In Michigan, a common clause to see in service and products contracts is one entitled indemnification. Within each indemnity clause are three separate and independent concepts: (1) Indemnify; (2) Hold Harmless; and (3) Defend. Each point conveys certain rights, duties, and obligations to the other party.

For example, a common indemnification clause is similar to:
“Contractor hereby releases and will defend, hold harmless, and indemnify the Company, from and against any allegation or claim based on any loss, arising from any act or omission by Contractor.” Here you see the 3 independent concepts and independent duties.

(3) “Defend” creates a duty to defend (obviously) the Company in a lawsuit, which includes the duty to prepare for and control of the defense. Immediately upon filing and notice of a claim, the Contractor’s duty is triggered. Occasionally it may be wiser to control your own defense, so use this carefully in conjunction with the other clauses.

(2) “Hold Harmless” means that the Company is not liable for the described damages. This essentially means, that the Contractor (the party indemnifying) may not sue the Company (the party being indemnified). Indemnification and hold harmless are closely related ideas and occasionally may mean the same thing (creating a redundancy, but not usually ambiguity).

(1) “Indemnification” means that the Contractor must compensate the Company for losses or damages described within the paragraph. This is independent of other clauses describing damages, such as liquidated damages. This will likely occur after the judgement has been filed against the Company.

Clearly, these clauses direct liability and risk from one party to the other; they should be considered carefully when agreeing to the terms of a contract. Generally, the contract price itself may be heavily dependent upon these clauses. Discuss with your attorney how best to price your fees within a contract containing a clause like the one above.

Traditionally, landlords had no duty to make properties safe for tenants. However, the law has evolved over the last several hundred years to include five exceptions: (1) Latent Defects; (2) Common Areas; (3) Public Use; (4) Furnished Short-Term Residences; and (5) Negligent Repairs (by (a) landlord, or (b) third party). These exceptions generally exist because under modern law, landlords are presumed to have the greatest knowledge and control over the premises.

Latent defects are those dangerous conditions that exist at the time of lease creation that the landlord should know about; and that a tenant could not discover through reasonable means (out of sight out of mind could be reasonable). These defects must be disclosed to the tenant, and failure to disclose those defects will subject the landlord to liability for any injury caused. However landlords generally cannot protect themselves by disclosure for short-term residences that are furnished.

Common areas are controlled by the landlord on behalf of the limited public and other tenants. Any dangerous condition reasonably discoverable by a landlord (out of sight out of mind might not be reasonable) must be made safe. Injuries subject the landlord to liability.

Public use. The landlord is liable for injuries to the public for dangerous conditions when the landlord has reason to believe that the public may be invited on to the property.

Repairs. Landlords are liable for injuries from negligent or ‘deceptively safe’ repairs.

Expansion in this area of law has progressed even beyond these common law rulings, with legislation in Michigan the landlord tenant act creates several duties for both landlords and tenants.

Unfair Competition in Michigan describes the interference, though malice or intention, of another businesses activities. Examples of unfair competition are the induction of one party to breach a contract with another party and, the use of a competitors trade secrets. Breach of contract involves one party exerting some influence towards the goal of causing another party not to enter into a contract or to exit a contract prematurely. Use of trade secrets requires a non-patented advantage unavailable to the public and, the trade secret must be taken in a wrongful manner. Michigan courts have explicitly described how to protect trade secrets in employment severance agreements. It is wise to actively pursue unfair competition in your industry.

Easements.
An easement is a non-possessory interest in land, but a legal right to use land possessed by someone else. The holder of an easement has a limited right to use the tract of land in a specific way. However, the holder does not have a right to possess and enjoy the land. Typically easements allow the laying of utilities or a right of way over land for access to another. Generally the easement is ‘owned’ by the land and not by an individual.

Easements are created or destroyed by by writing either in grant or in reservation on transfer of title, implication where it would be impractical not to allow an easement, or by taking it. Easement by implication is created by operation of law and does not need to be recorded or written.

Easement by taking it (easement by prescription) is less common today than in the past. Like adverse possession of land, it requires (i) open and notorious; (ii) adverse; and, (iii) continuous use for the statutory period.

Adverse Possession.
In Michigan, lawful title may be acquired through adverse possession. Adverse possession was of value in the past, and is of great value and necessity today. In the days of old it specifically kept land from slipping into non-use and rewarded a diligent steward with true ownership.

Today, adverse possession not only protects adjoining property owners who encroach and take for their own necessary use, but also encourages adjoining property owners to be mindful of their own property use. For instance, take any two properties, if owner Aaron needs more space, and the other owner Billy doesn’t; and Billy doesn’t (i) want to sell, (ii) want to allow Aaron access, and (iii) doesn’t stop his Aaron from using the land when Aaron tills the unused land, society will give part of Billy’s land that Aaron has been using (so long as Aaron follows the proper legal steps of adverse possession in Michigan).

Michigan adverse possession requires: (i) actual entry; (ii) exclusive possession; (iii) open and notorious possession; (iv) hostile possession (protect what you are taking); and, (v) continuous possession for the statutory period (and all tolling expired).

