Michigan Covenants
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FAQ
A covenant deed is a document used by a grantor to transfer a property to a grantee. However, unlike other types of Michigan deeds, a covenant deed provides limited protection to the grantee, entailing that grantors are liable for any problems in the property only within the period of their ownership.
Key Takeaways. Restrictive covenants are clauses that prevent, prohibit, restrict, or limit the actions of a person or entity named in a contract. Restrictive covenants are common in real estate transactions and apply to everything from the colors you can paint your house to how many tenants can live in a building.
Many Michigan businesses require their employees to sign non-compete agreements. Although many people assume these types of agreements are not enforceable, the fact is that non-compete agreements may be enforceable under Michigan so long as certain requirements are met.
In Michigan, the standing to enforce a restrictive covenant can be quite broad. By statute, any third-party beneficiary of a contract has the right to bring an action in the circuit court where the property is located to enforce the covenant.
Non-competition clauses in Michigan Michigan lands somewhere in the middle ? non-competes are legal and enforceable, though they must be: (1) narrowly drawn; (2) to protect a reasonable business interest; and (3) be reasonable in their duration, geographical area, and type of business, as defined by MCL 445.774a.
A registered restrictive covenant is recorded on the title of the burdened land but is not recorded on the title of benefiting land. If the benefited land has been subdivided and re-subdivided, you might need to search the original plan of the subdivision and earlier titles to identify the benefited owners.
The 2022 Discharge of Prohibited Restrictive Covenants Act allows for the discharge of racist and other discriminatory language from recorded deeds.
For example, covenants that impose racial or religious restrictions after the sale of a property are unenforceable. Shelley v. Kraemer, 334 U.S. 1 (1948). A restrictive covenant is usually enforceable only by the person for whom the benefit was intended.
