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Court of Appeals Decision Addresses Limitations to Landowners’ Right to Sell, Convey, or Divide Their Property

Generally, when you purchase or obtain property, you in turn as the landowner, are able to sell, convey, or divide the property as you please. This is called the “right of alienation.” This right of alienation is usually strictly enforced, especially when a landowner obtains absolute or an entire interest in the real property.

However, there are some parcels of land that may come with specific restrictions or easements attached.  An easement is the right to use the land of another for a specified purpose.  In this type of scenario, a landowner’s right to sell or convey their property may be limited.  When one’s right to sell or give away property is limited, this would be referred to as a restraint on alienation.  Such an issue was brought to light in a recent Court of Appeals case, Department of Agriculture & Rural Development v. Engle.  In this case, the defendants (Engle) owned two adjoining parcels in Acme Township and attempted to sell one of the parcels of property to an orchard company.  Yet, prior to the sale back in 2012, the defendants granted the Department of Agriculture & Rural Development a “Conservation Easement”.

A “conservation easement” is a restriction on the use of property based on the conservation, preservation, historic, and/or charitable purposes related to said property.  In Engle case, this Conservation Easement, prohibited the subdividing, dividing, and/or permitting of separate ownership with respect to the adjoining parcels of property.

This type of easement would constitute as a restraint on alienation.  Michigan law provides that whether such a restraint will be enforced depends on whether it is reasonable under the surrounding circumstances.  Therefore, courts can look to a variety of factors such as, the language of the certain restriction or easement, what purpose the restriction serves, whether its function is in fact serving such purpose, etc. For example, in the Englecase, the Court of Appeals noted the important public function and social utility conservation easements in particular, serve.  The Court also found that conservation easements, if they serve a legitimate purpose and are rationally related to accomplishing that purpose, will generally be enforced as to restraining one’s right to sell or convey the property at issue.

In this case, the Court interpreted the language of the Conservation Easement and found it was a reasonable restriction on the property owner’s rights and must be enforced as written.  To adequately enforce the Conservation Easement, the Court further determined that rescission of the defendant’s property deed conveying their parcel of land was warranted.  Rescission in essence, involves withdrawing a contract (or deed in this matter) as if it had never been executed in the first place. Therefore, in Engle, the Court ruled that the sale of land would be withdrawn, as if it had never taken place. This was premised on the finding that this particular Conservation Easement prohibited an owner dividing up their land to sell it.  Thus, in order to enforce this valid and reasonable restriction, the Court ruled the deed selling a piece of the property had to be rescinded.

Therefore, while rescission of a deed and restraining a landowner’s right to sell or subdivide their property, are more serious measures taken by a court, certain interests may lead to these kinds of disputes. As a property owner seeking to sell or subdivide your property, knowing what interest you hold, and what easements or restrictions attach to such property, prior to selling, is an important act of assurance.  Even more, as a potential purchaser of property, safeguarding the sale of land is also just as important.

When faced with uncertainty or disputed interests as to your land, speaking with an experienced land use attorney may be the appropriate next step to take.  Attorneys at Dalton & Tomich take a comprehensive analysis of land use issues, are experienced in handling any pitfalls that may arise, and can help you through the entire process of buying, selling, or managing property.   To speak with one of our attorneys, please contact (313) 859-6000.

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