SBM Real Property Law Section eNewsletter

November 2009

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Short Limitations Period for Residential Defect Claims Upheld
By Gregg A. Nathanson , Couzens Lansky Fealk Ellis Roeder & Lazar PC

The Michigan Court of Appeals upheld a one-year statute of limitation period in a residential purchase agreement. Siuda v. Tobin (Michigan Court of Appeals (unpublished) September 29, 2009).

The parties entered into a modular home purchase agreement in 2003 which stated, "Any action brought by the Purchaser . . . whether based in tort . . . contract or . . . any other legal or equitable theory, must be brought . . . no later than one year from the date of the sale of the home."

Buyers filed their complaint in 2007, claiming the home's poor construction led to interior water damage, and that Seller fraudulently concealed defects. Buyers claimed that they relied on Seller's promise to repair. Seller moved for Summary Judgment based on the one-year limitations period. Buyers argued the one-year limitation period should not be enforced because of Seller's fraudulent concealment or "continuing wrong," and the limitation was against public policy, and unconscionable.

The Court rejected Buyers' arguments. Seller's promise to "take care of everything" did not constitute waiver of, or equitably estop, Seller's right to enforce the limitation period. The Court concluded that not all agreements with shortened limitation periods are against public policy.

Finally, for a contract provision to be unconscionable, enforcement of the provision must "lead to a result that would shock the Court's conscience." The Court found nothing unconscionable and upheld the one year contractual limitations period.

Environmental News
By Patricia Paruch, Kemp Klein Law Firm

The Michigan Department of Environmental Quality (MDEQ) is drafting major revisions to Parts 201 and 213 of the Michigan environmental liability statute. The current fault-based scheme will remain, but owners/operators of contaminated property may face new monitoring and reporting obligations. Legislation may be introduced this fall; check back here for updates.
Executive Order 2009-45 issued 10/8/09 combines MDEQ and MDNR into a new Department of Natural Resources and Environment effective January 17, 2010. Some RPLS members may remember that these two departments were combined up through the Gov. Milliken administration.
PA 120 of 2009 modifies certain wetland requirements but keeps wetland regulation within MDEQ. Governor Granholm had proposed transferring wetland regulation to the federal government as a cost-saving measure. Michigan and New Jersey are the only states authorized to regulate wetlands; permit seekers in other states must apply to the U.S. Corps of Engineers/USEPA.

Trust Code Changes

By Steven H. Malach, Lipson Neilson Cole Seltzer & Garin PC

The Michigan Legislature recently enacted the Uniform Trust Code effective April 1, 2010. Many practitioners are already changing their estate planning documents and trust administration practices to comply with the upcoming changes. A number of the amendments attempt to provide clarity to avoid disputes and litigation especially over deadlines and successor trustee responsibilities. Some of the more notable changes include the following:

  • A successor trustee can, without further liability, abandon any real property if in their opinion the property is valueless or so encumbered that it is of no benefit to the trust.

  • Creditor claims will be satisfied under a new priority scheme; secured creditors have secondary priority.

  • Creditors will be able to attach spendthrift (discretionary) distributions to beneficiaries under limited circumstances.

  • Persons found liable for conversion of trust property or who transfer trust property without colorable claim will be subject to double damages under certain circumstances.

  • Unless the trust agreement says otherwise, claims against the trust will bear interest at Michigan statutory judgment rates.

  • Alternate dispute resolution will be available to interpret trust terms and to resolve administration disputes.

  • Successor trustees will be required to send out various notices regarding the trust within sixty-three (63) days of assuming responsibility.

At a Glance

Thursday, November 5, 2009, 2:00–5:00 p.m. Homeward Bound
Developing a Medical Office Building on or Near a Health Care Campus: A Prescription for Success

Inn at St. John's, Plymouth

March 11-13, 2009
2010 Winter Conference
Being an Agent of Change
Westin Kierland Resort and Spa, Scottsdale, Arizona