONS - by Scott W. Dales - Summer2004, p. 67. PERFECTINGLIENS ON MOBILEHOMES IN MICHIGAN- by Kelly M. Hagan - Summer 2003, p. 73. THEENTIRETIES ESTATE IN BANKRUPTCYAFTER CRAFT - by Peter A. Teholiz - Winter 2002, p. 171. USE OF SPECIALPURPOSE ENTITIES IN REALESTATE FINANCING TRANSACTIONS - by John C. Murray - Fall 2002, p. 107. IN RE MORRIS: IS THE SIXTH CIRCUIT INVITING REAL ESTATE CONSTRUCTIVETRUST CLAIMS IN BANKRUPTCYCASES? - by John A. Simon - Spring 2002, p. 21. FOR WHOMTHE STAY TOLLS: BANKRUPTCYCODE §§ 108 AND 362 - DO THEYTOLL REDEMPTIONAND CUREPERIODS? - by Sean P. Byrne - Spring 2001, p. 21 WAIVERSOF AUTOMATICSTAY - by John C. Murray and Judith Greenstone Miller - Winter 1999, p. 195. U.S. SUPREMECOURT RULES ON "NEW VALUE," OR DOES IT? - by Judith Greenstone Miller and John C. Murray - Summer1999, p. 67. SALES OF REAL ESTATE AND OTHERPROPERTY OF BANKRUPTCYESTATES UNDERTHE REVISED LOCAL BANKRUPTCYRULES OF THE U.S. BANKRUPTCYCOURT FOR THE EASTERNDISTRICT OF MICHIGAN- by Judith GreenstoneMiller and MarcM. Bakst - Spring 1999, p. 19. RECENTDEVELOPMENTS IN "NEWVALUE" AND SINGLE ASSET REAL ESTATECASES - by John C. Murray and Judith GreenstoneMiller - Spring 1998, p. 23. FITTING THE ROUNDPEG INTO THE SQUARE HOLE: CONDOMINIUMASSESSMENTS IN CHAPTER13 BANKRUPTCY- by Steve Sowell - Fall 1997, p. 233. LANDLORDBEWARE! WHAT HAPPENS TO THE OPTION TO RENEWWHEN THE TENANTFILES BANKRUPTCY? - by Judith GreenstoneMiller - Summer1997, p. 135. Winter 2004 - Page 236 MICHIGANREAL PROPERTYREVIEW
STATUSOF REALPROPERTY TAXES IN BANKRUPTCYCASES - REVISITED- by Harold Eo Nelson and William R. VanderSluis- Spring 1996, p. 13. BANKRUPTCYREFORM ACT OF 1994: HOWTHE RULESHAVE CHANGED - by Vicki Ro Harding - Spring 1995, p. 13. SINGLE-ASSET CHAPTER11 REAL ESTATE CASES: BADFAITH AND NEWDEBTOR SYNDROME AFFIRMED BY THESIXTH CIRCUIT COURT OF APPEALS- by Lisa SommersGretchko - Spring 1995, p. 19. IMPUTINGTHE MISDEEDSOF ONE PARTNERTO ANOTHERPARTNER UNDER THE BANKRUPTCYCODE - by MichaelI. Conlon- Winter 1994, p. 203. THE SECUREDLENDER: VICTIM OR VILLAIN? - THE BATTLETO PREVENTSEPARATE CLASSIFICATION OF UNSECUREDDEFICIENCY CLAIMS IN BANKRUPTCY- by Robert A. Weisberg - Fall 1994, po 129. SINGLE-ASSET CHAPTER11 REAL ESTATE CASES: BAD FAITH, NEWDEBTOR SYNDROME, AND OTHER PITFALLS- by Lisa SommersGretchko - Summer1994, p. 49. THEUSES OF A RECEIVERSHIPOVER REAL PROPERTY - by Lawrence M. Dudek - Summer 1994, p. 41. HOTEL REVENUESAS CASH COLLATERALIN BANKRUPTCYCASES - ARE HOTELREVENUES PERSONAL PROPERTYOR REAL PROPERTY? - by Douglas L. Lutz - Fall 1993, p. 119. BANKRUPTCY"CRAMDOWN": MORTGAGE FINANCING OF LASTRESORT - by Vicki R. Harding - Spring 1993, p. 23. ASSIGNMENTSOF RENTS IN BANKRUPTCYUNDER MICHIGAN LAW - by Julia Goatley Moreno and Laura J. Eisele - Winter 1992, po 137. EFFECTOF BANKRUPTCYON NON-RESIDENTIALREAL ESTATE LEASES - by Lisa Sommers Gretchko - Winter 1992, p. 157. REMEDIESOF THE SUBCONTRACTOROR SUPPLIER WHENTHE OWNEROR GENERALCONTRACTOR FILES FORBANKRUPTCY - by Lawrence M. Dudek - Summer1992, p. 49. BANKRUPTCYv ASSIGNMENT OF RENTS:A CASETO BE DECIDED- by Michael E. Baum- Spring 1992, p. 7. LANDCONTRACTS IN BANKRUPTCY:TERRELL REVISITED - by Robert A. Hendricks and Joan Schleef - Summer 1991, p. 57. STATUSOF REALPROPERTY TAXES IN BANKRUPTCYCASES - by Harold E. Nelson - Spring 1991, p. 13. A PRIMER FOR MICHIGANREAL ESTATE PRACTITIONERSON BANKRUPTCYTRUSTEE AVOIDANCE POWERS - by Jacqueline K. Vestevich and Robert D. Mollhagen- Winter 1989, p. 223. THE REORGANIZINGDEBTOR AND UNEXPIRED LEASES OF NONRESIDENTIALREAL PROPERTY - by Brian L. Donovan- Winter 1988, p. 243. TREATMENTOF MICHIGANLAND CONTRACTS IN CHAPTER11 AND CHAPTER13 CASES: IMPACT OF THE VENDEE’SBANKRUPTCY - by Patrick E. Mears - Winter 1988, p. 231. AN OVERVIEWOF THE BANKRUPTCYJUDGES, UNITEDSTATES TRUSTEES AND FAMILY FARMER BANKRUPTCY ACTOF 1986 - by Jay L. Welford - Winter 1986, p. 129. ANALYSISOF PRIORITY CLAIMSUNDER THE MICHIGANBUILDERS TRUST FUND ACT IN THE BANKRUPTCY SETTING- by Clifford J. DeVineand Ronald P. Strote - Summer1986, p. 39. HEADSTART vs. FRESHSTART: WHEN WILL THE ABUSES STOP? - by Robert S. Hertzberg and Michael J. Ryan - Spring 1986, p. 13. TIME SHARELAW AND THE 1984 BANKRUPTCYAMENDMENTS - by John D. Fershee - Spring 1986, p. 3. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 237
TREATMENTOF LANDCONTRACTS IN BANKRUPTCY-EXECUTORYCONTRACTS OR LIENS? - by Louis P. Rochkindand Jay L. Welford - Winter 1984, p. 484. THE EFFECT OF BANKRUPTCYAMENDMENTS AND FEDERAL JUDGESHIP ACT OF 1984 ON THE REAL ESTATEPRACTITIONER - by Louis P. Rochkind and Jay L. Welford - Fall 1984, p. 442. STATEMENTCONCERNING HOUSE BILL NO. 4095 - by Louis P. Rochkind - Summer1983, p. 146. THE EFFECT OF AUTOMATICSTAY PROVISIONS OF THE BANKRUPTCYREFORM ACT OF 1978 ON THE STATUTORYRIGHT OF REDEMPTION- by Wallace M. Handler - October 1982, p. 211. I~ROKER AND MORTGAGESERVICES LIABILITYOF SELLERSAND REAL ESTATE LICEIX~SEES FOR NONDISCLOSURE OF DEFECTS - by Gall Anderson - Summer2003, p.53. HUDTREK VIII: THE UNDISCOVEREDBROKER FEE, OR HI! I’M FROMHUD AND I’M HERETO HELP YOU- by HowardA. Lax - Spring 1998, p. 37. PRICE v LONGREALTY - REVISITING THE APPLICABILITYOF THE MICHIGANCONSUMER PROTECTION ACT TO CERTAINCONDUCT OF REALESTATE LICENSEES - by Gail A. Anderson and Deborah A. Lee - Fall 1993, p. 135. REGULATIONOF REALESTATE BROKERS AND SALESPERSONS IN MICHIGAN- AN UPDATE-by Gregory L. McClellandand Gail A. Anderson- Fall 1993, p. 131. BUYERBROKERING - CHANGINGSOME OF THE RULESIN RESIDENTIALREAL ESTATE TRANSACTIONS - by Gregory L. McClelland, Gail A. Andersonand Paula A. Charland - Fall 1991, p. 113. REALESTATE BROKERS - COMMISSION DISPUTES - by Gregory L. McClelland and Gall A. Anderson - Fall 1990, p. 115. THEMORTGAGE BROKERS, LENDERS, AND SERVICERS LICENSING ACT OF 1987 - by Murray E. Brown - Spring 1988, p. 27. REGULATIONOF THEREAL ESTATE PROFESSION IN MICHIGAN- by George J. Siedel, Ill - June 1982, p. 124. SALEOF HUDPROJECTS - "TRANSFEROF PHYSICALASSETS" - by Jefferson F. Riddell - April 1981, p. 24. CIVIL RIGHTS U.S. DISTRICT COURTHOLDS THAT THE CITY OF TAYLOR’SREFUSAL TO ALLOWA TWELVE-PERSON ADULTFOSTER CARE HOME TO LOCATEIN A SINGLE-FAMILYRESIDENTIAL DISTRICT VIOLATEDTHE FAIR HOUSINGAMENDMENTS ACT - by Gregory Bator - Summer1995, p. 123. U.S. DISTRICT COURTHOLDS THAT THE 1500-FOOT RULE ANDNEIGHBOR NOTIFICATION RULE VIOLATE THE FAIR HOUSINGAMENDMENTS ACT ANDTHE EQUALPROTECTION CLAUSE OF THE U.S. CONSTITUTION - by Gregory Bator - Summer!995, p. 119. CONDOMINIUMS,SUBDIV!SIOI~/S, COOPERATIVESAND PUDS MIXAI~ID MATCH;ISSUES WITH MIXED-USE CONDOMINIUMS - by H. William Freeman - Spring 2004, p. 21. UPDATESTO THE NEWAMENDMENT TO THE MICHIGANCONDOMINIUM ACT - by C. Kim Shierk - Fall 2002, p. 137. THE NEW AMENDMENTSTO THE MICHIGAN CONDOMINIUMACT - KNOWTHE CHANGESTHAT WILL AFFECTTHE PRACTICE OF CONDOMINIUMLAW- by Mark F. Makowerand C. Kim Shierk - Summer2002, p. 69. CHANGESTO CONDOMINIUMDEVELOPMENT AND OPERATION - by C. Kim Shierk - Winter 2001, p. 191. Winter 2004 - Page 238 MICHIGANREAL PROPERTYREVIEW
ATTORNEYFEES IN CONDOMINIUMENFORCEMENT ACTIONS - THE LIMITS OF JUDICIAL DISCRETION- by Mark F. Makowerand Christopher S. Hartman- Winter 2000, p.197. ASSOCIATIONGOVERNANCE AT THE CROSSROADS:THE INTERSECTIONOF PRIVATE RESTRICTIONSAND PUBLICPOLICY - by John A. Stevens and Robert M. Meisner - Winter1999, 19. 203. REPLATTINGAND SUBDIVISION CHANGES: THE FRUSTRATINGPAPER CHASE - by Marc Daneman - Winter 1998, p. 195. UPDATEON THE LAND DIVISION ACT: 1996 P.A. 591 AND1997 P.A. 87 - by David E. Pierson - Summer1998, p. 71. WORKINGWITH THE NEW RULES OF THELAND DIVISION ACT- by James R. Brown and David W. Charron - Summer1997, p. 113. CONDOMINIUMASSOCIATIONS GET A BREAK- OR DO THEY?- by Steve Sowell - Winter 1995, p. 235. A SUBJECTINDEX OF THE CONDOMINIUMACT ANDREGULATIONS - by Ethan M. Powsner - Winter 1994, p. 209. THECONDOMINIUM ACT REVISITED - TENYEARS AFTER "DEREGULATION" - by Mark F. Makower- Fall 1993, p. 125. CONDOMINIUMSUBDIVISION PLAN - A PRACTITIONER’SCHECKLIST - by Jeffery R. Jones - Fall 1992, p. 115. MARINACONDOMINIUMS OR"DOCKOMINIUMS" - by C. Peter Theut and James Y. Stewart -Spring 1990, p. 17. AN ANALYSISOF A "PHENOMENON"- SITE CONDOMINIUMPROJECTS - by Mark F. Makower and Jeffery R. Jones - Winter 1989, p. 241. CONDOMINIUMDEREGULATION ACTCLARIFIED - by Jeffery R. Jones, Paul L. Nine and James P. Babcock - Fall 1983, p. 182. PROCEDURETO ESTABLISHA CONDOMINIUMUNDER THE DEREGULATIONACT - by James P. Babcock and Jeffery R. Jones - Fall 1983, p. 184. COMMENDINGTHE PLANNEDUNIT DEVELOPMENT- by Gerald A. Fisher o Summer 1983, p. 61. CONDODEREGULATION ARRIVES - COMPLETEWITH QUESTIONS - by Jeffery R. Jones and James P. Babcock, Spring 1983, p. 42. AN INTRODUCTIONTO TIME-SHARINGCONDOMINIUMS UNDER THE MICHIGANCONDOMINIUM ACT - by MarkS. Keegan- August 1982, p, 164. CONDOMINIUMDEREGULATION IN MICHIGAN - by James P. Babcock and Jeffery R, Jones -August 1982, p. 157. THE LANDCONTRACT CONDOMINIUM PURCHASER - THE DISENFRANCHISEDOWNER - by John A. Stevens - February1982, p. 3, TIME SHARECONDOMINIUMS - by Gary J. Mclnemey- December 1981, p. 164. CONDOMINIUMS:HASSLE OR CASTLE- by Earl I. Sherman - December 1980, p. 172. CONSTRUCTION STOKES- REDUX- by Mark S~ Frankel - Winter 2003, p, 201. CONSTRUCTIONSUBCONTRACTS: SHIFTING THE RISK OF NON PAYMENTTHROUGH "PAY IF PAID" CLAUSES- by Brian H, Holt - Spring 2003, p. 9. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 239
STOKESv MILLENROOFING CO.: THE MICHIGANSUPREME COURT PUTS TEETHBACK INTO THE RESIDENTIAL BUILDERS ACT’S PROHIBITION AGAINST SUITS FOR COMPENSATIONBY UNLICENSEDRESIDENTIAL CONTRACTORS- by Mark E. Merlanti - Spring 2003, p. 21. ADVISINGCLIENTS AFTER STOKES - by Mark S. Frankel - Summer2001, p. 79 PERSONALLIABILITY OF A CORPORATEOFFICER FOR VIOLATIONOF THE MICHIGANBUILDER’S TRUST FUNDACT - by Eric I. Lark and MatthewC. Norris - Summer2000, p. 93 MICHIGAN’SBUILDER’S TRUST FUND ACT REVISITED: IS A "SUPPLIER" A SUBCONTRACTOR/TRUSTEE?- by Ronald P. Strote and Clifford J. De Vine - Summer1999, po 77. ANALYSISOF EFFECT ON SUBCONTRACTORSAND SUPPLIERS OF CONTINGENTPAYMENT CLAUSES - by Eric I. Lark and MatthewC. Norris - Fall 1998, p. 173. CONSTRUCTIONLIENS FOR "SOFT SERVICES"AND "HIDDEN IMPROVEMENTS" - by John A. Stevens - Spring 1998, p. 49. RAISING THE ROOF FOR THE HOMEOWNER:REJECTING THE PASSIVE APPROACHTO HOMEOWNER REPRESENTATIONIN RESIDENTIALCONSTRUCTION LIEN FORECLOSURES- by Marilynn K. Arnold - Summer 1997, p. 129. ENFORCEABILITYOF THE "PAY-IF-PAID" PROVISIONIN A CONSTRUCTIONCONTRACT - by Lawrence M. Dudek- Summer1996, p. 87. THE CASEFOR PROMPTPAY LEGISLATIONFOR PRIVATECONSTRUCTION PROJECTS - by Clark C. Johnson and Jerome WoZimmer - Summer1995, p. 103. SMALLEYTO PRICETO ERB: A TIME-PRICETRILOGY - by Ronald P. Strote - Summer1995, p. 115. CONSTRUCTIONLIENS IN MICHIGAN- OWNER’SOR INSURER’SRISK? - by Stephanie M. Zimmerman- Spring 1995, p. 25. THEMICHIGAN BUILDERS TRUST FUND ACT: AN OVERLOOKEDREMEDY? - by Daniel Mo Morley - Spring 1994, p. 13. RECOVERYOF CONSEQUENTIALDAMAGES AND DELAY/DISRUPTION DAMAGESFROM PAYMENTBOND SURETIES- by Clifford J. DeVineand Mark W. Mclnerney - Summer1993, p. 63. SUMMARYOF DECISIONSUNDER THE CONSTRUCTION LIEN ACT- by Matthew Norris, Marry A. Burnstein and Ronald Lo Cornell, Jr. - Summer1993, p. 53. FRAUDULENTPUBLIC WORKS BONDS: NO RIGHT, NO REMEDY- by Sheryl A. Collins Summer 1992, p. 53. THE CONSTRUCTIONCONTRACT REVISITED: KEY CONTRACT CLAUSES - by Ronald P. Strote - Summer 1990, p. 87. RESOLVINGCONSTRUCTION PROJECT CHANGES - by David M. Hayes and Sheryl A. MoodyFall 1989, p. 151. ANALYSISOF CONSTRUCTIONSUBCONTRACT AGREEMENTS - by Clifford J. DeVine -Summer 1989, p. 67. RESOLVINGCONSTRUCTION DISPUTES: ALTERNATIVES TO LITIGATION- by Mary A. Bedikian - Winter 1988, p. 249. LABORAND MATERIAL PAYMENT BONDS: AN OVERVIEW- by Ronald P. Strote - Summer 1988, p. 101. RECOVERYOF INTEREST OR FINANCE CHARGESIN CONSTRUCTIONLIEN FORECLOSUREACTIONS - by Lawrence M. Dudek - Summer1987, p. 3. ALTERNATIVETHEORIES FOR RECOVERYOF CONSTRUCTIONCLAIMS - by Clifford J. DeVine and Dana I. Avrunin- Fall 1985, p. 168. Winter 2004 - Page 240 MICHIGAN REAL PROPERTY REVIEW
