Real Estate Worksheet

Two Forms of Deed

There are only two forms of deed in Michigan:  quit claim and warranty.  There is no such such thing as a "limited warranty deed", "fiduciary deed" or "covenant deed".  These types of deeds attempt to limit warranties and should not be used.  

 Warranty Deed

MCL 565.151:  That any conveyance of lands worded in substance as follows: "A.B. conveys and warrants to C.D. (here describe the premises) for the sum of (here insert the consideration)," the said conveyance being dated and duly signed, sealed and acknowledged by the grantor, shall be deemed and held to be a conveyance in fee simple to the grantee, his heirs and assigns, with covenant from the grantor for himself and his heirs and personal representatives, that he is lawfully seized of the premises, has good right to convey the same, and guarantees the quiet possession thereof; that the same are free from all incumbrances, and that he will warrant and defend the title to the same against all lawful claims.

Unless exceptions are listed in the document, the seller warrants to the buyer that the interest that the buyer is receiving is fully vested in the seller and that there are no exceptions to clear fee title.  McCausey v Ireland, 253 Mich App 703, 660 NW2d 337 (2002). If an encumbrance on title exists, the seller is personally liable.

Quit Claim Deed

MCL 565.152: Any conveyance of lands worded in substance as follows: "A.B. quit claims to C.D. (here describe the premises) for the sum of (here insert the consideration)," the said conveyance, being duly signed, sealed, and acknowledged by the grantor, shall be deemed to be a good and sufficient conveyance in quit claim to the grantee, his heirs, and assigns.

A quit claim deed conveys to the buyer only the interest in the premises that the seller actually holds, if any. Thomas v Steuernol, 185 Mich App 148, 460 NW2d 577 (1990). If the grantor had no interest in the property at the time of the quit claim deed, it follows that no title may pass by the conveyance. Doelle v Read, 329 Mich 655, 46 NW2d 422 (1951). The seller gives no warranty of title in a quit claim deed. Therefore, buyers taking property by quit claim do so at their own risk. McGoren v Avery, 37 Mich 120 (1877).

Quit claim deeds are often used for gifts, transactions not negotiated at arm’s length, correction of defective titles, and compliance with court orders and where the seller seeks to shift the burden of its warranty to the title insurance company. 

Limitations of Warranty or Estate

Provisions may appear in deeds to notify the grantee of limitations of the warranty to a specific timeframe or the estate granted to them.

• A conveyance made to fulfill a land contract:  Subject to all matters arising from or created through the acts or omissions of Buyer or those claiming under or through Buyer since [date], the date of the land contract in fulfillment of which Seller gives this deed to Buyer, a memorandum of which was recorded at Liber [number], Page [number], of the [county] register of deeds.
• A conveyance of real property by the fee title owner in which the property is already subject to an existing land contract:  Subject to the rights of [name of buyer under existing land contract], Buyer under a land contract dated [date of existing land contract], notice of which was recorded at Liber [number], Page [number], of the [county] register of deeds.
• A conveyance of property occupied by a current tenant: Subject to the rights of [name of current tenant], Tenant under a lease dated [date of lease], notice of which was recorded at Liber [number], Page [number], of the [county] register of deeds.
• A conveyance of a condominium unit:  Subject to the bylaws and rights of the co-owners of [name of condominium] Condominium in the general common elements and limited common elements as set forth in the master deed recorded in Liber [number], Pages [numbers], in the [county] register of deeds, and all the conditions, regulations, restrictions, easements, and other matters set forth in the master deed.
• A conveyance of a term estate:  Grantor quitclaims to Grantee a term estate in the premises for [number] years from the date of this conveyance.
• A conveyance creating a life estate by reservation: Grantor reserves to Grantee a life estate in the premises.

WARNING:  File a new PTA and claim the correct exemption to ensure that property taxes do not uncap during the life estate. 

The Grantor will be entitled to claim the Personal Residence Exemption (PRE) during the life estate if the property is their primary residence.  If so, file a new PRE form to claim the exemption. 

Add the names of the married grantors to the first and second positions. 

Add the names of the other married grantors to the third and fourth positions. 

Background

Lady Bird deeds are based on Land Title Standard 9.3:

LTS 9.3 -- THE HOLDER OF A LIFE ESTATE, COUPLED WITH AN ABSOLUTE POWER TO DISPOSE OF THE FEE ESTATE BY INTER VIVOS CONVEYANCE, CAN CONVEY A FEE SIMPLE ESTATE DURING THE LIFETIME OF THE HOLDER. IF THE POWER IS NOT EXERCISED, THE GIFT OVER BECOMES EFFECTIVE.

LTS Commitee Comment to 9.3 -- "The Committee has not attempted to determine the effect of a conveyance by a life tenant who has a power to dispose of the fee if the conveyance does not indicate clearly that it purports to be an exercise of the power. See MCL 556.114".

Problem -- Based on the Comment to 9.3, when creating a new deed after an LBD, title companies often require an express reference to the Grantor's power to convey (i.e. power of appointment) which was reserved to them in the prior LBD. 

Resolution

It is NOT necessary to make a reference to a prior LBD because the Grantor expresses the intent to exercise the power to convey by making the new deed (see In Re Tobias Estate (2012); MCL 556.114).

