Michigan real estate disputes – 5 common reasons to file a quiet title action
A quiet title action is a type of lawsuit that resolves a dispute as to the ownership of real estate or resolves a dispute regarding an interest in real estate relating to somebody that may not be the owner of the real estate. Quiet title actions are often necessary to ensure that a property owner
Property acquired from a mortgage foreclosure sale.Michigan law allows for an owner that loses real estate in a mortgage foreclosure sale to challenge the validity of the foreclosure in certain limited circumstances. Specifically,
The Michigan Supreme Court has held that statutory foreclosures will only be set aside if "very good reasons" exist for doing so. Markoff v. Tournier, 229 Mich. 571, 575, 201 N.W. 888 (1925). " '[I]t would require a strong case of fraud or irregularity, or some peculiar exigency, to warrant setting a foreclosure sale aside.' " Sweet Air Investment, Inc. v. Kenney, 275 Mich.App. 492, 497, 739 N.W.2d 656 (2007), quoting United States v. Garno, 974 F.Supp. 628, 633 (E.D.Mich., 1997). "Statutory foreclosures are a matter of contract, authorized by the mortgagor, and ought not to be hampered by an unreasonably strict construction of the law." White v. Burkhardt, 338 Mich. 235, 239, 60 N.W.2d 925 (1953). Kubicki v Mortgage Elec Registration Sys, 292 Mich App 287, 289; 807 NW2d 433, 434 (2011).
While is it rare that a mortgage foreclosure sale is set aside, it is not impossible. Accordingly, in order to ensure that a former property owner does not later challenge the validity of the foreclosure sale, a purchaser of property that has been subject to a mortgage foreclosure should file a quiet title action to obtain a court order establishing that their ownership is superior to all former owners.
Property acquired from a tax foreclosure saleThe Michigan General Property Tax Act (GPTA), MCL 211.1 et seq., appears to preclude a subsequent challenge to a tax foreclosure sale on its face. Specifically, MCL 211.78k(5) provides, in part:
The circuit court shall enter final judgment on a petition for foreclosure filed under [MCL 211.78h] at any time after the hearing under this section but not later than the March 30 immediately succeeding the hearing with the judgment effective on the March 31 immediately succeeding the hearing for uncontested cases or 10 days after the conclusion of the hearing for contested cases. All redemption rights to the property expire on the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case 21 days after the entry of a judgment foreclosing the property under this section. The circuit court's judgment shall specify all of the following:
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(b) That fee simple title to property foreclosed by the judgment will vest absolutely in the foreclosing governmental unit, except as otherwise provided in subdivisions (c) and (e), without any further rights of redemption, if all forfeited delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case within 21 days of the entry of a judgment foreclosing the property under this section.
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(g) A judgment entered under this section is a final order with respect to the property affected by the judgment and except as provided in subsection (7) shall not be modified, stayed, or held invalid after the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or for contested cases 21 days after the entry of a judgment foreclosing the property under this section.
MCL 211.78k(6) provides, in part:
Except as otherwise provided in subsection (5)(c) and (e), fee simple title to property set forth in a petition for foreclosure filed under [MCL 211.78h] on which forfeited delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case within 21 days of the entry of a judgment foreclosing the property under this section, shall vest absolutely in the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property .... The foreclosing governmental unit's title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in subsection (7) or (9). [Emphasis added.]
MCL 211.78k(7) adds that "[t]he foreclosing governmental unit or a person claiming to have a property interest under [MCL 211.78i] in property foreclosed under this section may appeal the circuit court's order or the circuit court's judgment foreclosing property to the court of appeals," and clarifies that "[t]he circuit court's judgment foreclosing property shall be stayed until the court of appeals has reversed, modified, or affirmed that judgment."
However, the Michigan Supreme Cour
Forged DeedIn Michigan, a party cannot hold title to property based upon a forged deed. Specifically,
..."[t]here can be no such thing as a bona fide holder under a forged deed, whose good faith confers any rights against the party whose name has been forged, or those claiming under him." VanderWall v. Midkiff, 166 Mich.App. 668, 685, 421 N.W.2d 263 (1988), citing Horvath v. Nat'l Mortgage Co., 238 Mich. 354, 360, 213 N.W. 202 (1927). To the contrary, "[w]here a deed is forged, those innocently acquiring interests under the forged deed are in no better position as to title than if they had purchased with notice." VanderWall, supra at 685, 421 N.W.2d 263. Thus, as a matter of law, plaintiff can claim no interest in the property through Boykin's conveyance to it.
Special Prop VI v Woodruff, 273 Mich App 586, 591-92; 730 NW2d 753, 756 (2007).
Accordingly, while MCL 750.249b makes forging a deed a crime in Michigan, it is not uncommon for someone to forge a deed and attempt to sell property that they do not in fact own. A quiet title action is needed to remove a forged deed from the chain of title, as it clouds the title of the true owner if recorded in the register of deeds.
A Break in the Chain of TitleA break in the chain of title is one of the most common reasons to file a quiet title action. A break in the chain of title occurs when a property owner cannot trace their title back to a prior recorded deed in the register of deeds. This often occurs in a situation where a prior owner forgets to record a deed, a prior owner is deceased and their estate is not administered or a prior owner inadvertently switches the name of the seller on a deed in a subsequent transfer. According, a quiet title action would be filed to ensure that the break in the chain of title is repaired and that the current owner has good title.
Removal of a LienRemoval of a lien is another common reason to quiet title. It is not uncommon for a lienholder to forget to remove a lien on property, even if it has been satisfied. Common examples of liens that need to be removed that can cloud title are as follows:
Child Support Liens
Property Tax Liens
If a lien has been paid in full, and not discharged, a quiet title action would be an appropriate way to remove the lien. If the lien was accidentally placed on the property as a result of an incorrect legal description, a quiet title action could remove the lien. In other circumstances, a lien was improperly placed on a property or placed after the allowable time by law. All of these circumstances would justify the removal of a lien via a quiet title action.