HOMECONSTRUCTION - by John W. Steckling - Summer 1984, p. 366 HOMEOWNERCONSTRUCTION LIEN RECOVERYFUND - by Dayna Milbrand - Summer 1984,p. 339 LIEN CLAIMANTSAND NON-TITLEHOLDERS, LESSEES AND LAND CONTRACTPURCHASERS: NEW ACT, OLD PROBLEMS- by E. Peter Drolet and Ronald P. Strote - Summer 1984, p. 345 COMPETING PRIORITY CLAIMS UNDER THE MICHIGAN BUILDER’S TRUST FUND ACT - by Stanley Mo Weingarden and Clifford J. DeVine - Summer1983, p. 70. MICHIGAN’SNEW CONSTRUCTION LIEN ACT - by Robert S. Bolton, Patrick D. Hanes, A. Deane Malaker, Peter A. Nathan, Richard W. Pennings, and Stanley M. Weingarden - April 1982, p. 41. A TITLE INSURER LOOKSAT THE CONSTRUCTIONLIEN ACT - by Deane Malaker - June 1981, p. 42. WILLIAMS& WORKSv SPRINGFIELDCORPORATION REVERSED - by James W. Batchelor -August1980, po 111. EXPANDEDAPPLICATION OF BUILDER’STRUST FUNDACT - by Stanley M. Weingarden -April 1980, p. 46. MECHANIC’SLIENS ANDRESIDENTIAL BUILDERS’ LICENSES - by Gary A. Trepod - April 1980, p. 52. PENDING LEGISLATIONREGARDING MICHIGAN’S MECHANIC’SLIEN LAW~ by Richard W. Pennings - April 1980, p. 38. STATUSOF WILLIAMSAND WORKS, INC. v SPRINGFIELDCORPORATION, ET AL - by James W. Batchelor - April 1980, p. 55. EMINENT DOMAIN
THE ADMISSIBILITY OF OFFERS AND PURCHASEAGREEMENTS AS EVIDENCE OF VALUE IN CONDEMNATION TRIALS- by Ho Adam Cohen and Jason C. Long - Fall 2004, p. 157.
THE BAR IS RAISED? AN ANALYSIS OF CITY OF NOVI v ROBERTARDELL CHILDREN’S FUNDEDTRUST, et al. - by Arthur C. Spalding and Eric R. Starck - Spring 2003, p. 15 REGULATORY TAKINGS AND THE RIGHT OF OPTION HOLDERS TO PURSUE DAMAGES FOR JUST COMPENSATION- by Robert J o Siebert - Summer 2002, p. 63. UNITED STATES SUPREME COURT STANDS UP FOR PROPERTY OWNERIN REGULATORYTAKINGS CASE - by Richard E. Rassel - Winter 2001, p. 187. THE "PUBLIC USE" LIMITATION ON THE TAKINGOF PROPERTY: ALIVE AND WELLIN MICHIGAN- by David W. Berry and Ronald E. Reynolds - Fall 2001, p. 145 GOVERNMENTALDAMAGES: REAL ESTATE AND RELATED DAMAGESRESULTING FROM INTENTIONAL AND UNINTENTIONALGOVERNMENT ACTS - by Jerome P. Pesick and H. Adam Cohen - Fall 2000, p. 123. BUSINESS CLAIMS FOR GOING CONCERNVALUE IN CONDEMNATIONCASES - by Thomas J.McCarthy - Fall 1999, p. 143. PUBLIC PURPOSE CHALLENGESIN CONDEMNATIONPROCEEDINGS - by Mark Zausmer - Fall 1996, p. 165. LEASE CONDEMNATIONCLAUSES - THE LANDLORD’SWINDFALL - by Gary A. Taback -Summer 1996, p. 95. DETERMINING REASONABLE ATTORNEY FEES UNDER THE UCPA: COMMENTS ON DEPARTMENT OF TRANSPORTATIONv D&TCONSTRUCTION COMPANY - by Patrick F. Isom - Fall 1995, po 191.
WHAT IS THE PROPER STANDARD FOR REIMBURSEMENT OF ATTORNEY FEES UNDER THE UNIFORM CONDEMNATIONPROCEDURES ACT? - by Frederick D. Steinhardt - Fall 1995, p. 187. CONSIDERATIONOF ENVIRONMENTALISSUES WITHIN A CONDEMNATIONPROCEEDING -by Richard A. Barr and Jerome P. Pesick - Fall 1994, p. 153. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 241
U.S. SUPREMECOURT HOLDS THAT DEDICATION REQUIREMENT TO OBTAINAPPROVAL OF DEVELOPMENT CONSTITUTESA TAKING - by David W. Berry and Susan K. Friedlaender - Fall 1994, p. 159. BURDENOF PROOF, RANGEOF TESTIMONYAND APPELLATEREVIEW IN CONDEMNATIONPROCEEDINGS - by Allan T. Ackermanand Gregory A. Buss - Winter 1991, po 155. EMINENTDOMAIN LAW FOR THE GENERAL PRACTITIONER - by David Wo Berry and Clara DeMatteis Mager - Winter 1989, p. 233. REIMBURSEMENTOF ATTORNEYFEES AND LITIGATION COSTS UNDERTHE UNIFORMCONDEMNATION PROCEDURESACT - by Boris K. Yakima - Winter 1989, p. 249. ATTORNEYFEES IN CONDEMNATIONCASES - by Walter B. Mason, Jr. and Frederick D. Steinhardt - Fall 1986, p. 73. ¯ PRACTICEUNDER THE UNIFORM CONDEMNATION ACT- by Walter B. Mason and Frederick D. Steinhardt - Fall 1983, p. 177. ENVIRONMENT A PROGRESSREPORT ON THE PROMULGATIONOF RULES FOR "ALL APPROPRIATE INQUIRY" UNDER CERCLA- by R. Craig Hupp- Winter 2004, p. 215. NOT ANOTHERDAY AT THE BEACH - MICHIGAN’S NEWGREAT LAKES SHORELINE MAINTENANCE REGULATIONS- by Patricia Paruch, Winter 2003, po 193. CONSERVATIONEASEMENTS IN MICHIGAN: SEEKING COMMONGROUND BETWEEN LANDOWNERS AND LANDTRUSTS - by Robert L. Brackenbury - Fall 2001, p. 117 THE 2000 BROWNFIELDAMENDMENTS: HOW TO TURN CONTAMINATED,BLIGHTED OR OBSOLETE PROPERTYINTO SUCCESSFULBROWNFIELD REDEVELOPMENT PROJECTS - by Grant R. Trigger and Richard A. Barr - Winter 2000, p. 179. HOWTO PROTECT BUYERS OF CONTAMINATEDPROPERTY FROMENVIRONMENTAL LIABILITY WITH CERCLAPROSPECTIVE PURCHASER AGREEMENTS--AND THE LIMITATIONSOF DOINGSO - by Christopher J. Dunsky- Winter 1999, p. 183. IN RE FORTYACRES - JUDICIAL INTERPRETATIONOF THE MICHIGANSUPERPRIORITY ENVIRONMENTAL LIEN STATUTEPOSES NEW PROBLEMS - by Jack D. Shumate and Patrick A. Karbowski - Spring 1999, p. 25. NEWBROWNFIELDS OPPORTUNITIES IN MICHIGAN- THROUGHLIABILITY REFORM, CLEANUPCOST REDUCTIONAND FINANCIAL INCENTIVES - by Grant Ro Trigger - Winter 1997, p. 281. UNEARTHINGTHE STATE’S "HIDDEN PRIORITY" ENVIRONMENTALLIEN, OR HOWTO LOSE YOURLIEN PRIORITYWITHOUT EVEN TRYING - by Patrick A. Karbowski - Spring 1997, p. 41. FEDERALLEAD-BASED PAINT DISCLOSUREREQUIREMENTS: AN UPDATE- by Gregg A. Nathanson - Winter 1996., p. 213. THE U.S. SUPREMECOURT CLARIFIES THE LAWON RCRACITIZEN ENFORCEMENTACTIONS - by Jack D. Shumate - Summer1996, p. 91. BUILDINGOWNERS BEWARE - OSHAEXTENDS ITS REACH- by James A. Gray, III - Winter 1995, p. 231. ONLYPOLLUTERS PAY - MAYBE:IMPLICATIONS OF ACT 307/PART 201 AMENDMENTSFOR MORTGAGE 12ENDERS- by Vicki RI Harding - Winter 1995, p. 225. THE REGENTAMENDMENTS TO ACT 307: REASONAND SANITY PREVAILS OF "THE WORSTASSAULT ON THEENVIRONMENT BYSELFISH INTEREST IN THIS CENTURY"- by Grant R. Trigger - Fall 1995, p. 171. Winter 2004 - Page 242 MICHIGANREAL PROPERTYREVIEW