In Re Tobias Estate (unpublished)

"Where the creating instrument does not contain a provision requiring or waiving reference to the power of appointment, a donee may nevertheless manifest an intent to exercise the power in a later instrument (1) “if the instrument purports to transfer an interest in the appointive property that the donee would have no power to  transfer except by virtue of the power, even though the power is not recited or referred to in the instrument,” or (2) “if the instrument either expressly or by necessary implication from its wording, interpreted in the light of the circumstances surrounding its drafting and execution, manifests an intent to exercise the power.”"

MCL 556.114

Unless otherwise provided in the creating instrument, an instrument manifests an intent to exercise the power if the instrument purports to transfer an interest in the appointive property that the donee would have no power to transfer except by virtue of the power, even though the power is not recited or referred to in the instrument, or if the instrument either expressly or by necessary implication from its wording, interpreted in the light of the circumstances surrounding its drafting and execution, manifests an intent to exercise the power. Subject to the other provisions of this section, if there is a general power exercisable by will with no express gift in default in the creating instrument, a residuary clause or other general language in the donee's will purporting to dispose of all of the donee's estate or property operates to exercise the power, but in all other cases such a clause or language does not in itself manifest an intent to exercise a power exercisable by will.

Changing a Prior LBD

A new LBD can be created directly from the power to convey reserved in prior LBD without first conveying the property back to the Grantors.  A second LBD does not alter the Grantors' interest in the property. For example, the Grantors may wish to change the persons who will receive the property upon their death. In that case, the Grantors may simply create a new LBD to change the ultimate recipients of the property. (In Re Conservatorship of Barbara Greer, 2023)

Deed Reference to Power of Appointment

By answering "Yes" to this question, a statement will be included in the deed to reference the prior LBD executed by the Grantors in which they reserved the power to convey the property.

Forms of Grantee Tenancy

1. Tenants in Common (TIC): 

• Form of Tenancy:  Default form of ownership in Michigan if no other tenancy is specified on the deed for unmarried co-owners.
• Ownership Shares: Owners can hold equal or unequal percentages.
• Rights of Survivorship: None. When a co-owner dies, their share does not automatically go to the surviving owners. Instead, it passes to their heirs via their will or estate (probate).
• Transferability: Each owner can sell, gift, or mortgage their individual share without the permission of the other owners.

2. Joint Tenancy:

• Form of Tenancy:  Deed must refer to ownership as "joint tenants". 
• Ownership Shares: All owners must hold equal shares.
• Rights of Survivorship: If an owner dies, their share automatically passes to the surviving owners.
• Transferability: Any owner can sever the joint tenancy by selling or transferring their interest to a third party. If they do, the tenancy converts into a Tenancy in Common, destroying the automatic rights of survivorship for that share.

3. Joint Tenants with Rights of Survivorship (JTWROS):

• Form of Tenancy:  Deed must refer to ownership as "joint tenants with rights of survivorship."
• Ownership Shares: All owners must hold equal shares.
• Rights of Survivorship: Yes, and it is absolute.
• Transferability: No owner can destroy the survivorship right by selling their share. If one owner sells their interest to a third party, the third party only buys a "life estate." When the original selling owner dies, the entire property automatically reverts to the other original surviving owners.

4. Tenants by the Entirety (TBE)

• Form of Tenancy: Default form of ownership for all married couples unless otherwise stated.
• Ownership Shares: The couple owns 100% of the property together.
• Rights of Survivorship: Yes. When one spouse dies, the surviving spouse automatically owns the entire property without going through probate.
• Transferability: Neither spouse can sell, give away, or mortgage the property without the other's consent.
• Asset Protection: A creditor of only one spouse cannot place a lien on or foreclose on the TBE property.

 

FILE REAL ESTATE TRANSFER TAX VALUATION AFFIDAVIT (FORM 2705) WITH THE REGISTER OF DEEDS

Background

An instrument subject to transfer tax (see "Transfer Tax" section of this worksheet) must include the total value of real property being transferred, unless an affidavit is filed with the instrument declaring the value of the real property. An affidavit may be useful if the parties want to mainitain privacy regarding the price of the property, or if tangible personal property is included in the purchase price (TPP is not subject to transfer tax).  

A Real Estate Transfer Tax Valuation Affidavit is used to declare the value of real property if the value is not stated on the face of the deed.  It is also use for transfers of an entity where 90% or more of the FMV of the assets are real property.  However, in most cases in which an entity is being transferred, the assets will be sold separately from the entity.  

Statutory References

MCL 207.504 (COUNTY):  A written instrument subject to the tax imposed by this act (i.e. county transfer tax) shall state on its face the total value of the real property or there shall be attached to the instrument an affidavit declaring the total value of the real property. The form of the affidavit shall be prescribed by the state tax commission. In the case of the sale or transfer of a combination of real and personal property the tax shall be imposed only upon the transfer of the real property, if the values of the real and personal property are stated separately on the face of the instrument or if an affidavit is attached to the instrument setting forth the respective values of the real and personal property.

MCL 207.525 (STATE): A written instrument subject to the tax imposed by this act shall state on its face the total value of the real property being transferred unless an affidavit is attached to the written instrument declaring the total value of the real property being transferred. The form of the affidavit shall be prescribed by the department of treasury. If the sale or transfer is of a combination of real and personal property, the tax shall be imposed only upon the transfer of the real property if the values of the real and personal property are stated separately on the face of the written instrument or if an affidavit is attached to the written instrument setting forth the respective values of the real and personal property.

