The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us)



STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL


Opinion No. 5321

June 12, 1978

SUBDIVISION CONTROL ACT:

Date of subdividing when conveyance is made by unrecorded land contract

Land Contracts

DEEDS & CONVEYANCES:

Date of subdividing when conveyance is made by unrecorded land contract

RECORDS & RECORDATION:

Unrecorded land contract

STATUTE OF FRAUDS:

Land contract

The vendee of a land contract is vested with equitable title in the land and the legal title remains in the vendor as security for payment of the purchase price of the land.

Pursuant to the statute of frauds, a land contract which is not in writing and signed by the party by whom the conveyance is made is void.

The date of a land contract is the date of transfer of the equitable title.

If, through execution of deeds or land contracts, five or more parcels, each having an area of ten or fewer acres, will be created by partitioning a tract of land within the immediate preceding ten years, the vendor must cause a plat to be made and recorded before contracting to sell any of the parcels.

Bill S. Huffman

State Senator

The Capitol

Lansing, Michigan 49801

By letter you have requested my opinion on the following question:

'For the purpose of the Plat Act, [Subdivision Control Act, 1967 PA 288; CL 560.101 et seq, MSA 26.430(101) et seq] does the date of sale of property as evidenced by the land contract of sale determine the date of sale, or does the date the land contract is recorded determine the date of sale?'

The vendee of a land contract is vested with equitable title in the land, and the legal title remains in the vendor as security for payment on the purchase price of the land. Barker v Klinger, 302 Mich 282; 4 NW2d 596 (1942). The vendee's interest is real property while the vendor's interest is personal property. Hull v Hostettler, 224 Mich 365; 194 NW 996 (1923). The vendee is entitled to possession unless otherwise stipulated in the contract. In re Estate of Jeffers, 272 Mich 127; 261 NW 271 (1935).

An agreement to sell real property must meet the requirements of the Statute of Frauds, RS 1846, Ch 80, Sec. 8; MCLA 566.108, MSA 26.908, which provides:

'Every contract for the leasing for a longer period than 1 year, or for the sale of any lands, or any interest in lands, shall be void, unless the contract, or some note or memorandum thereof be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized in writing: Provided, That whenever any lands or interest in lands shall be sold at public auction and the auctioneer or the clerk of the auction at the time of the sale enters in a sale book a memorandum specifying the description and price of the land sold and the name of the purchaser, such memorandum, together with the auction bills, catalog or written or printed notice of sale containing the name of the person on whose account the sale is made and the terms of sale, shall be deemed a memorandum of the contract of sale within the meaning of this section.'

Therefore the date of the land contract is the date of transfer of the equitable title.

Transfers of title to real estate need not be recorded to be effective; however, the recording statute provides:

'Every conveyance of real estate within the state hereafter made, which shall not be recorded as provided in this chapter, shall be void as against any subsequent purchaser in good faith and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded. The fact that such first recorded conveyance is in the form or contains the terms of a deed of quit-claim and release shall not affect the question of good faith of such subsequent purchaser, or be of itself notice to him of any unrecorded conveyance of the same real estate or any part thereof.' RS 1846, Ch 65, Sec. 29; MCLA 565.29, MSA 26.547

To secure the protection afforded by recording, therefore, it is advisable for a land contract vendee to have the contract recorded.

The Subdivision Control Act, supra, Sec. 102(d) defines the words 'subdivide' and 'subdivision' as:

'(d) 'Subdivide' or 'subdivision' means the partitioning or dividing of a parcel or track of land by the proprietor thereof or by his heirs, executors, administrators, legal representatives, successors or assigns for the purpose of sale, or lease of more than one year, or of building development, where the act of division creates 5 or more parcels of land each of which is 10 acres or less in area; or 5 or more parcels of land each of which is 10 acres or less in area are created by successive divisions within a period of 10 years.'

Section 103 of the Subdivision Control Act, supra, provides in part:

'(1) Any division of land which results in a subdivision as defined in section 102 shall be surveyed and a plat thereof submitted, approved and recorded as required by the provisions of this act.'

For subdivision control purposes, a land contract entered into by a proprietor contracting to convey a portion of a tract of land constitutes a 'dividing or partitioning of lands' as that term is used in 1967 PA 288, supra, Sec. 102(d) even if it is not recorded.

If, therefore, through execution of deeds or land contracts, five or more parcels, each having an area of 10 or fewer acres, will be created by partitioning a tract of land within the immediate preceding 10 years, the vendor must cause a plat to be made and recorded before contracting to sell any of the parcels.

The precise fact situation presented by your inquiry, however, requires additional commentary.

In the example given:

(a) In 1965 A purchased one parcel of land containing 640 acres;

(b) In 1965 A contracted with B to sell 500 acres of land, retaining the remaining 140 acres;

(c) The contract was recorded in 1973.

The Subdivision Control Act was effective on January 1, 1968. On that date the parcels held by A and B were, and remain, separate and distinct tracts or parcels. On or before January 1, 1978, therefore:

(a) A may partition or divide his 140 acre tract without platting the same so long as he or his successors or assigns do not create out of that tract more than 4 parcels having an area of less than or equal to 10 acres.

(b) B may partition or divide his 500 acre tract without platting the same so long as he or his successors or assigns do not create out of that tract more than 4 parcels having an area of less than or equal to 10 acres.

It appearing that neither A nor B have thus far made any division or partition of their respective tracts:

(a) Neither A nor his successors or assigns may within a future 10 year period by act of division or successive acts of division create out of the 140 acre tract more than 4 parcels each having an area of 10 acres or less.

(b) Neither B nor his successors or assigns may within a future 10 year period by act of division or successive acts of division create out of the 500 acre tract more than 4 parcels each having an area of 10 acres or less.

Frank J. Kelley

Attorney General