FEDERALLEAD-BASED PAINT DISCLOSUREREQUIREMENTS ARE JUST AROUNDTHE CORNER- by Gregg A. Nathanson - Summer1995, p. 93. SIXTH CIRCUIT FINDS TURNER"SUBSTANTIAL CONTINUITY" RULE OF SUCCESSORLIABILITY INAPPLICABLE OUTSIDETHE CONTEXT OF PRODUCTSLIABILITY - by Saulius K. Mikalonis, Esq. - Spring 1995, p. 37. FEDERALREGULATION OF RIPARIANRIGHTS - by Kevin T. Smith - Fall 1994, p. 147. ALCANAND BELL PETROLEUM:THE FEDERALCOURTS RECONSIDER JOINT AND SEVERALLIABILITY IN SUPERFUNDCASES - by Jack D. Shumate - Summer1994, p. 81. APPELLATECOURT OVERTURNS EPA’S LENDERLIABILITY RULE - by Peter D. Holmes Summer1994, p. 87. NAVIGATINGTO CERCLA’SSAFE HARBOR: EPA’S LENDER LIABILITY RULE - by Peter D. Holmes - Winter 1993, p. 161. IMPACTOF LUCASv SOUTHCAROLINA COASTAL COUNCIL ON MICHIGAN’SWETLAND ACT - by David W. Berry and Susan K. Friedlaender - Winter 1992, p. 177. STRUCTURINGREAL ESTATE TRANSACTIONSIN THE ERA OF THE POLLUTERSPAY LAW- by Jack D. Shumateand Paul S. Lewandowski- Fall 1992, po 93. THE AMENDEDSAND DUNES PROTECTIONAND MANAGEMENTACT: DNR GETS SOME POTENTIAL NEW ALLIES- by MichaelF. Skinner - Fall 1990, p. 129. MICHIGANWETLAND PROTECTION ACT: THESTATE’S PERSPECTIVE - by John Arnsman and Steve Sadewasser - Spring 1990, p. 23. REGULATIONOF UNDERGROUNDSTORAGE TANKS IN MICHIGAN- by Robert A. Hykan and John C. Burchett - Winter 1989, p. 215. PROPERTYTAX RELIEF FOR CONTAMINATED PROPERTY - by Julianna B. Miller - Fall 1989, p. 167. ASBESTOSAND CONSTRUCTIVE EVICTION: DETERMININGA STANDARDOF FITNESS FOR LEASEHOLDS- by LawrenceR. Shoffner - Spring 1989, p. 11. CITIZEN SUITS UNDERTHE CLEANWATER ACT - GWALTNEYMUDDIES THE WATERS- by Peter D. Holmes - Spring 1989, p. 17. ENVIRONMENTALRISK ASSESSMENTFOR REALESTATE TRANSACTIONS - by James M. Harless - Winter 1987, p. 81. NEGOTIATINGENVIRONMENTAL PROVISIONS IN REALESTATE TRANSACTIONS - by Alan S. l_~vine - Winter 1987, p. 74, FIRST AID FOR THE BUYER- REMEDIESFOR THE PURCHASEOF CONTAMINATEDPROPERTY - by John D, Dunn- Winter 1987, p. 87. REALESTATE TRANSACTIONS IN THEAGE OF SARA- by Jack D. Shumate - Winter 1987, p. 70. CURRENTDEVELOPMENTS IN MICHIGAN ENVIRONMENTAL LAW - by Joseph M. Polito - Fall 1985, p. 113. ENVIRONMENTALIMPAIRMENT LIABILITY INSURANCE - by Jack D. Shumate - Summer1985, p. 87. THEENVIRONMENTAL PERILS OF LANDOWNERSHIP - b~, Jack D. Shumate - Summer 1985, p. 92. RECENTMICHIGAN SUPERFUND ACTIONS - by Jack D. Shumate - Summer 1985, p. 97. SOLAREASEMENTS UNDER HB 4083 and HB 4127 - by Dearie Malaker - June 1980, p, 66. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 243
FORECLOSURE/FORFEITURE FORECLOSUREOF REAL PROPERTYTAX LIENS UNDERMICHIGAN’S NEWFORECLOSURE PROCESS - by Kevin T. Smith - Summer2002, p. 51. PRE-FORECLOSURESALE LOSSES: A TRAPFOR THE UNWARYMORTGAGEE - by Steve Sowell - Summer 1998, p. 107. IS THEREPOSSESSION AFTER FORFEITURE? - by ThomasW. Hall, Jr. and Diane M. Kuhn -Spring 1993, p. 29. FORFEITUREUNDER LAND CONTRACTS: TO POSSESSOR NOTTO POSSESS- by Alan M. Oravec - February 1981, p. 2. ~LEASING A POTENTIALDANGER FOR LESSEES ANDLEASEHOLD MORTGAGEES: THE PRECISION INDUSTRIES CASE - by Stephen E. Dawsonand Patrick E. Mears - Summer2004, p. 91. TERMINATIONOF THE COMMERCIALLEASE DESPITE LANDLORD’SBREACH - by Lawrence M. Shoffner - Winter 2003, p. 185. ASSIGNABILITYOF COMMERCIALLEASES: MICHIGANLAW AND DRAFTINGCONCERNS - by Kenneth F. Possner and KennethM. Kalousek, Fall 2003, p.109 PROPOSALA OF 1994 ANDLEASES: OWNER,TENANT AND BUYER BEWARE - by David E. Nykanen - Spring 2001, p. 29 RES JUDICATAAND SUMMARY PROCEEDINGS: MUCH ADO ABOUT NOTHING? - by Lawrence R. Shoffner - Spring 2000, p.37. MICHIGANSUMMARY PROCEEDINGS AND THE FAIR DEBT COLLECTIONPRACTICES ACT: A SEA CHANGE FORLANDLORDS’ LAWYERS? - by Lawrence Shoffner and Eric S. Bronstein - Spring 1999, p. 31. ARE THE RULESCHANGING? NAVIGATING REASONABLENESS IN COMMERCIALLEASING - by David A. Kreis and Aaron D. Sims - Winter 1998, p. 203. LEASEGUARANTY MAY BE ENFORCEABLEDESPITE LANDLORD’SFAILURE TO PERFECTITS LIEN - by Eric S. Bronstein - Fall 1998, p. 179. A PRACTICALAPPROACH TO LANDLORD/TENANTOBLIGATIONS UNDER THE FEDERALFAIR HOUSINGACT ANDTHE MICHIGANHANDICAPPERS’ CIVIL RIGHTSACT - by Thomas E. Moorhead, JoD. - Summer 1998, p. 111. TENANT’SCONTRACTUAL OBLIGATION TO SURRENDERLEASED PREMISES IN A PRESCRIBEDCONDITION AFTERTERMINATION OR EXPIRATIONOF LEASETERM: IGHTS AND REMEDIES OF THE PARTIES- by Richard A. Sundquist - Spring 1998, p. 7. COMMERCIALLEASE DISPUTES: RECENTCASES AFFECTINGLITIGATION STRATEGY- by Lawrence R. Shoffner - Spring 1997, p. 47. THEUNINTENDED INDEMNIFICATION OF A LANDLORD- by Arthur A. Homing - Spring 1995, p. 33. DAMAGESFOR UNLAWFUL EVICTION - by N. O. Stockmeyer, Jr. - Fall 1994, p. 157. MICHIGANCOURT OF APPEALSINTERPRETS THE ASSIGNMENTOF RENTSSTATUTE - by James R. Cambridge and Patrick J. Haddad- Fall 1994, p. 161. ANALYZINGLEASE TAX CLAUSES IN RESPONSETO POTENTIALTAX RESTRUCTURING - by Alan M. Hurvitz and Kenneth F. Posner - Summer1994, p. 61. Winter 2004 - Page 244 MICHIGANREAL PROPERTYREVIEW