Background

Transfer tax is paid at both the county (MCL 207.502) and state (MCL 207.523) levels.  Transfer tax is paid by the sellor or grantor of real property at the time of recording, unless the transfer is exempt. The tax is imposed on the following transfers:  

1. (County and State) Contracts for the sale or exchange of real estate or any interest therein or any combination of the foregoing or any assignment or transfer thereof.
2. (County and State) Deeds or instruments of conveyance of real property or any interest therein, for consideration.
3. (State Only) Contracts for the transfer or acquisition of a controlling interest in any entity only if the real property owned by that entity comprises 90% or more of the fair market value of the assets of the entity determined in accordance with generally accepted accounting principles which shall be recorded.

Rate of Tax

State: $7.50 per $1,000 of total value of property transferred, or fraction thereof (MCL 207.525)

Wayne County: $1.50 per $1,000, or fraction thereof (MCL 207.504) 

All Other Counties: $1.10 per $1,000 of fraction thereof (MCL 207.504)

Platted vs. Unplatted Land

"Platted Land" has a legal description with any of the following terms:

• Lot
• Unit
• Subdivision
• Plat

"Unplatted Land" has a legal description which refers to the Public Land Survey System (i.e. parts of sections). 

Definition of "Plat" and "Subdivision"

MCL 560.102(a):  "Plat" means a map or chart of a subdivision of land.

MCL 560.102(f):  "Subdivision" means the partitioning or splitting of a parcel or tract of land by the proprietor thereof or by his or her heirs, executors, administrators, legal representatives, successors, or assigns for the purpose of sale, or lease of more than 1 year, or of building development that results in 1 or more parcels of less than 40 acres or the equivalent, and that is not exempted from the platting requirements of this act by sections 108 and 109. "Subdivision" does not include a property transfer between 2 or more adjacent parcels, if the property taken from 1 parcel is added to an adjacent parcel; and any resulting parcel shall not be considered a building site unless the parcel conforms to the requirements of this act or the requirements of an applicable local ordinance.

Background

Section 109(3) of The Land Division Act (LDA) requires that a notice regarding the grantee's right to make future divisions under the LDA for all sales of unplatted land.

CAUTION: The right to make future divisions can be very valuable to the grantor and grantee, and should be examined carefully (see Form 3278 instructions for an example). Review these rights based on the interests of the client. Decide whether additional fees should be charged to examine the chain of title and prior divisions before proceeding. 

Selecting "Yes" for this question will add the notice below and will grant to the grantee the right to make ALL divisions under the LDA. In the absence of a notice, the right to make all divisions stays with the grantor.

Notice: Right to Make Divisions

MCL 560.109(3): A person shall not sell a parcel of unplatted land unless the deed contains a statement as to whether the right to make further divisions exempt from the platting requirements of this act under this section and section 108 is proposed to be conveyed. The statement shall be in substantially the following form:

"The grantor grants to the grantee the right to make [insert "zero", a number, or "all"] division(s) under section 108 of the land division act, 1967 PA 288, MCL 560.108."

In the absence of a statement conforming to the requirements of this subsection, the right to make divisions under section 108(2), (3), and (4) stays with the remainder of the parent tract or parent parcel retained by the grantor.

Notice of Farm Operations

Section 109(4) of The Land Division Act (LDA) requires that the following notice be placed in all deeds for unplatted land:

"This property may be located within the vicinity of farm land or a farm operation. Generally accepted agricultural and management practices which may generate noise, dust, odors, and other associated conditions may be used and are protected by the Michigan right to farm act."

Note: This notice does not make sense for lady-bird deeds or deeds between spouses, but the LDA does not make any exceptions. 

Selecting "Unplatted" above will add the farm notice above to the deed.

Background

Section 261 of The Land Division Act requires that a separate notice be recorded for all sales of land that abut a private road. Therefore, a private road notice should accompany a deed which is transferred for consideration if the parcel abuts a private road. 

If a Private Road Notice is not already recorded, then a new notice will be added to the deed. 

Notice of Private Road

MCL 560.261:  No person shall sell any lot in a recorded plat or any parcel of unplatted land in an unincorporated area if it abuts a street or road which has not been accepted as public unless the seller first informs the purchaser in writing on a separate instrument to be attached to the instrument conveying any interest in such lot or parcel of land of the fact that the street or road is private and is not required to be maintained by the board of county road commissioners. In addition, any contract or agreement of sale entered into in violation of this section shall be voidable at the option of the purchaser.

FILE PROPERTY TRANSFER AFFIDAVIT (FORM 2766) WITH THE LOCAL ASSESSOR

What is the purpose of a PTA?

A PTA is used to notify a local assessor that a transfer of ownership has occurred, and whether the transfer is exempt from uncapping. The assessor uses this information to increase property taxes as soon as possible. 

When is a PTA required to be filed?

MCL 211.27a(10)

The buyer, grantee, or other transferee of the property shall notify the appropriate assessing office in the local unit of government in which the property is located of a "transfer of ownership" of property within 45 days of the transfer of ownership, on a form prescribed by the state tax commission that states the parties to the transfer, the date of the transfer, the actual consideration for the transfer, and the property's parcel identification number or legal description.

