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SBM Real Property Law Section eNewsletter

September 2012

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Co-Editors:
Howard A. Lax, Lipson, Neilson, Cole, Seltzer & Garin, PC

Patricia Paruch, Kemp Klein Law Firm

Beware the "of record" Exception

By Tom Treppa, Giarmarco, Mullins & Horton, PC

The advent of Internet title searches hides a new pitfall: title companies sometimes insert an exception for "easements and restrictions of record" into "Schedule B—Section II" of the commitment without calling out and listing individual exception documents.

The subtle "exception" appears most often in residential title commitments because certain underwriter's guidelines only require the title agent to examine title back to the last good warranty deed and purchase money mortgage. Therefore, the title agent may not feel the need to search further back in time in order to issue the policy. This approach does nothing to inform the buyer of the specific restrictions applicable to the property recorded prior to the last deed and mortgage and is a serious disservice to the agent's client, the buyer/insured.

The problem with using this generalized "exception" is that the commitment may not inform the buyer of all documents that affect title. Unless the buyer or counsel notices this exception, they may erroneously believe that the property is free of any recorded easements and restrictions which may significantly impact a buyer's decision to purchase. Failing to notice this exception could have malpractice implications as well for the lawyer.

Title companies are not yet commonly using this exception in commercial transactions where more thorough searches are still the norm. However, real estate practitioners should remain vigilant and spot the exception in any type of transaction. If this exception appears in a commitment, counsel should request: (1) that it be deleted; (2) that the commitment list all easements and restrictions recorded for a period of years; and (3) that the title company supply counsel with copies of all listed documents for review. No exceptions.

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October 11, 2012
Groundbreaker Breakfast Roundtable
Dealing with Distressed Properties, Part I—Fight or Flight: The Lawyer's Guide to Analyzing Exit Strategies

Townsend Hotel, Birmingham

November 1, 2012
2:00-5:00 p.m.
Homeward Bound
Your Government, Your Neighbor, and Your Water: The Ebb and Flow of Property Rights

Inn at St. John's, Plymouth

March 14-16, 2013
Winter Conference 2013
J.W. Marriott, New Orleans

Interested in writing a future article for the e-Newsletter?
Please contact co-editors:
Howard Lax at HLax@lipsonneilson.com or Patricia Paruch at Pat.Paruch@kkue.com.

Farewell to Arlene/Welcome to Karen

By Ronn S. Nadis, Chair

The word is out. After over 26 years as administrator of the Real Property Law Section, Arlene Rubinstein is retiring. Arlene has been invaluable to the Section and its membership. She has throughout the years provided capable, wise, and forward-thinking leadership with dedication and devotion. She will be missed by all of us. We wish Arlene all the best in her future endeavors as she embarks on a new chapter in her life.

The Section is very fortunate that Karen Schwartz, who has worked closely with Arlene over the past year, will be stepping in as the new administrator of the Section. Karen has a Masters in Advertising and brings 20-years experience as a marketing executive to this position. We are pleased to welcome Karen in her new role and have great confidence that she too will do a great job for the Section and its members. Karen's contact information is: c/o PO Box 252612, West Bloomfield, MI 48325; (248) 933-0835; rplsks@gmail.com.