CONVENIENCEAT QUALITY’SEXPENSE: BEWARE OF THE FORMLEASE! - by Sean M. Carty -Spring 1993, p. 33. COMMERCIALLEASES: EFFECT OF LANDLORD’SBREACH ON TENANT’SOBLIGATION TO PAY RENT - by LawrenceR. Shoffner - Summer1990, p. 75. LANDLORDLIABILITY FOR CRIMINAL ACTS OF THIRDPARTIES - by Michael W. Maddin and Mark H. Fink - Spring 1990, p. 43. EVICTIONIN MICHIGAN:DRAFTING AND PLANNING TECHNIQUES TO ENHANCETHE LANDLORD’SPOSITION - by LawrenceR. Shoffner - Summer1988, p. 89. MICHIGANHOUSING CODE CLAIMS AND DEFENSES DURING EVICTION - by Michael G. Slaughter - Winter 1986, p. 115. LIMITATIONSON THELESSEE’S USE OF THEPOOLING CLAUSE - by David A. Lawler and Richard D. Moritz - Summer1986, p. 49. INSURANCEAND THE STANDARDFORM OF COMMERCIALLEASE - by Michael W. Maddin and lan D. Pesses - Summer1984, p. 350. THELANDLORD’S LIABILITY FOR INJURIES ON THEPREMISES - by James Marshall - August 1981, p. 108. MORTGAGEAND LENDING ISSUES CONDOMINIUMSAS COLLATERAL:WHAT LENDERS SHOULD KNOW - by Scott A. Steinhoff and Casey Koppelman- Summer2004, p. 79. MORTGAGEFORECLOSURE AND RELATEDREMEDIES UNDER MICHIGAN LAW - by Lawrence M. Dudek - Winter 2003, p. 173. THE MICHIGANCONSUMER MORTGAGE PROTECTION ACT: THE CURE FOR PREDATORYLENDING OR JUST ANOTHERHAT IN THERING? - by Howard E. Lax - Spring 2003, p. 27. INSURANCECOVERAGE CONCERNS IN LENDER-BORROWERRELATIONSHIPS - by Michael S. Hale and Joel D. Kellman- Winter 2002, p. 177. FINANCIALPRIVACY IS A LONGFOUR LETTER WORD - by Howard A. Lax - Summer 2001, p. 63 HUDAND FANNIE MAE REQUIREMENTS FOR BORROWER ENTITIES - by C. Leslie Banas - Winter 2000, p. 213. MORTGAGEWORKOUTS: DEEDS IN ESCROW- by John C. Murray - Fall 2000, p. 133. FEDERALPRIVATE MORTGAGE INSURANCE LEGISLATION: PROTECTION IN A REGULATOR-FREEENVIRONMENT - by Elliot A. Spoon- Summer2000, p. 85 THENEW FANNIE MAF_./FREDDIEMAC UNIFORM NOTE AND MORTGAGE: A BRIEF REVIEWby Mark K. Rabidoux - Fall 1999, p. 151 THE "LANDCONTRACT MORTGAGE" - IT’S BRANDNEW - by Gary A. Taback - Winter 1998, p. 211. LENDINGTO A LIMITEDLIABILITY COMPANY - A LENDER’SCONCERN - by W. A. Steiner, Jr. - Winter 1996, p. 217. LOANDOCUMENTS IN PERPETUITY? - by Robert R. Nix II - Winter 1996, p. 221. LATECHARGE EXPORTATION BY NATIONALBANKS CONFIRMED BY U.S. SUPREMECOURT - by Laura Nieber - Fall 1996, p. 169. A GUIDETO MICHIGAN’SNEW CREDIT REFORM ACT - by Laura Nieber - Summer1996, p. 67. IN RE BOYD- MUSTA MORTGAGECONTAIN REPAYMENT TERMS? - by Penny B. Webster -Spring 1996, p. 19. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 245
THE REAL ESTATE SETTLEMENTPROCEDURES ACT ANDHUD’S REGULATIONX: OH HUD! -by Howard A. Lax - Winter 1994, p. 181. MORTGAGINGHOMESTEAD - by Willard Go Moseng - Spring 1994, p. 19. LANDCONTRACT INTERESTS AS COLLATERAL- by Laurence D. Rich - Winter 1993, p. 185. ORALPROMISES TO LEND UNDER MICHIGAN’S ACT 245 - by David E. Dora~ and Daniel J. Brondyk - Winter 1993, p. 175. REAL ESTATE SETTLEMENTPROCEDURES ACT (RESPA) AND HUD’S REGULATIONX: WHATHATH HUD WROUGHT?- by Howard A. Lax - Summer1993, p. 81. WARNING:THE BANKMUST SIGN THE PROMIS,~ORYNOTE (OR AT LEASTA WRITING)- by Gary A. Taback - Winter 1992, p. 185. FUTUREADVANCE MORTGAGES ACT: TO AMENDOR NOTTO AMEND?- by Vicki R. Harding - Winter 1991, p. 139. A SELECTEDSURVEY OF PUBLICFINANCING ALTERNATIVES - by James W. Bliss, Cynthia B. Faulhaber, Terrence Po Grady, Michael L. Lencione, Jeffrey M. McHugh,and Timothy D. Sochocki - Summer1991, p. 43. LENDERLIABILITY: SHOULD LENDERS CARE ABOUT "DUE CARE"? - by James L. Allen - Summer1989, p. 83. LENDERLIABILITY: THE DONE DEAL? - by John E. Anding - Winter 1988, p. 259. SHARELOAN FINANCING FOR THE COOPERATIVE MEMBER - by Michele Cubbison and James N. Candler, Jr. - Spring 1988, p. 9. EVERYTHINGYOU EVER WANTEDTO KNOWBUT WEREAFRAID TO ASK ABOUTORIGINAL ISSUE DISCOUNT (OID) ANDIMPUTED INTEREST - by Mark L. Robinson and Warren J. Ligan - Fall 1986, p. 77. MORTGAGEFORECLOSURE SALES AS FRAUDULENTCONVEYANCES - by Ronald P. Strote -Spring 1986, po 8. A COMMENTARYUPON AND CRITIQUE OF ACT 351, PUBLIC ACTS OF 1984: MICHIGAN’S ANSWERTO FEDERALPREEMPTION OF STATE LAWGOVERNING ENFORCEABILITY OF DUE-ON-SALECLAUSES - by William Bo Dunn- Summer1985, p. 80. ANOTHERACRONYM COMES OF AGE, OR WILL FIRPTA’S NEWWITHHOLDING REQUIREMENTS FREEZE FOREIGNINVESTMENT IN THEUNITED STATES? - by Kaplin Jones and Nyal Deems - Summer1985, p. 29. INFORMATIONALREQUIREMENTS FOR SMALLREAL ESTATE PRIVATE OFFERINGS - by Gall A..Berry - Spring 1984, p. 303. BANKBOARD FINAL REGULATIONSFOR DUE-ON-SALEUNDER GARN-ST. GERMAINE ACT -by William B. Dunn - Summer!983, p. 90. A SU.RVEYOF PUBLICFINANCIAL ASSISTANCE TO REALESTATE DEVELOPMENT - by .Frank L. Andrews, Gerald P. LaHaie, ThomasS. Leven, Dennis R. Neiman,and Jefferson F. Riddell - Spring 1983, p. 3. G,~aN-ST. GERMAINEAND DUE-ON-SALE CLAUSES IN MICHIGAN- by Timothy A. Fusco -December 1982, p. 275. FIRST MORTGAGEINTEREST RATE ON RESIDENTIALREAL PROPERTY IN MICHIGAN- by Patrick D. Hanes - August 1982, p. 169. THE TIME PRICE DIFFERENTIAL:A BONDCLAIMANT’S VEHICLE FOR RECOVERYOF SERVICECHARGES - - by ’.Robert R. Nix, II - June 1982, p. 121. MICHIGANSTATUTORY INTEREST RATE CEILINGS IMPOSED BY STATELAW - February 1982, p. 10. Winter 2004 - Page 246 MICHIGANREAL PROPERTYREVIEW
SYNDICATIONSAND OTHER AREAS OF REALESTATE FINANCING IN THE1980’s - by Craig Hall - December 1981, p. 189. AN ANALYSISOF MICHIGAN’SNEW USURY STATUTES - by James Marshall - June 1980, p. 86. FEDERALPREEMPTION OF STATEUSURY CEILINGS UNDER PUBLIC LAW 96-161- by Robert H. Janover - June 1980, p. 76. OFFERINGLIMITED PARTNERSHIP INTERESTS UNDER THE NEWMICHIGAN PRIVATE OFFERING EXEMPTIONS - by Joel J. Morris - February1980, p. 2. OIL, GAS AND MINERAL RIGHTS SEVEREDMINERALS: RESTRICTIVE COVENANTSAS RESTRICTIONS ON SURFACEUSE BY THE MINERAL OWNER- by Susan HlywaTopp - Winter 2004, p. 209. IMPLIEDCOVENANT OF REASONABLEDEVELOPMENT [Oil and Gas Leases] - by Deborah Lo Bruce - Winter 1993, p. 181. REAL ESTATECLOSINGS AND OUTSTANDING OIL ANDGAS RIGHTS - DO THEYMIX? - by Mark A. Van Allsburg - Spring 1993, p. 17. THEGENERAL PROPERTY TAX AS IT PERTAINSTO INTERESTSIN OIL ANDGAS - by J. Donel Moore - Fall 1991, p. 91. POOLINGAND UNITIZATION IN MICHIGAN- by Thomas A. Nelson - Summer1989, p. 103. STATUTESPROMOTING