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September 2020
2021 Proposed ALTA Owner’s and Loan Policies

Lease Agreement

By C. Lynn Sagar, First American Title Insurance Co.

The American Land Title Association (“ALTA”) has proposed updated Owner’s and Loan Policies (“2021 Policies”) for adoption in July 2021 which will replace the 2006 ALTA Owner’s and Loan policies. The 2021 Policies provide some additional coverages, new definitions, and clarification of many provisions. The following are some examples:

  • Covered Risk 2 a. (ii) now includes remote online notarization within the scope of notarization.
  • Covered Risk 2 a. (viii) is an added coverage if an electronic signature is repudiated by the person who executed the document because the electronic signature was not valid under applicable law.
  • There are new Covered Risk and Exclusion provisions and additional Definitions relating to PACA-PSA Trusts. Covered Risk 8 insures against the enforcement of a PACA-PSA Trust but only to the extent of an enforcement evidenced by an Enforcement Notice (as defined in the Conditions).
  • There is a new exclusion for any discrepancy in the quantity of the area or acreage of the land to be insured or of any improvement to the land.
  • In the Definition of Terms for the “Insured,” the 2021 ALTA Owner’s Policy no longer conditions the application of the definition to an Affiliate or a trustee for estate planning purposes to be delivered “without payment of actual valuable consideration.” In addition, the 2021 ALTA Owner’s Policy will extend coverage to the former spouse of the Insured whether by divorce or dissolution of the marriage; to the beneficiary of a transfer effective upon the death of the Insured; or to another Insured named in Schedule A who acquires interest from another Insured.

These are a few of the highlighted differences to expect with the new policy forms. The 2021 Policies are in a public comment process and should be finalized after December 31, 2020. As we get closer to July 2021, various publications will include more thorough discussions of the new provisions of the policies.

Excess Tax Sale Proceeds = Unconstitutional Taking

Pro Bono

By Jason C. Long, Steinhardt Pesick & Cohen

In Rafaeli, LLC v. Oakland County, the Michigan Supreme Court held that when the government sells a tax-foreclosed property and retains any amounts that exceed the tax charges that were due, retaining the excess amount is an unconstitutional taking from the property’s former owner. Rafaeli owed $285.81 in tax, penalties, and interest. Oakland County foreclosed and sold the property for $24,500, retaining all proceeds. Rafaeli sued for an unconstitutional taking of all amounts exceeding $285.81.

Reversing the lower courts, the court held that the county’s retention of the surplus proceeds was a taking.  The court explained that the lower courts’ reliance on the General Property Tax Act (GPTA) provision that the property had been “forfeited” was wrong because forfeiture in this context means only that the property was subject to foreclosure.  The court then examined authorities ranging from the Magna Carta to Dean v. Dep’t of Natural Resources, 399 Mich 84 (1976), concluding that these authorities demonstrated a common law principle that the government may only seize property to collect taxes owed and not more, and that an owner possesses a common law right to recover surplus proceeds after a foreclosure sale. Further, the court explained that the 1963 Michigan Constitution continued the common law in force at that time, so the GPTA amendments that permitted the government to retain surplus proceeds did not abrogate the owner’s rights.  Rafaeli, therefore, suffered a taking when the county retained the surplus proceeds.

The court distinguished other states’ statutory procedures, which courts have held constitutionally permissible, through which an owner must affirmatively claim surplus proceeds or the government may retain them. Whether the Michigan Legislature will authorize such procedures remains to be seen. Relying on Rafaeli, prior owners are already pursuing actions across the state to recover unconstitutionally retained surplus tax sale proceed. And county governments are calculating how much revenue they may have to return. 

Legislative Report

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Now Available

Homeward Bound 2018-19 "Navigating the Rapids: Understanding the Nuances of Water Rights in Michigan" and "All Good Things Must Come to an End: Issues at the End of the Lease" on-demand webcasts available for those who did not attend the series.


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