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Winter 2009 Vol. 36, No. 4

Published by the Real Property Law Section State Bar of Michigan

M I C H I G A N
REAL PROPERTY REVIEW

CONTENTS

Chairperson’s Report ........................................................................................ 175
by Jerome P. Pesick

Workouts, Receiverships, and Foreclosures on Michigan Residential

Condominium Projects: A Road Map for Mortgage Lenders .................................. 177

by Patrick E. Mears and C. Kim Shierk

In Re Patel: Synthesizing Corporate Offi cer Liability and

Non-Dischargeability Under the Michigan Builders Trust Fund Act ......................... 194

by Daniel M. Morley and Megan M. Hard

Selected Legal Issues in Designing a Surplus Property

Disposition Program for the Retail Tenant ........................................................... 200

by Robert A. LaBelle

Judicial Decisions Affecting Real Property ........................................................... 207

by C. Kim Shierk and Ravi K. Nigam

Legislation Affecting Real Property ..................................................................... 221

by C. Kim Shierk

Continuing Legal Education ................................................................................ 223

by Richard D. Rattner and Gregory J. Gamalski, Co-Chairpersons, and
Arlene R. Rubinstein, Administrator

Special Committees ........................................................................................... 228

Standing Committees ......................................................................................... 233

Cumulative Article Index .................................................................................... 239

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Page 220

Winter 2009

vicariously liable for the allegedly negligent acts of the

company (an independent contractor) hired to replace

the roof; Applicability of Restatement Contracts, 2d §

318; Whether plaintiff was entitled to a set off for his

condominium assessments because defendant breached

its contract under the condominium bylaws; Applicability

of landlord-tenant law; Whether defendant was entitled

to attorney fees

Judges: Saad, O’Connell, and Zahra

The court held the trial court properly granted the

defendant-condominium association summary disposition

when the trial court held, inter alia, the defendant

condominium association was not liable for slander of title

or for negligence, plaintiff was not statutorily permitted

to withhold his assessments based on defendant’s alleged

failure to repair his condominium, and defendant was

entitled to the assessments together with interest and

attorney fees. Because the trial court awarded defendant

only one-third of its attorney fees without considering the

condominium bylaws allowing them, the court affi rmed

in part, reversed in part, and remanded. Plaintiff owns

a condominium in defendant’s development, which

is a nonprofi t corporation formed under the CA for

management purposes. Plaintiff sued defendant for

negligence allegedly because his condominium was

damaged when a roofer hired by defendant replaced the

roof. He also sued for slander of title because defendant

placed a lien on his property after he stopped paying his

assessment fees, which he withheld because defendant

failed to repair his condominium. Defendant fi led a

counterclaim seeking the amount plaintiff owed or to

foreclose. Plaintiff argued defendant was vicariously liable

for the allegedly negligent acts of the roofi ng company.

The court held the rule “an independent contractor is

not subject to the control of the employer, and therefore

the employer should not be held vicariously liable for

actions outside its control,” applied here. Based on its

bylaws, defendant is responsible for the maintenance of

the “common elements” in the condominium complex.

The parties agreed the condominium buildings’ roofs

were “common elements.” There was no dispute the

roofer was an independent contractor and plaintiff

did not claim defendant retained any control over the

roofi ng work. Thus, as a matter of law, defendant could

not be held vicariously liable for damages caused by the

roofer’s allegedly negligent work when it replaced the

roof over plaintiff’s condominium. The court also held

the plaintiff’s other claims were without merit.

Al-Naimi v. Foodland Distribs., Inc.
___ Mich ____; 773 NW2d 904 (2009)

2009 Mich LEXIS 2577
October 28, 2009

(SC: 139267, COA: 285375)

Issues: Efforts to collect on a judgment; Claim to set
aside mortgages as fraudulent conveyances; The former

Uniform Fraudulent Conveyance Act (MCL 566.17);

The Uniform Fraudulent Transfer Act (MCL 566.34(1)

(a)); Fraudulent intent; “Badges of fraud”

Judges: Kelly, Cavanagh, Weaver, Corrigan, Young,
Jr., Markman, and Hathaway

In an order in lieu of granting leave to appeal, the

court reversed the Court of Appeals judgment for the

reasons stated in the Court of Appeals dissenting opinion

and remanded the case to the trial court for further

proceedings not inconsistent with the court’s order.