Should a PTA be filed even if a conveyance is NOT a transfer of ownership?

There are many types of conveyances that are NOT transfers of ownership, and therefore, a PTA is not required to be filed. However, a PTA should be filed for all deeds except lady-bird deeds or deeds to create or disjoint a tenancy by the entireties. Otherwise, the assessor cannot determine from the face of the deed whether the transfer is exempt from uncapping.

What is the penalty for failure to file a PTA?

MCL 211.27b(1)

A county register of deeds is required to send all deeds to the local assessors on a monthly basis (MCL 211.27a(10)).  If the buyer, grantee, or other transferee in the immediately preceding transfer of ownership of property does not notify the appropriate assessing office as required by section 27a(10), the property's taxable value shall be adjusted under section 27a(3) and all of the following shall be levied:

1. Any additional taxes that would have been levied if the transfer of ownership had been recorded as required under this act from the date of transfer.
2. Interest and penalty from the date the tax would have been originally levied.
3. For property classified under section 34c as either industrial real property or commercial real property, a penalty in the following amount: (i) Except as otherwise provided in subparagraph (ii), if the sale price of the property transferred is $100,000,000.00 or less, $20.00 per day for each separate failure beginning after the 45 days have elapsed, up to a maximum of $1,000.00.
4. For real property other than real property classified as industrial real property or commercial real property, a penalty of $5.00 per day for each separate failure beginning after the 45 days have elapsed, up to a maximum of $200.00.

What is the remedy if an assessor incorrectly uncaps tax based on failure to file a PTA?

MCL 211.27b(6)

An assessor must immediately notify by first-class mail the owner of that property of that increase in taxable value. A buyer, grantee, or other transferee may appeal any increase in taxable value or the levy of any additional taxes, interest, and penalties to the Michigan tax tribunal within 35 days of receiving the notice of the increase in the property's taxable value. An appeal is limited to the issues of whether a transfer of ownership has occurred and correcting arithmetic errors. 

Definition of "Uncapping"

Per MCL 211.27a(3), upon a "Transfer of Ownership", the property's Taxable Value for the calendar year following the year of the transfer will increase (i.e. "uncap") to the property's State Equalization Value for the calendar year following the transfer -- unless a specific exception applies under Section 7a(6) or 7a(7).

Definition of State Equalization Value (SEV) 

"State Equalization Valuation" (SEV) means 50% of true cash value (TCV). SEV is derived from (but not defined by) Article IX, Section 3, of the Michigan Constitution. The General Property Tax Act refers to SEV but does not further define the term (MCL 211.27a(1)). 

Definition of "Taxable Value"

Per MCL 211.27a(2), "Taxable Value" of each parcel of property is the lesser of the following:

1. The property's taxable value in the immediately preceding year minus any losses, multiplied by the lesser of 1.05 or the inflation rate, plus all additions (this is referred to as the "capped" amount); or,
2. The property's current SEV.

It is possible that SEV will be less than Taxable Value, but that will not occur unless the TCV of the property has actually declined. Therefore, most people will benefit if the taxable value does not uncap to the current SEV. 

Definition of "Transfer of Ownership" (and exceptions)

Per MCL 211.7a(6), "Transfer of Ownership" means the conveyance of title to or a present interest in property, including the beneficial use of the property, the value of which is substantially equal to the value of the fee interest, including but not limited to the following--

1.  A conveyance by deed.
2.  A conveyance by land contract. 
3.  A conveyance to a trust, except under any of the following conditions:
   1. If the settlor or the settlor's spouse, or both, conveys the property to the trust and the sole present beneficiary or beneficiaries are the settlor or the settlor's spouse, or both.
   2. For residential real property, if the settlor or the settlor's spouse, or both, conveys the residential real property to the trust and the sole present beneficiary or beneficiaries are the settlor's or the settlor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance. 
4. A conveyance by distribution from a trust, except under any of the following conditions:
   1. If the distributee is the sole present beneficiary or the spouse of the sole present beneficiary, or both.
   2. A distribution of residential real property if the distributee is the settlor's or the settlor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance.
5. A change in the sole present beneficiary or beneficiaries of a trust, except under any of the following conditions:
   1. A change that adds or substitutes the spouse of the sole present beneficiary.
   2. For residential real property, a change that adds or substitutes the settlor's or the settlor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance.
6. A conveyance by distribution under a will or by intestate succession, except under any of the following conditions:
   
   1. If the distributee is the decedent's spouse.
   2. For residential real property, if the distributee is the decedent's or the decedent's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance.
7. A conveyance by lease if the total duration of the lease, including the initial term and all options for renewal, is more than 35 years or the lease grants the lessee a bargain purchase option. As used in this subdivision, "bargain purchase option" means the right to purchase the property at the termination of the lease for not more than 80% of the property's projected true cash value at the termination of the lease. 
8. Except as otherwise provided in this subdivision, a conveyance of an ownership interest in a corporation, partnership, sole proprietorship, limited liability company, limited liability partnership, or other legal entity if the ownership interest conveyed is more than 50% of the corporation, partnership, sole proprietorship, limited liability company, limited liability partnership, or other legal entity. Both of the following apply to a corporation subject to 1897 PA 230, MCL 455.1 to 455.24:
   
   1. A transfer of stock of the corporation is a transfer of ownership only with respect to the real property that is assessed to the transferor lessee stockholder.
   2. A cumulative conveyance of more than 50% of the corporation's stock does not constitute a transfer of ownership of the corporation's real property.
9. A transfer of property held as a tenancy in common, except that portion of the property not subject to the ownership interest conveyed.
10. A conveyance of an ownership interest in a cooperative housing corporation, except that portion of the property not subject to the ownership interest conveyed.