MARKETABILITY OF OIL AND GAS TITLES: THE MICHIGANDORMANT MINERALS ACTAND ITS COUNTERPARTSAFTER TWENTY-FIVE YEARS - by James R. Brown - Fall 1988, p. 145. CURINGTITLE OF AN UNRELEASEDOIL ANDGAS LEASE - by David Ao Lawler - Fall 1984, p. 417. FARMOUTAGREEMENTS IN THEOIL ANDGAS INDUSTRY - by William H. Stephens - Fall 1984, p. 421. IMPLIED COVENANTSOF EXPLORATIONAND DEVELOPMENT IN OIL ANDGAS LEASES- by James R. Brown - Fall 1984, p. 391. INTERESTSARISING UNDER AN OIL ANDGAS LEASE - by T. T. Thompson- Fall 1984, po 386. POTENTIALRULE AGAINSTPERPETUITIES EFFECTS ON COMMONOIL, GAS ANDMINERAL TRANSACTIONS - by E. DanStevens - Fall 1984, p. 437. THEMICHIGAN DORMANT MINERALS ACT - by James R. Brown - Summer1983, p. 116. ANATOMYOF AN OIL ANDGAS LEASE - by Lawrence M. Elkus - Summer 1983, p. 100. COMMONOIL ANDGAS TERMS - by David A. Lawler - Summer1983, p. 96. HASMY OIL ANDGAS LEASE EXPIRED? THE HABENDUM CLAUSE - by T. T. Thompson- Summer1983, p. 113. SPACINGAND POOLING IN MICHIGAN- by Terence V. Lynamand William H. Stephens, III - Summer1983, p. 136. U.S. SUPREMECOURT DENIES CERTIORARIIN MICHIGANDORMANT MINERAL ACT CASES -by Allen E. Priestley - June 1982, p. 139. DORMANTMINERAL ACT HELD CONSTITUTIONAL - by Allen E. Priestley - June 1981, p. 80. PARTNERSHIPS,CORPORATIONS AND LIMITED LIABILITY COMPANIES MICHIGANAND DELAWARE LIMITED LIABILITY COMPANYACTS - A COMPARISONby Mark G. Kaylian and Richard A. Shapack- Fall 2004, p. 129. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 247
USE OF SPECIALPURPOSE ENTITIES IN REALESTATE FINANCING TRANSACTIONS - by John C. Murray - Fall 2002, p. 107. CAVEATMEMBER: COURTS BEGIN TO "PIERCE THE ENTITY VEIL," IMPOSINGPERSONAL LIABILITY ON LLCMEMBERS - by C. Leslie Banas and Jonathan Block - Spring 2002, p. 15. OPPRESSIONOF MEMBERSOF LIMITEDLIABILITY COMPANIES - by Jeffrey A. Supowit -Summer 1998, p. 103. PUBLIC ACT 52: A COMPREHENSIVEAMENDMENT OF THE MICHIGANLIMITED LIABILITY COMPANYACT - by C. Leslie Banas- Fall 1997, p. 225. A REALPROPERTY PRACTITIONER’S GUIDE TO THE UTILIZATIONOF LIMITEDLIABILITY COMPANIESIN REALPROPERTY TRANSACTIONS - by Tara E. Barr - Winter 1995, p. 217. THE MICHIGANLIMITED LIABILITY ACT: NEWOPPORTUNITIES FOR MICHIGANBUSINESSES- by William B. Acker and Gary Schwarcz- Fall 1993, p. 109. PARKER REVISITED: HAS THE LAW OF GOVERNMENTALIMMUNITY BECOMEA CONCERNIN THE DEVELOPMENTOF PUBLIC SERVICE FACILITIES? - by Jack D. Shumate - Summer1983, p. 75. VOTINGRIGHTS FOR LIMITED PARTNERSUNDER MICHIGAN’S REVISED UNIFORMLIMITED PARTNERSHIP ACT- by ThomasSo Vaughn- December1982, p. 261. PREMISESLIABILITY THE AFTERMATHOF SEPTEMBER11, 2001: IMPLICATIONSFOR THE REAL ESTATEINDUSTRY - by Susan Allene Kovachand KennethM. Kalousek - Spring 2002, p. 7. WHOIS LIABLEWHEN A PATRONIS ASSAULTEDON REALPROPERTY? - by David B. Lipski and Anissa C. Werner- Winter 2000, p. 205. A PRIMERON CASUALTYINSURANCE AND MISCELLANEOUS COVERAGE - by Michael W. Maddin - Summer 1997, p. 141. PROBATE AND ESTATE PLANNING THE AUGMENTEDESTATE: A REALPROPERTY NIGHTMARE? - by Margaret A. Meyers - Spring 1998, p. 43. ESTATEPLANNING FOR OWNERS OF REALESTATE: PART II - b~’ William B. Acker - Fall 1997, p. 211. ESTATEPLANNING FOR OWNERS OF REALESTATE - by William B. Acker - Fall 1996, p. 137. THE DESCENTAND DISTRIBUTION OF PROPERTYWHEN THE OWNERDOES NOT MAKEA WILL - by Allen E. Priestley - Spring1983, p. 37. REALESTATE TRANSACTIONS UNDER THE REVISEDPROBATE CODE - by Edward C. Dawda -February 1980, p. 13. PROFESSIONALRESPONSIBILITY ATTORNEYMALPRACTICE LIABILITY FOR FAILURETO FILE UCC FINANCINGSTATEMENT - by John C. Murray,Fall 2003, p. 137. ATTORNEYSARE NOT LEGALCONTRACTORS FOR PURPOSESOF FILING CONSTRUCTIONLIENS - by John KobyRobertson - Summer2001, p. 87 LET THE BUYERBEWARE: EXPLORING THE LIMITS ON SELLERS’ ATTORNEYS’DUTIES TO BUYERSOF REALPROPERTY - by J. Mark Cooney - Summer2000, po 89 JACK OF TWOTRADES: ETHICALCONSIDERATIONS FOR REAL ESTATE LAWYERSWHO ARE ALSO AGENTS OR OWNERSOF TITLE INSURANCEBUSINESSES - by David C. Anderson -Summer 1999, p. 83. Winter 2004 - Page 248 MICHIGANREAL PROPERTYREVIEW
THE NEWFRONTIER: THE INTERNETAND YOUR REAL ESTATE LAW PRACTICE - by HowardA. Lax - Winter 1996, p. 201. A RECORDRETENTION PLAN: WHY YOU NEED ONE - by Steven A. Mitchell - Fall 1996, po 161. MICHIGANREAL ESTATE MALPRACTICE 1995 - by William Co Roush - Summer1995, p. 73. ETHICSIN REALESTATE LAW - by William C. Roush - Fall 1994, p. 109. MICHIGANREAL ESTATE MALPRACTICE - A 1992 UPDATE- by William C. Roush - Winter1992, p. 167. THIRD-PARTYLEGAL OPINIONS: THE NEXT GENERATION - by Robert R. Nix, II, Vicki R. Harding, Dan M. Challa, Tyrone Ao Powell, GreggA. Nathanson, Denise J. Lewis, Ronald Eo Hodessand John A. Nitz - Fall 1992, p. 77. THIRDPARTY LEGAL OPINIONS: A NEWAGE DAWNS? - by William B. Dunn and Steven O. Weise - Summer1991, p. 63. CURRENTISSUES CONCERNINGTHE UNAUTHORIZEDPRACTICE OF LAWIN CONNECTIONWITH MICHIGAN REALESTATE TRANSACTIONS - by J. Patrick Martin and Mark W. Cherry - Winter 1990, p. 163. IMPACTOF THE NEWRULES OF PROFESSIONALRESPONSIBILITY ON REALESTATE LAWYERS - by J. Patrick Martin and MarkW. Cherry - Fall 1989, p. 173. REALESTATE MALPRACTICE EXPERIENCE - AN UPDATE- by William C. Roush - Summer1988, p. 67. IOLTAUPDATE - by Linda K. Rexer - Fall 1987, p. 32. REALESTATE MALPRACTICE EXPERIENCE IN MICHIGAN- by William C. Roush - Summer 1985, po 53. HOWTO AVOIDGRIEVANCES IN REALESTATE PRACTICE - by Michael Alan Schwartz - Winter 1984, p. 482. REALESTATE MALPRACTICE RISKS IN THEUSE OF LEGALFORMS - by William C. Roush - Winter 1984, p. 465. PROPERTY SALES AGREEMENTS REGULATORYTAKINGS AND THE RIGHT OF OPTION HOLDERS TO PURSUE DAMAGESFOR JUST COMPENSATION- by Robert J. Siebert - Summer2002, p. 63. TRUTHAND CONSEQUENCES:THE STATUTEOF FRAUDSAND ADMISSIONSIN COURT- by George D. Cameron,III - Winter 1985, po 186.