Laketon Twp. v. Advanse, Inc.
___ Mich ____; 773 NW2d 903 (2009)

2009 Mich LEXIS 2561
October 28, 2009

(SC: 139040, COA: 276986)

Issues: Zoning; Whether short-term rentals
were allowed under the ordinance in effect when the

defendant began using the property in this manner;

Interpretation of ordinance language; Standard of review;

Nonconforming use

Judges: Kelly, Cavanagh, Weaver, Corrigan, Young,
Jr., Markman, and Hathaway

In an order in lieu of granting leave to appeal, the

court reversed the judgment of the Court of Appeals and

reinstated the trial court’s Februay 9, 2007 opinion and

order and the February 28, 2007 judgment and fi nal

order for injunctive relief. Under § 200 of the 1979

zoning ordinance, use of the subject premises, which

were zoned Residential District A, was restricted to

“single family dwellings.” Single family dwellings were a

subset of the 1979 ordinance’s more expansive defi nition

of “dwelling.” Thus, the defendant’s expansion of the

rental use of the subject premises to include the main

residence situated on the property, after purchasing

it in 2003, constituted an impermissible expansion of

an existing nonconforming use lawful under the 1979

ordinance.

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Page 221

Winter 2009

LEGISLATION AFFECTING REAL PROPERTY

by C. Kim Shierk

The Section is active in the legislative process in a

variety of ways, such as appearing before House and

Senate committees, lobbying for and against bills, and

monitoring legislation of interest to real estate lawyers.

This Article provides a quarterly report designed to

inform Section members about new legislation affecting

real property, the Section’s efforts regarding legislation

that may become law, and bills that may have an impact

on real estate practice.

The Section has taken a
Formal Position on the

following Pending Legislation

Positions adopted by the Section: The
Real Property Law Section is not the State Bar

of Michigan, but rather a Section that members

of the State Bar choose voluntarily to join based

on common professional interest. The positions

expressed are those of the Real Property Law

Section. The Real Property Law Section’s total

membership is 3,249. The positions were adopted

by vote of the Section Council which has a total

of 18 voting members.

The Council of the Real Property Law Section

opposed with recommended amendments SB 791,
which would create an electronic reporting act.

SB 791 is the Michigan’s proposed version of the

Uniform Real Property Electronic Recording Act

(“URPERA”), promulgated by the National Conference

of Commissioners on Uniform State Laws (“NCCUSL”).

As with all uniform acts, URPERA is well drafted and

effectively accomplishes the principal legislative goal

of equating electronically recorded documents with

physically recorded documents. County registers of

deeds are obligated to follow uniform standards which

will be promulgated by an administrative body and bear

some resemblance to the standards in other States.

The administrative rule making body may be either an

existing governmental agency or a new commission

under URPERA. The proposed draft of SB 791 follows

the latter path and proposes the establishment of a new

“Electronic Recording Commission.” URPERA does not

specify the number or composition of members of the

Commission, other than it provides that a majority of

the members of the Commission must be registers of

deeds due to their professional interest in the subject

matter of the Commission. SB 791 (S-1) proposes

an eight member Commission consisting of: (1) the

director of the department of information technology

of the State of Michigan or his or her designee: and

(2) seven members appointed by the governor, four of

whom must be country registers of deeds and three

of who shall be individuals who are engaged in the

land title profession. Other States which have enacted

URPERA with the Electronic Recording Committee

option have chosen different compositions for the

Committee. In Florida, the non-registers consist of

one attorney member appointed by the Real Property,

Probate and Trust Law Section of the Florida State Bar

Association, two members appointed by the Florida

Land Title Association and one member appointed

by the Florida Bankers Association. In Arizona, the

non-register members consist of one member who is a

representative of an association of title companies, one

who is a representative of mortgage bankers and one

who represents real property attorneys. Finally, several

counties in the State have already initiated e-recording

measures in reliance upon existing federal and state law.

The Real Property Law Section supports the adoption

of the Uniform Real Property Electronic Recording

Act (“URPERA”) but it OPPOSES the current draft of

SB 791 until the following concerns are satisfactorily

addressed:

Page 104

Real Property Law Section
State Bar of Michigan
Michael Franck Building
306 Townsend Street
Lansing, Michigan 48933-2083

NONPROFIT ORG.

U.S. POSTAGE PAID

LANSING, MI

PERMIT NO. 191

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