Defintion of Transfers that are NOT "Transfers of Ownership"

Per MCL 211.27a(7), Transfer of ownership does not include the following:

1. The transfer of property from 1 spouse to the other spouse or from a decedent to a surviving spouse.
2. A transfer from a husband, a wife, or a married couple creating or disjoining a tenancy by the entireties in the grantors or the grantor and his or her spouse.
3. Subject to subdivision (D), a transfer of that portion of property subject to a life estate or life lease retained by the transferor, until expiration or termination of the life estate or life lease. 
4. A transfer of that portion of residential real property that had been subject to a life estate or life lease retained by the transferor resulting from expiration or termination of that life estate or life lease, if the transferee is the transferor's or transferor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the transfer. 
5. [OMITTED-transfers through foreclosure or forfeiture]
6. [OMITTED-transfers by redemption for delinquent taxes].
7. A conveyance to a trust if the settlor or the settlor's spouse, or both, conveys the property to the trust and any of the following conditions are satisfied:
   1. If the sole present beneficiary of the trust is the settlor or the settlor's spouse, or both.
   2. For residential real property, if the sole present beneficiary of the trust is the settlor's or the settlor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance. 
8. A transfer pursuant to a judgment or order of a court of record making or ordering a transfer, unless a specific monetary consideration is specified or ordered by the court for the transfer.
9. A transfer creating or terminating a joint tenancy between 2 or more persons if at least 1 of the persons was an original owner of the property before the joint tenancy was initially created and, if the property is held as a joint tenancy at the time of conveyance, at least 1 of the persons was a joint tenant when the joint tenancy was initially created and that person has remained a joint tenant since the joint tenancy was initially created. A joint owner at the time of the last transfer of ownership of the property is an original owner of the property. For purposes of this subdivision, a person is an original owner of property owned by that person's spouse.
10. A transfer for security or an assignment or discharge of a security interest.
11. A transfer of real property or other ownership interests among members of an affiliated group. As used in this subsection, "affiliated group" means 1 or more corporations connected by stock ownership to a common parent corporation.
12. [OMITTED-Normal public trading of shares of stock]
13. A transfer of real property or other ownership interests among corporations, partnerships, limited liability companies, limited liability partnerships, or other legal entities if the entities involved are commonly controlled. 
14. A direct or indirect transfer of real property or other ownership interests resulting from a transaction that qualifies as a tax-free reorganization under section 368 of the internal revenue code, 26 USC 368. 
15. Except as provided in subsection (6)(k), a transfer of qualified agricultural property, if the person to whom the qualified agricultural property is transferred files an affidavit with the assessor of the local tax collecting unit in which the qualified agricultural property is located and with the register of deeds for the county in which the qualified agricultural property is located attesting that the qualified agricultural property will remain qualified agricultural property. [REMAINING TEXT OMITTED]
16. [OMITTED-transfer of qualified forest property]
17. [OMITTED-transfer of land subject to a conservation easement]
18. [OMITTED-merger of domestic non-profit corporations]
19. [OMITTED-change to assessment rolls]
20. [OMITTED-certain transfers which occurred between 12/31/2013 and 12/30/2014]
21. A transfer of residential real property if the transferee is the transferor's or the transferor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance. 
22. For residential real property, a conveyance from a trust if the person to whom the residential real property is conveyed is the settlor's or the settlor's spouse's mother, father, brother, sister, son, daughter, adopted son, adopted daughter, grandson, or granddaughter and the residential real property is not used for any commercial purpose following the conveyance. 
23. A conveyance of land by distribution under a will or trust or by intestate succession, but not buildings or structures located on the land, which meets 1 or more of the following requirements:
    1. The land is made subject to a conservation easement under subpart 11 of part 21 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.2140 to 324.2144, prior to the conveyance by distribution under a will or trust or by intestate succession. As used in this subparagraph, "conservation easement" means that term as defined in section 2140 of the natural resources and environmental protection act, 1994 PA 451, MCL 324.2140.
    2. The land or an interest in the land is made eligible for a deduction as a qualified conservation contribution under section 170(h) of the internal revenue code, 26 USC 170, prior to the conveyance by distribution under a will or trust or by intestate succession.
       (x) A conveyance of property under section 2120a(6) of the natural resources and environmental protection act, 1994 PA 451, MCL 324.2120a.

Definition of "Residential Real Property"

Per MCL 211.34c(2)(e), "Residential Real Property" includes the following:

1. Platted or unplatted parcels, with or without buildings, and condominium apartments located within or outside a village or city, which are used for, or probably will be used for, residential purposes.
2. Parcels that are used for, or probably will be used for, recreational purposes, such as lake lots and hunting lands, located in an area used predominantly for recreational purposes.
3. A home, cottage, or cabin on leased land, and a mobile home that would be assessable as real property under section 2a except that the land on which it is located is not assessable because the land is exempt

Definition of "Commercial Purpose"

Per MCL 211.27a(11)(c), "Commercial Purpose" means used in connection with any business or other undertaking intended for profit, but does not include the rental of residential real property for a period of less than 15 days in a calendar year.

