Bulletin: MI2014002

Date:
October 29, 2014
To:
All Michigan Issuing Offices
RE:
Stewart Bulletin

Dear Associates:

Please be advised that effective October 17, 2014, the Governor of Michigan signed into law Public Acts 347, 348, and 349 which laws have been given immediate effect (click here to view). We have referred to this series of Bills, colloquially, as the "Neal Fix Legislation". The effect of this legislation is to remedy the problems caused by the Neal Case [In re: Nathaniel and Carol Ann Neal, Debtors, United States Bankruptcy Court, Eastern District of Michigan, Southern Division, Case No. 08-57254 R] which held that copies of mortgages recorded by affidavit did not meet the requirements of the Michigan recording statutes and did not, therefore, constitute constructive notice of the mortgage. This enabled bankruptcy trustees to take free of the interest of the mortgage on behalf of the bankruptcy estate.

PA 347 of 2014 amends MCL 565.201, providing that the recording of a copy of a mortgage affixed to an affidavit, that is otherwise recordable under section MCL 565.451a [Recording Affidavits Affecting Real Property], shall be deemed "duly" recorded under the Act as of the date of the recording of the affidavit. The Act contemplates that this section shall have retroactive effect. Please note that the mortgage must otherwise validly create a lien (duly executed) to be perfected at the date of the recording of the affidavit.

PA 349 of 2014 amends MCL 565.451a to include section (g) which contemplates that an affidavit may be submitted for recordation by an affiant who has knowledge with respect to an unrecorded mortgage and is to be accompanied by a copy of the unrecorded mortgage. The affidavit will be indexed under the name of the affiant and the names of the parties to the mortgage so that a search will disclose the mortgage. This section goes on to provide that the affidavit and the attached mortgage must contain:

  • names of the mortgagor and the mortgagee
  • the legal description of the property, tax identification number and, if applicable, the address of the property
  • a statement that the original mortgage has been lost or destroyed
  • a statement that the original mortgage was signed by the parties to the unrecorded mortgage
  • a statement that to the best of the affiant’s knowledge, the original mortgage was delivered from the mortgagor to the mortgagee
  • a statement that the affiant did one of the following, as applicable:

(A)   Mailed a copy of the affidavit and unrecorded mortgage by first-class certified or registered mail, return receipt request, to the mortgagor at the mortgagor’s last known address to the affiant. (Actual receipt of delivery is not required.)

(B)   Personally served a copy of the affidavit and unrecorded mortgage on the mortgagor.

Public Act 348 modifies MCL 565.28 to require that the Register of Deeds index affidavits made under MCL 565.451a(g) under the names of the parties to the mortgage in addition to the name of the affiant.

As of October 17, 2014, all Affidavits recorded with a copy of a lost or destroyed mortgage must contain the language provided in MCL 565.451a (g) above to constitute constructive knowledge of the mortgage and to have been deemed "duly" recorded. This mandates the mailing to, or the effectuation of personal service upon, the mortgagor of a copy of the affidavit and the mortgage at the last known address of the mortgagor. It is necessary to draft and record such affidavits in accordance with these standards.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None