Michigan House Bill HB5366

Michigan 2023-2024 Regular Session

• Introduced: 11/14/23
• Refer: 11/14/23
• Refer: 1/10/24
• Report Pass: 5/23/24

Caption

Property: other; citations to the motor vehicle sales finance act in 1846 RS 65; revise. Amends sec. 25 of 1846 RS 65 (MCL 565.25). TIE BAR WITH: HB 5354'23

Impact

The implications of this bill on state laws include potentially increasing the responsibilities of individuals or entities wishing to record encumbrances. They must ensure that adequate documentation is in place to support their claims against properties. The bill may reduce instances of fraudulent or harassing encumbrances since improperly notified charges could be rendered ineffective. While proponents argue this adds a necessary layer of protection for landowners, critics may argue that this puts an additional burden on legitimate creditors and could complicate the recording process for lawful encumbrances.

Summary

House Bill 5366 aims to amend the provision regarding the perfection of encumbrances in the state of Michigan, specifically under section 25 of the 1846 RS 65 laws. The bill stipulates that certain instruments of encumbrance, such as liens and attachments, cannot be perfected unless a court finds that specific documents were provided during their delivery to the register. These documents include a full accounting of the facts supporting the encumbrance and proof of service that the landowner received actual notice. The aim of this legislative amendment is to enhance the transparency and integrity surrounding property encumbrances, thereby ensuring that property owners are adequately informed about claims on their property.

Contention

Opponents of HB 5366 might contend that the requirements for perfecting an encumbrance could slow down legal and financial processes related to property transactions. There is a concern that the increased judicial oversight might strain court resources, particularly if many cases arise contesting the perfection of encumbrances. On the other hand, supporters believe that the protection of property owners from unexpected claims is paramount and justifies the bill's provisions. This ongoing debate reflects a broader tension between property rights and the efficiency of real estate and finance systems.