PTA's Personal Property Transfers

A Property Transfer Affidavit must be filed for some types of personal property, including but not limited to:

• Buildings on leased land.
• Leasehold improvements, as defined in MCL Section 211.8(h).
• Leasehold estates, as defined in MCL Section 211.8(i) and (j).

Uncapping Exemptions Specified in PTA Form

FILE "QUALIFIED FOREST PROGRAM TRANSFER FORM" WITH THE MICHIGAN DEPT OF AGRICULTURE AND THE LOCAL ASSESSOR.

FILE AFFIDAVIT ATTESTING THAT QUALIFIED AGRICULTURAL PROPERTY WILL REMAIN QUALIFIED AGRICULTURAL PROPERTY (FORM 3676) WITH THE LOCAL ASSESSOR

MCL 211.27a(7)(o)

(7) Transfer of ownership does not include the following:

(o) Except as provided in subsection (6)(k), a transfer of qualified agricultural property, if the person to whom the qualified agricultural property is transferred files an affidavit with the assessor of the local tax collecting unit in which the qualified agricultural property is located and with the register of deeds for the county in which the qualified agricultural property is located attesting that the qualified agricultural property will remain qualified agricultural property.  The affidavit under this subdivision shall be in a form prescribed by the department of treasury.  An owner of qualified agricultural property shall inform a prospective buyer of that qualified agricultural property that the qualified agricultural property is subject to the recapture tax provided in the agricultural property recapture act, 2000 PA 261, MCL 211.1001 to 211.1007, if the qualified agricultural property is converted by a change in use, as that term is defined in section 2 of the agricultural property recapture act, 2000 PA 261, MCL 211.1002.  If property ceases to be qualified agricultural property at any time after a transfer subject to this subdivision, all of the following shall occur:

(i) The taxable value of that property, or, if subsection (6)(k) applies, a portion of it established as a separate tax parcel, shall be adjusted under subsection (3) as of the December 31 in the year that the property, or, if subsection (6)(k) applies, a portion of it established as a separate tax parcel, ceases to be qualified agricultural property.

(ii) The property, or, if subsection (6)(k) applies, a portion of it established as a separate tax parcel, is subject to the recapture tax provided for under the agricultural property recapture act, 2000 PA 261, MCL 211.1001 to 211.1007.

Other Uncapping Exemptions Not Specified in PTA Form

MCL 211.7dd(a) 

As used in sections 7cc and 7ee:

(a) "Owner" means any of the following:

(i) A person who owns property or who is purchasing property under a land contract.

(ii) A person who is a partial owner of property.

(iii) A person who owns property as a result of being a beneficiary of a will or trust or as a result of intestate succession.

(iv) A person who owns or is purchasing a dwelling on leased land.

(v) A person holding a life lease in property previously sold or transferred to another.

(vi) A grantor who has placed the property in a revocable trust or a qualified personal residence trust.

(vii) The sole present beneficiary of a trust if the trust purchased or acquired the property as a principal residence for the sole present beneficiary of the trust, and the sole present beneficiary of the trust is totally and permanently disabled. As used in this subparagraph, "totally and permanently disabled" means disability as defined in section 216 of title II of the social security act, 42 USC 416, without regard as to whether the sole present beneficiary of the trust has reached the age of retirement.

(viii) A cooperative housing corporation.

MCL 211.7dd(c)

(c) "Principal residence" means the 1 place where an owner of the property has his or her true, fixed, and permanent home to which, whenever absent, he or she intends to return and that shall continue as a principal residence until another principal residence is established.

• Except as otherwise provided in this subdivision, principal residence includes only that portion of a dwelling or unit in a multiple-unit dwelling that is subject to ad valorem taxes and that is owned and occupied by an owner of the dwelling or unit.
• Principal residence also includes all of an owner's unoccupied property classified as residential that is adjoining or contiguous to the dwelling subject to ad valorem taxes and that is owned and occupied by the owner.
• Beginning December 31, 2007, principal residence also includes all of an owner's unoccupied property classified as timber-cutover real property under section 34c that is adjoining or contiguous to the dwelling subject to ad valorem taxes and that is owned and occupied by the owner. Contiguity is not broken by boundary between local tax collecting units, a road, a right-of-way, or property purchased or taken under condemnation proceedings by a public utility for power transmission lines if the 2 parcels separated by the purchased or condemned property were a single parcel prior to the sale or condemnation.
• Except as otherwise provided in this subdivision, principal residence also includes any portion of a dwelling or unit of an owner that is rented or leased to another person as a residence as long as that portion of the dwelling or unit that is rented or leased is less than 50% of the total square footage of living space in that dwelling or unit.
• Principal residence also includes a life care facility for purposes of former 1976 PA 440 that is registered under the continuing care community disclosure act, 2014 PA 448, MCL 554.901 to 554.993.
• Principal residence also includes property owned by a cooperative housing corporation and occupied by tenant stockholders.
• Property that qualified as a principal residence shall continue to qualify as a principal residence for 3 years after all or any portion of the dwelling or unit included in or constituting the principal residence is rented or leased to another person as a residence if all of the following conditions are satisfied:
  
  • (i) The owner of the dwelling or unit is absent while on active duty in the armed forces of the United States.
  • (ii) The dwelling or unit would otherwise qualify as the owner's principal residence.
  • (iii) Except as otherwise provided in this subparagraph, the owner files an affidavit with the assessor of the local tax collecting unit on or before May 1 attesting that it is his or her intent to occupy the dwelling or unit as a principal residence upon completion of active duty in the armed forces of the United States. A copy of an affidavit filed under this subparagraph shall be forwarded to the department of treasury pursuant to a schedule prescribed by the department of treasury.

