Commercial real estate liens and recording a correction instrument and a lis pendens

Lis pendens Current law provides that any person who applies to a court or municipal governing body for laying out, widening, vacating, or extending a street, alley, or other specified public place must file a notice of pendency of the application and that failure to comply renders all proceedings based on the application void. The bill instead requires the person making the application to submit a lis pendens to the register of deeds for filing or recording and removes the provision that failure to comply renders all proceedings based on the application void.

Current law provides that any final order or resolution based on the application has no effect and is not notice unless a certified copy of the order or resolution contains a full and accurate description of the property and is recorded in the office of the register of deeds. The bill provides that the final order must instead contain a legal description of the property and is not notice unless it is recorded in the office of the register of deeds. The bill also removes a provision in current law that a resolution or order that affects land but for which no application was made has no effect and is not notice unless it is recorded.

Commercial real estate liens This bill makes numerous changes in the process of obtaining and terminating a commercial real estate lien, which is a lien on real property other than real property that contains eight or fewer dwelling units, that is zoned for residential use but that has no structures, or that is zoned for agriculture.

Currently, if a real estate broker (broker) earns a commission on the sale of commercial real estate, the broker has a lien against the commercial real estate for the unpaid amount of the commission. The bill expands the types of agreements that may give rise to a commercial real estate lien to include an agreement between a broker and a person that grants the broker the right to represent the person in the lease of commercial real estate.

Under current law, to claim a lien against commercial real estate for an unpaid commission, a broker must file or record a written notice of intent to claim the lien at the office of the register of deeds for the county in which the commercial real estate is located and deliver a copy of that notice to the person owing the commission. Under this bill, to obtain a lien, the broker must send written notice to the person who owes the commission of the right to claim the lien and record a written notice of interest in the commercial real estate at the office of the register of deeds for the county in which the commercial real estate is located.

Currently, the lien is perfected when a broker files a notice of lien in the office of the register of deeds for the county in which the commercial real estate is located.

Under the bill, the lien is perfected when a broker records the lien in the office of the register of deeds for the county in which the commercial real estate is located.

The bill changes the time period for perfecting a lien involving a written commercial real estate list contract or buyer agency agreement from three days before the conveyance documents are recorded with register of deeds to 30 days after the conveyance documents are recorded with register of deeds.

Under current law, the broker is required to satisfy a commercial real estate lien if the person owing a commission that is the subject of the lien pays an amount equal to 125 percent of the commission owed into the trust account of the broker or of an attorney who does not represent any party to the dispute, pending resolution of the dispute. This bill adds a mutually agreed third party to those who can receive and hold the money pending resolution of the dispute.

Current law provides that a commercial real estate lien is extinguished if an action to enforce the lien is not commenced within two years after the lien is perfected. Under this bill, a commercial real estate lien is extinguished if a new notice of interest in the commercial real estate is not recorded in the office of the register of deeds for the county in which the commercial real estate is located within two years after the original notice of interest was recorded. Under the bill, a broker may rescind a notice of interest by recording a notice in the office of the register of deeds for the county in which the commercial real estate is located indicating that he or she no longer claims an interest in the commercial real estate.

The bill requires a broker to record a notice rescinding a notice of interest in the commercial real estate if the agreement that created the interest in the commercial real estate is terminated or expires. In addition, under the bill, a broker may waive the lien by signing a written waiver, but no action between any other persons may invalidate the lien, other than the payment in full of the broker's commission.