Background
Jay C. Carll purchased property in Detroit in 2011 and in 2015 granted four perpetual easements to 8150 Fulton LLC to accommodate a billboard: a Billboard Easement, Access Easement, Utility Easement, and Visibility Easement. These easements were recorded in Wayne County. Carll later assigned his rights under the existing billboard lease to Fulton. When Carll stopped paying property taxes, the property was forfeited and sold at tax foreclosure in September 2019. Harper Land Company (HLC) purchased the property for $28,000 and demanded rent from Outfront Media (the billboard operator). Outfront refused, arguing that Outdoor Equities LLC (which had acquired Fulton’s rights in 2019) held the easements and was the rightful recipient of rent payments. HLC sued to quiet title and extinguish both the easements and the underlying lease.
HLC presented evidence that the easements rendered the property valueless for any other use, arguing this made them improper and contrary to public policy under the General Property Tax Act (GPTA), which aims to encourage the expeditious return of foreclosed property to productive use. The trial court granted summary disposition to the defendants, finding the easements survived foreclosure because they were recorded.
The Court’s Holding
The Michigan Court of Appeals affirmed. The court held that the four easements were valid “true easements” limited to the specific purpose of billboard operation and maintenance, even though they were extensive and burdensome. An easement need not give the holder exclusive possession of the property to qualify as a valid easement; it only requires a limited property interest for a specific purpose. The easements’ substantial burden on the property’s value and marketability did not negate their character as easements.
The court further held that the easements, though in gross (benefiting the easement holder rather than a dominant estate), were assignable. Under Michigan law, commercial easements in gross are alienable property interests and freely assignable unless the grant instrument provides otherwise. HLC’s attempt to limit assignability to specific categories like pipelines and railroads found no support in Michigan precedent.
On public policy grounds, the court acknowledged the tension between the easements’ effect (rendering the property valueless and potentially creating perpetual foreclosure cycles) and the GPTA’s stated goal of returning foreclosed property to productive use. However, MCL 211.78k(5)(e) explicitly exempts recorded and visible easements from termination upon tax foreclosure. The court emphasized that statutory text is the best indicator of legislative intent and that judicial policy concerns cannot override plain statutory language absent ambiguity. Any reform requires legislative action.
Key Takeaways
- Recorded easements survive tax foreclosure under Michigan law and remain binding on subsequent property owners, even if they render the property nearly valueless for other purposes.
- Commercial easements in gross are freely assignable in Michigan unless the instrument of creation restricts assignment; the law is not limited to specific categories like utilities or transportation.
- Courts cannot invalidate contracts or easements based on public policy concerns unless those policies are “clearly rooted in the law,” reflected in constitutions, statutes, or common law—stated legislative policy reflected in statutory text cannot be overcome by judicial concerns about consequences.
- Property owners who grant recorded easements may face perpetual foreclosure cycles if easements prevent productive use, but legislative action would be required to change this outcome.
Why It Matters
This case illustrates a practical tension in property law: the GPTA aims to return tax-foreclosed property to productive use, yet explicitly protects recorded easements from foreclosure termination. The result is that a new owner who purchases foreclosed property at auction can be stuck with easements that make the property economically worthless and unable to generate sufficient revenue to cover property taxes, potentially trapping the property in perpetual foreclosure. The court’s decision shows that Michigan courts will enforce the plain language of the foreclosure statute, even when the practical consequences seem perverse.
The decision also confirms Michigan’s modern approach to commercial easements in gross as freely assignable. This provides certainty to commercial operators like billboard companies—their easement rights are not diminished by assignment to another commercial entity. However, the ruling may prompt property owners and lenders to scrutinize recorded easements more carefully, as they will survive foreclosure and bind successive owners regardless of the property’s ability to generate value.