MCL 211.7cc (3)

(3) Except as otherwise provided in subsection (5), a married couple who are required to file or who do file a joint Michigan income tax return are entitled to not more than 1 exemption under this section.

For taxes levied after December 31, 2002, a person is not entitled to an exemption under this section in any calendar year in which any of the following conditions occur:

(a) That person has claimed a substantially similar exemption, deduction, or credit, regardless of amount, on property in another state. 

(b) That person or his or her spouse owns property in a state other than this state for which that person or his or her spouse claims an exemption, deduction, or credit substantially similar to the exemption provided under this section, unless that person and his or her spouse file separate income tax returns.

(c) That person has filed a nonresident Michigan income tax return, except active duty military personnel stationed in this state with his or her principal residence in this state.

(d) That person has filed an income tax return in a state other than this state as a resident, except active duty military personnel stationed in this state with his or her principal residence in this state.

(e) That person has previously rescinded an exemption under this section for the same property for which an exemption is now claimed and there has not been a transfer of ownership of that property after the previous exemption was rescinded, if either of the following conditions is satisfied:

(i) That person has claimed an exemption under this section for any other property for that tax year.

(ii) That person has rescinded an exemption under this section on other property, which exemption remains in effect for that tax year, and there has not been a transfer of ownership of that property.

MCL 211.7cc(5)

An owner of property who previously occupied that property as his or her principal residence but now resides in a nursing home, assisted living facility, or, if residing there solely for purposes of convalescence, any other location may retain an exemption on that property if the owner manifests an intent to return to that property by satisfying all of the following conditions:

(a) The owner continues to own that property while residing in the nursing home, assisted living facility, or other location.

(b) The owner has not established a new principal residence.

(c) The owner maintains or provides for the maintenance of that property while residing in the nursing home, assisted living facility, or other location.

(d) That property is not leased and is not used for any business or commercial purpose.

THE OWNER IS NOT ELIGIBLE FOR THE PRINCIPAL RESIDENCE EXEMPTION

FILE "PRINCIPAL RESIDENCE EXEMPTION AFFIDAVIT" (FORM 2368) WITH THE LOCAL ASSESSOR

FILE "REQUEST TO RESCIND PRE" (FORM 2602) WITH THE LOCAL ASSESSOR

CLICK HERE FOR A COMPLETE LIST OF PROPERTY TAX EXEMPTIONS

MCL 211.7b

(1) Real property used and owned as a homestead by either of the following individuals is exempt from the collection of taxes under this act:

(a) A disabled veteran.
(b) A surviving spouse of a disabled veteran who, immediately before death, was eligible for the exemption under this section. An exemption under this subdivision continues as long as the surviving spouse does not remarry, and the exemption applies to any property used and owned as a homestead by the surviving spouse, including homestead property acquired after the decedent's death.

(4) As used in this section:

(a) "Disabled veteran" means a veteran who is a resident of this state and who meets 1 of the following criteria:

(i) Has been determined by the United States Department of Veterans Affairs to be permanently and totally disabled as a result of military service and entitled to veterans' benefits at the 100% rate.
(ii) Has a certificate from the United States Department of Veterans Affairs certifying that the veteran is receiving or has received pecuniary assistance due to disability for specially adapted housing.
(iii) Has been rated by the United States Department of Veterans Affairs as individually unemployable.

(b) "Own" or "owned" means 1 of the following:

(i) For an individual described in subsection (1)(a), legal title to the property is held solely by that individual or jointly by that individual and that individual's spouse.
(ii) For an individual described in subsection (1)(b), legal title to the property is held solely by that individual.

(c) "Veteran" means an individual who served in the United States Armed Forces, including the reserve components, and was discharged or released under honorable conditions.CL 211.7a

MCL 211.7a

(c) "Homestead" means a dwelling or a unit in a multipurpose or multidwelling building which is subject to ad valorem taxes and which is owned and occupied as the principal domicile by the owner thereof. When a homestead is an integral part of a larger unit of assessment such as commercial, industrial, developmental, residential, timber cutover, or a multipurpose or multidwelling building, the tax on the homestead shall be the same proportion of the total property tax as the proportion of the value of the homestead is to the total value of the assessed property.

FILE "STATE TAX COMMISSION AFFIDAVIT FOR DISABLED VETERANS EXEMPTION" (FORM 5107) WITH THE LOCAL ASSESSOR

MCL 211.7u

(1) The principal residence of a person who, in the judgment of the supervisor and board of review, by reason of poverty, is unable to contribute toward the public charges is eligible for exemption in whole or in part from the collection of taxes under this act. This section does not apply to the property of a corporation.

(2) To be eligible for exemption under this section, a person shall, subject to subsections (6), (8), and (10), do all of the following on an annual basis:

(a) Own and occupy as a principal residence the property for which an exemption is requested. The person shall affirm this ownership and occupancy status in writing by filing a form prescribed by the state tax commission with the local assessing unit.