MICHIGAN’SNEW SELLER DISCLOSURE ACT: SELLERBEWARE - by Gregg A. Nathanson - Summer1994, p. 71. PITFALLSIN CLOSINGREAL ESTATE TRANSACTIONS - by W. A. Steiner, Jr. - Winter 1993, p. 189. THE LAWOF MUTUALMISTAKE AND LENAWEE:SHOULD MICHIGAN ABANDON ROSE 2nd OF ABERLONE? - by GeorgeD. Cameron,III - Spring 1984, p. 315. RESIDENTIALCLOSING PROBLEMS - by Philip R. Seaver - Summer1983, p. 85. TAXATION TAXATIONOF LANDLORDSAND TENANTS OF REAL PROPERTY:DEFERRED AND PREPAID RENT A PRIMER FORREAL PROPERTY PRACTITIONERS - by William B. Acker - Winter 2004, p. 184. NEWLEGISLATION IMPACTS TAX TREATMENTOF PRINCIPAL RESIDENCE CONVERTEDFROM A 1031 REPLACEMENTPROPERTY - by DawnM. Patterson - Winter 2004, p. 222. EXPLORETHE BENEFITSOF IRC SECTIONS121 AND1031 BEFORETHE SELLEROF REAL ESTATEREACHES THECLOSING TABLE - by DawnM. Patterson - Fall 2004, p. 150. MICHIGANREAL PROPERTYREVIEW Winter 2004 - Page 249
FEARAND LOATHING IN MICHIGAN’SFLOW-THROUGH ENTITY WITHHOLDINGTAX - by Paul V. McCord - Spring 2004, po 9. TAX-DEFERREDEXCHANGES OF SECONDHOMES AND MIXED-USE PROPERTIES - by Michael Ao Luberto - Spring 2004, p. 35. MICHIGAN’S NEWSLEEPER TAX ON SALES OF REAL ESTATE - THE "NEW" DEFINITION OF "GROSS RECEIPTS"UNDER THE SINGLE BUSINESS TAX ACT - by Alan M. Valade and Aaron M. Silver - Fall 2002, p. 123. PROPOSALA OF 1994 AND AGRICULTURALPROPERTY: FARMER, DEVELOPERAND TITLE COMPANY BEWARE- by David Eo Nykanen- Fall 2002, p. 131. FORECLOSUREOF REAL PROPERTYTAX LIENS UNDERMICHIGAN’S NEWFORECLOSURE PROCESS - by Kevin T. Smith - Summer2002, p. 51. ~ PRORATIONOF PROPERTYTAXES (REPRINTED) - by Robert F. Rhoades - Fall 2001, p. 151 SAFEHARBOR FOR REVERSE LIKE-KIND EXCHANGE TRANSACTIONS - by Dean Ao Rocheleau, Jeffrey K. Moore and WilliamB. Acker - Fall 2001, p. 131 TAX DEFERREDLIKE-KIND EXCHANGES:EARLY DISTRIBUTIONS BY QUALIFIED INTERMEDIARIES- FLEXIBILITYOR FOLLY? - by William B. Acker - Fall 2000, p. 153. ENFORCEMENTOF PROPERTY TAX LIENS - by Robert F. Rhoades - Fall 1999, p. 131 PROPERTYTAX ANDENVIRONMENTAL INDEMNIFICATION: IS SWEEPSTERSWEEPING SUPPORT FOR VALUES OFCONTAMINATED REALPROPERTIES? - by Patricia Paruch, Ronald S. Nixon and William B. Acker - Fall 1999, p. 147 A GUIDETO REALPROPERTY TAX EXEMPTION FOR HOUSINGDEVELOPMENT - by Margaret A. Meyers and Eldonna MoRuddock - Spring 1999, p. 7. CHECK-THE-BOX:A MAJOR STEP TOWARDTAX SIMPLIFICATION - by Richard A. Shapack and William Bo Acker - Spring 1998, p. 53. CURRENTABUSES OF THE ANTI-RAIDINGPROVISION OF ACT 198 ANDPROPOSED REFORMS [Properly Tax Abatement]- by ThomasP. Martin and Paul J. Mastrangel - Fall 1997, p. 249. THE"SPECULATIVE BUILDING" DESIGNATION IN ACT198 [Property Tax Abatement] - by Paul J. Mastrangel and ThomasP. Martin - Fall 1997, p. 253. OFF-BALANCESHEET FINANCING: SYNTHETIC REAL ESTATE - by John C. Murray - Spring 1997, p. 5. A ROADMAP THROUGH THE TAXSALE MINEFIELD: A TITLE INSURER’SPERSPECTIVE - by Catharine B. LaMont- Fall 1996, p. 149. "SUPERCAP"IS UNCONSTITUTIONAL,SAYS ATTORNEY GENERAL KELLEY - by Samuel J.. McKim, III and Joanne B. Faycurry - Fall 1996, p. 157. MICHIGAN’SPROPERTY TAX "CAP" - NOTAS SIMPLEAS IT SOUNDS- by Samuel J. McKim-Summer 1995, p. 109. LOCALASSESSORS RECEIVE A BELATEDCHRISTMAS PRESENT: ACT 415 REQUIRESTHE SUBMISSIONOF VALUATIONDATA - by Gall A. Anderson, James M. Marquardt and Michael W. Maddin - Spring 1995, p. 5. EXCHANGEREAL ESTATE AND SAVE TAX: RECENTDEVELOPMENTS CLARIFY PRACTICE APPLICATIONS - by WilliamB. Acker - Winter 1994, p. 195. FEDERALAND MICHIGANTAX ASPECTSOF REAL ESTATE PARTNERSHIPWORKOUTS AND FORECLOSURES - by John Jo Grant and WilliamBo Acker - Fall 1992, p. 103. Winter 2004 - Page 250 MICHIGANREAL PROPERTYREVIEW
FEDERALAND MICHIGANTAX ASPECTSOF REAL ESTATE PARTNERSHIPWORKOUTS AND FORECLOSURES - by John Jo Grant and William B. Acker - Winter 1991, p. 147. EXPANDEDREAL ESTATE REPORTINGREQUIREMENTS IMPACT MANY REAL ESTATE TRANSACTIONS- by William B. Acker - Summer1991, p. 69. TAXTITLES - by Lee P. Mohnkern- Winter 1990, p. 179. TAXON RECEIPTOF A PARTNERSHIPINTEREST FOR SERVICES:THE CAMPBELLCASE - by Richard S. Soble and WilliamB. Acker - Fall 1990, p. 123. DETERMININGTHE AMOUNTOF PARTNERSHIPDEBT INCLUDABLEIN A PARTNER’SBASIS UNDERTHE NEW REGULATIONS- by Richard S. Soble - Fall 1989, p. 161. CONSTITUTIONALITYOF TAX INCREMENTFINANCING LEGISLATION UPHELD IN ADVISORYOPINION ON CONSTITUTIONALITYOF 1986 PA 281 - by Kester K. So - Spring 1989, p. 31. NEWREAL ESTATEREPORTING REQUIREMENTS: A LITTLE MORESALT FOR THE WOUNDS- by Kaplin S. Jones and Nyal D. Deems- Spring 1988, p. 15. FEDERALAND MICHIGANLAW CHANGES AFFECTING PRIVATE PURPOSETAX-EXEMPT FINANCING, TAX INCREMENTFINANCING AND SPECIAL ASSESSMENTS - by James W. Bliss, Donald W. Kein, Mitchell R. Meisner, Timothy D. Sochocki and ThomasV. Yates - Winter 198.7, p. 51. THE JURISDICTIONALTIME PERIODSAND PREREQUISITES FOR FILING ANDAMENDING PETITIONS BEFORE THEMICHIGAN TAX TRIBUNAL - by Robert E. McCarthy - Fall 1987, p. 27. THE LOCALDEVELOPMENT FINANCE AUTHORITYACT OF 1986 - MORETAX INCREMENTFINANCING IN MICHIGAN- by Fred M. Woodruff - Summer1987, p. 6. REPORTINGREAL ESTATE SALES - THE1986 TAXREFORM ACT - by Carol Ann Martinelli -Spring 1987, p. 8. ASSF_~SINGSUBSIDIZED APARTMENTS: CONGRESSHILLS APARTMENTS I AND II - by Thomas J. Beale ~ Summer1984, p. 335. THEMENNONITE DECISION [Tax Sales] - by Allen E. Priestley - Winter 1983, p. 249. RESOLVINGREAL ESTATE VALUATION DISPUTES BY ARBITRATION- by Lamont M. Walton -Fall 1983, p. 191. DEDUCTIONOF "PRE-OPENING"EXPENSES - by Andrew Mo Barbas and Jonathan M. Kurtzman - Summer1983, po 77. PRESERVATIONTAX CREDITS: EVERYBODY WINS - by Janet Lo Kreger - December 1982, p. 286. APPLICATIONOF CHANGESIN COSTRECOVERY AND REHABILITATION CREDITS UNDERTHE1981 ECONOMIC RECOVERYTAX ACT TO A REALESTATE PROJECT - by Michael Jo Brenner and Mark L. Robinson - October 1982, p. 215. TAXDELINQUENCY - by Russell E. Prins - December1981, p. 170. 1979 TAXTRIBUNAL DECISION - by Michael B. Shapiro - August 1980, p. 108. TITLES AND CONVEYANCING QUASHINGCIAPPELLETTO: THE NEW NOTARY ACT - by Leslee M. Lewis - Summer 2004, p. 85. THE CRAFTDECISION AND ITS IMPLICATIONSFOR REAL PROPERTY - by William B. Acker and Shannon N. Demeshko- Winter 2002, p. 161. THEENTIRETIES ESTATE IN BANKRUPTCYAFTER CRAFT - by Peter A. Teholiz - Winter 2002, p. 171.
