Home > business, litigation, Real Estate, Uncategorized > They Did What? Real Estate Legal News: Be Careful What you Record Against Real Estate.

They Did What? Real Estate Legal News: Be Careful What you Record Against Real Estate.

Yesterday an Oregon Couple plead guilty to filing “retaliatory liens” on the property of a federal judge and other government officials.  The liens exceeded $100 Million.

The couple allegedly filed the liens while charges were pending against them for unpaid taxes.

Absurd.

Can you imagine going to a closing on your home, or refinancing a mortgage and hearing from your lender or title insurance company, “sorry, we can’t assist in closing on your home until the $100 Million lien is removed.”

Yet, this happens.

I’ve previously written about these real life “Paper Terrorists” as described by one federal prosecutor.

Most who regularly work in the real estate industry aren’t in realistic danger of being labeled a “Paper Terrorist”.  However, there are real dangers to be aware of when recording liens (or any document) against real estate.

A typical example is a contractor or tradesman who believes his company is owed money and wants to file a lien against the real estate where he provided his services.

Michigan law permits a contractor to file such a lien if the procedures set forth in the Michigan Construction Lien Act are substantially complied with.

However, if the lien isn’t filed “in good faith” you could get sued for “slander of title”.

Slander of title isn’t just a danger for contractors filing liens. it is really a caution for anyone in the real estate industry recording any document against real estate. See a January 21st, 2016 court of appeals decision brought by a landowner against the City of East Grand Rapids for recording an affidavit affecting real estate under MCL  565.451a   – 208 Pioneer Club Rd. Se Llc v. City of E. Grand Rapids, 2016 Mich. App. LEXIS 124, *2 (Mich. Ct. App. Jan. 21, 2016).

In that case, the Court of appeals affirmed the lower court’s ruling dismissing the slander of title claim. However, the practical point to consider is that it still cost the City attorney fees fighting the lawsuit and appeal.

Slander of Title

Slander of title at common law means that an individual or company maliciously published false statements that disparaged a plaintiff’s right in property, causing special damages. B & B Inv. Grp. v. Gitler, 229 Mich. App. 1, 8, 581 N.W.2d 17, 20 (1998).

Broken down, the elements that make up slander of title are:

  • Malice,
  • False statements
  • disparage your rights in property; and
  • cause special damages. (typically include costs of a lawsuit)

Slander of title is a common cause of action filed in response to a contractor who threatens to put a lien on property for non-payment.  However, in order to succeed on a claim of slander of title all elements must be proven, including “malice” –

In my example of the contractor seeking to file a lien –  the question needs to be asked:

Are you  (contractor) recording a lien on the property simply to force payment, even though you know you probably aren’t entitled to file the lien? 

Takeaway:  Whenever considering to record anything against real estate that you don’t own, you should consult with legal counsel.

Questions? 

E-mail: Jeshua@dwlawpc.com

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