(b) File a claim with the board of review on a form prescribed by the state tax commission and provided by the local assessing unit, accompanied by federal and state income tax returns for all persons residing in the principal residence, including any property tax credit returns, filed in the immediately preceding year or in the current year. Federal and state income tax returns are not required for a person residing in the principal residence if that person was not required to file a federal or state income tax return in the tax year in which the exemption under this section is claimed or in the immediately preceding tax year. If a person was not required to file a federal or state income tax return in the tax year in which the exemption under this section is claimed or in the immediately preceding tax year, an affidavit in a form prescribed by the state tax commission may be accepted in place of the federal or state income tax return. The filing of a claim under this subsection constitutes an appearance before the board of review for the purpose of preserving the claimant's right to appeal the decision of the board of review regarding the claim.

(c) Produce a valid driver license or other form of identification if requested by the supervisor or board of review.

(d) Produce a deed, land contract, or other evidence of ownership of the property for which an exemption is requested if required by the supervisor or board of review.

(e) Meet the federal poverty guidelines published in the prior calendar year in the Federal Register by the United States Department of Health and Human Services under its authority to revise the poverty line under 42 USC 9902, or alternative guidelines adopted by the governing body of the local assessing unit provided the alternative guidelines do not provide income eligibility requirements less than the federal guidelines.

(3) The application for an exemption under this section must be filed after January 1 but before the day prior to the last day of the board of review.

(4) The governing body of the local assessing unit shall determine and make available to the public the policy and guidelines used for the granting of exemptions under this section. If the local assessing unit maintains a website, the local assessing unit shall make the policy and guidelines, and the form described in subsection (2)(b), available to the public on the website. The guidelines must include, but are not limited to, the specific income and asset levels of the claimant and total household income and assets.

FILE "APPLICATION FOR POVERTY EXEMPTION" (FORM 5737) WITH THE LOCAL ASSESSOR

MCL 211.7ee

(1) Qualified agricultural property is exempt from the tax levied by a local school district for school operating purposes to the extent provided under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211, according to the provisions of this section.

(2) Qualified agricultural property that is classified as agricultural under section 34c is exempt under subsection (1) and the owner is not required to file an affidavit claiming an exemption with the local tax collecting unit unless requested by the assessor to determine whether the property includes structures that are not exempt under this section. To claim an exemption under subsection (1) for qualified agricultural property that is not classified as agricultural under section 34c, the owner shall file an affidavit claiming the exemption with the local tax collecting unit by May 1.

FILE "CLAIM FOR FARMLAND EXEMPTION" (FORM 2599) WITH THE LOCAL ASSESSOR.

THIS FORM IS NOT REQUIRED IF THE PROPERTY IS ALREADY CLASSIFIED AS AGRICULTURAL BY THE ASSESSOR OR IF THE  PRE IS ALREADY CLAIMED FOR THIS PROPERTY, AND THERE IS NO TRANSFER OF OWNERSHIP.

MCL 211.7ss

(3) Beginning December 31, 2013, eligible development property is exempt from the collection of the tax levied by a local school district for school operating purposes under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211, to the same extent provided a principal residence under section 1211 of the revised school code, 1976 PA 451, MCL 380.1211, for 3 years or until the property is no longer eligible development property, whichever occurs first.

(4) To claim an exemption under subsection (1), an owner of development property shall file an affidavit claiming the exemption with the local tax collecting unit on or before June 1, 2013 for the immediately succeeding summer tax levy and all applicable subsequent tax levies or on or before November 1, 2013 for the immediately succeeding winter tax levy and all applicable subsequent tax levies. The affidavit shall be on a form prescribed by the department of treasury.

(17) As used in this section:

(a) "Development property" means real property on which a residential dwelling, condominium unit, or other residential structure is located, which residential dwelling, condominium unit, or other residential structure meets all of the following conditions:

(i) Is not occupied and has never been occupied.

(ii) Is available for sale.

(iii) Is not leased.

(iv) Is not used for any business or commercial purpose. This restriction does not apply to real property used as an on-site office in a specific development. However, in the case of a specific development that consists of multiple units, only 1 such unit is eligible for exclusion from this restriction as an on-site office.

(b) "Eligible development property" means all of the following real property not previously exempt under this section:

(i) A residential dwelling, condominium unit, or other residential structure that was new construction after December 30, 2012 and that meets all of the following conditions:

(A) Is not occupied and has never been occupied. In the case of a condominium or other residential structure that consists of multiple units, occupancy does not occur until all of the units are occupied. However, any unit that is occupied is not eligible for exemption under this section.

(B) Is available for sale.

(C) Is not leased.

(D) Is not used for any business or commercial purpose. This restriction does not apply to real property used as an on-site office in a specific development. However, in the case of a specific development that consists of multiple units, only 1 such unit is eligible for exclusion from this restriction as an on-site office.

(ii) The land on which the residential dwelling, condominium unit, or other residential structure identified in subparagraph (i) is located.

(c) "New construction" means that term as defined in section 34d.

FILE "AFFIDAVIT CLAIMING EXEMPTION FOR ELIGIBLE DEVELOPMENT PROPERTY" (FORM 5033) WITH THE LOCAL ASSESSOR