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FROMFEE SIMPLETO FEE COMPLEX- by Ralph Jossman - Winter 1985, p. 183. MADHAVENv SUCHER - REVISITED- by Jeffrey B. Larkin - Spring 1983, p. 35. MICHIGANLAND TITLE STANDARDS,FOURTH EDITION - by Ralph Jossman - Spring 1983, p. 30. MICHIGAN’SNEW STATUTE ON MARRIEDWOMEN’S CONTRACTUAL CAPACITY: THE END OF COVERTURE? - by GeorgeD0 Cameron,III - December1982, p. 280. CLOGGINGTHE EQUITY - by John C. Murray - October 1981, p. 132. MAKINGCLAIMS ON TITLE POLICIES- by Alan A. Knox - August 1981, p. 119. COVERTURE’SLAST STAND: THE MARRIEDWOMAN’S LACK OF CONTRACTUALCAPACITY IN MICHIGAN - by GeorgeD. Cameron,III - June 1981, p. 75. CLARIFICATIONOF DOWERRIGHTS UNDER THE REVISED PROBATE CODE - by Ralph Jossman - April 1981, p. 29. NEWTITLE STANDARDS- by Ralph Jossman - February 1980, p. 9. WATER ACCESSTO MICHIGANWATERS - by James Y. Stewart - Spring 2004, p. 29. WHOSELAKE IS IT ANYWAY?BASIC WATERLAW CONCEPTS AND THE MICHIGANLAND TITLE STANDARDS - by AnneH. Hiemstra- Fall 2001, p. 139. TITLE TO LANDBETWEEN THE LAKEFRONTLOT ANDTHE WATER’SEDGE: CONCEPTUALIZINGA PERSISTENT PROBLEM- by James W. Pfister - Summer1999, p. 89. ROAD-ENDACCESS TO MICHIGANWATERS: AN UPDATE~ by Douglas S. Loomer - Fall 1997, p. 245. ROADEND ACCESS TO MICHIGANWATER - by M. Carol Bambery and Douglas S. Loomer -Spring 1993, p. 5. INSURINGTITLE TO RIPARIANOR LITTORAL PROPERTY - by J. Bushnell Nielsen - Spring1990, p. 11. WATERFRONTDEVELOPMENTS AND THE REGULATORY PROCESS - by C. Peter Theut, Ronald T~ Barrows and Robert Charles Davis - Spring 1990, p. 31. THELEGAL RIGHTS OF THEPUBLIC IN THEFORESHORES OF THEGREAT LAKES - by Diana V. Pratt - Winter 1983, p. 237. ZONING AND LAND USE TRANSFEROF DEVELOPMENTRIGHTS IN MICHIGAN- IS IT HEREYET?. - by David Pierson and Elan Stavros - Winter 2004, p. 201. DIVIDINGPLATTED PARCELS: HARMONIZING SECTIONS 108 AND263 OF THE LANDDIVISION ACT- by Peter Swiecicki - Winter2004, p. 193. THEDECLINE OF TRADITIONALFAMILY RESIDENTIAL ZONING IN MICHIGAN- by Marilyn H. Mitchell - Fall 2004, p, 141. THE"PUBLIC USE" LIMITATIONON THETAKING OF PROPERTY:IN NEEDOF LIFE SUPPORT?.- by David W. Berry and RonaldE. Reynolds, Fall 2003, p. 123. SHORT-TERMRENTAL RESTRICTIONS IN SINGLE FAMILYZONES - A GROWINGBATTLE FOR CONTROLOF THELAKESHORE - by David Pierson - Summer2003, p. 61. AT SOMEPOINT YOUBEGIN TO SMELLA RAT: CITY OF MONTEREYV DEL MONTEDUNES - by Susan K, Fiedlaender - Spring 2000, p. 5. MICHIGAN REAL PROPERTY REVIEW Winter 2004 - Page 253
DEL MONTEDUNES v CITY OF MONTEREY- by Susan K. Friedlaender - Winter 1998, p. 219. K & K CONSTRUCTION- by David W. Berry - Winter 1998, po 223. PARAGON’S CATCH 22: CAN SEEKING AND BEING DENIED A USE VARIANCE FROM A ZBA PRECLUDE THE LITIGATIONOF A SUBSEQUENTLY-FILEDTAKING CLAIM? - by Susan K. Friedlaender - Fall 1998, p. 161. NAVIGATINGTHE RIPENESS RULES IN STATE ANDFEDERAL ZONING LITIGATION - by Susan K. Friedlaender and David W. Berry - Spring 1997, p. 25. PARAGONv CITY OF NOVI: THE SUPREMECOURT REVISES THE RULES OF THE ZONING GAME- by Susan K. Friedlaender - Fall 1996, p. 171. THE JESUS CENTER v FARMINGTONHILLS: WILL APPLICATION OF THE RELIGIOUS FREEDOMRESTORATION ACT EFFECTIVELYIMMUNIZE RELIGIOUS INSTITUTIONS FROMZONING LAWS? - by Susan K. Friedlaender - Summer 1996, p. 81. PARAGONv CITY OF NOVI: THE MISAPPLICATION OF THE "FINAL DECISION" RULE UNDER MICHIGAN LANDUSE LAW- by Susan K. Friedlaender - Fall 1995, p. 157. THE "SPECIAL LANDUSE": WHATIS IT ANDWHEN IS IT PERMITTED?- by Timothy A. Stoepker - Fall 1994, p. 139. SITE PLANREVIEW - LIMITS ON DISCRETION- by Michael L. Chojnowski and Michele Co Marquardt - Summer 1990, p. 81o ZONING LITIGATION: THE DISTINCTION BETWEENCONFISCATION AND SUBSTANTIVE DUE PROCESS - by David W. Berry and David J. Portelli - Summer1988, p. 61. MICHIGANCOURTS PAINT WITH A BROADBRUSH IN RECENTZONING CASES - by Gerald A. Fisher - Summer 1986, p. 45. A SECONDARYIMPACT OF SILVA - by Norman Hyman - Summer 1983, p. 68. TURKISHAND THE FUTURE - by Michael H. Feller - October 1980, p. 142. MISCELLANEOUS DRAFTINGADR PROVISIONS FOR REALESTATE TRANSACTION DOCUMENTS - by Asher N. Tilchin, Fall, 2003, p. 127. THE AFTERMATHOF SEPTEMBER11, 2001: IMPLICATIONS FOR THE REAL ESTATE INDUSTRY - by Susan Allene Kovach and Kenneth M. Kalousek - Spring 2002, p. 7. ACCORD AND SATISFACTION: HAVE THE TENDER BACK REQUIREMENTS REALLY BEEN CHANGEDBY A RECENTCOURT OF APPEALSDECISION? - by Stephon B. Bagne - Spring 2002, p. 25. THE SALE OF COMMERCIALPROPERTY: IF YOU CAN’T SAY SOMETHINGNICE, DON’T SAY ANYTHING AT ALL - by Judy Jo Donegan - Summer 1998, p. 97. TREBLEDAMAGES FOR INJURYTO LAND- by N. O. Stockmeyer, Jr. - Fall 1990, p. 135.