Ancient Property — commercial investment property — example study.
In uptown Grand Rapids, Michigan 1920 two vacant lots existed. Phil owned the north lot, Tim owned the south lot. Tim built a several story apartment community housing over 100 individual families, and Phil built a warehouse housing commercial inventory. Resident’s at Tim’s apartment community asked Tim to build a garage for their new automobiles; Tim did so. Phil thought nothing of the garage.

Tim followed an east-west line on what was assumed to be the north boundary (touching Phil’s lot) of his southern lot. Years passed, residents used the garage, Tim passed away, and Phil passed away. The land exchanged hands several times and eventually the southern lot (Tim’s) landed in the hands of Tommy. And the northern lot (Phil’s) landed in Peter’s hands.

In 2010, Tommy approached Brad and asked Brad to purchase the land; Brad agrees. While investigating the survey, Brad’s lender discovers the encroaching the garage.

Result.
There are a number of ways of looking at this problem. Whether it is the boundary line doctrine, or adverse possession, Tommy owns at least the land where the building is encroaching, and Brad’s lender should not fear the wrath of Peter.

The sale of residential real estate in Michigan is regulated by several statutes (including occupational statutes if you use a real estate agent or broker) designed to protect both sellers and buyers. These statutes provide exceptions for certain property and strict penalties for violating a law whether by misinterpretation or intention. Most individuals looking to buy or sell their residential property hire a professional either real estate agent through a broker or attorney.

Real Estate Agents and Brokers
Although oftentimes used, brokers and agents are not necessary conduct a real estate transaction. Real estate brokers offer a service to real estate agents and individuals. In Michigan, brokers are required to take a special exam authorizing them to advertise broker services. Brokers house a particular real estate license authorizing them to work with real estate agents, whereby the agent receives a commission for the sale of a property. Brokers and agents have access to a range of property valuation and listing services based on competitive information in the region. Brokers and agents offer a method of advertising to other brokers and agents representing an ‘inverse’ party (seller to buyer, buyer to seller). Not all “listed” properties through a broker and agent are necessarily part of the multiple service listing (a/k/a MLS); it is important that a seller is aware what their “listing” will include, ask the important questions and be certain to get a pin-point answer (ignore puffery).

Commission is a negotiable point with any broker or agent, a company may have a non-negotiable or ‘fixed’ rate of commission, but by law it is always negotiable. The commission is owed to the broker (not the agent), the agent gets paid by the broker (often times a commission, but from the broker not the seller). Commission rates between 3 and 7% are fairly common on both ends (buyer and seller). Individuals should be careful to understand which type and on what condition the commission is owed; sellers should consider carefully the terms of picking a broker (or agent) who attempts to acquire an exclusive listing.

Sellers and buyers, listen to your gut, brokers and agents have a motivation to sell the home quickly and cheaply because their payment is contingent upon the sale. Never buy or sell a home unless you are certain you are making a choice you can live with. Brokers and agents offer a valuable service, but by the theory of economics, the best broker/agent is the one who can convince the seller to sell low and the buyer to buy high; the number one priority of a broker or agent is to close the sale.

Real Estate Attorneys
Attorneys are brought into real estate transactions for a number of reasons… the buyer or seller want to be certain the purchase agreement accurately reflects their intent; there is a problem with the title; a land contract is asked for; there is a falling out between buyer, seller, and broker or agent; review of mortgage documents or due diligence; or the buyer or seller desire the legal security of a deeply loyal party on their side. An attorney will represent the buyer or seller in a range of services depending upon the desires of the client and how early or late the attorney is brought in.

Where as a broker or agent, either for seller or buyer, is driven off of commission and the desire to sell the property, attorneys by contrast represent the buyer or seller as if the seller or buyer’s interests are that of the attorney. The attorney does not concern him or herself with whether or not the closing will take place, merely on whether or not the real estate transaction is a wise choice for their client. The attorney’s first and only concern is that of their client’s interest; the client must be informed and protected. An attorney will advise a client when a piece of property is not in their best interest, no matter how close to closing they are; an attorney will enforce the rights of their client, when others would throw up their hands and say “its too late”.

The biggest draw back of hiring an attorney to be your loyal servant (over that of a commission based professional), particularly for smaller real estate transactions, is that an attorney will be paid even if the property never closes. This is why many individuals don’t hire attorneys; but you get what you pay for. In the moment, individuals don’t often contemplate the benefit to burden of–risking an investment of several hundreds of thousands of dollars–where if it goes poorly, losing everything or worse. Purchasing real property is one of the biggest, most important, and most risky action an individual will ever undertake.

Michigan forms and documents in some real property transfers:
– Purchase Agreements: Are binding agreements whereby the seller agrees to sell and the buyer agrees to buy real property; it should contain every term and aspect conceivable (pre-printed forms are wisely avoided).
– Seller Disclosure Statement: see MCL 565.957.
– Lead Disclosure
– Closing settlement statement and affidavits
– Real Estate Transfer Valuation
– Property Transfer Affidavit
– Mortgage
– Land Contract
– Notice to assessor of transfer
– Warranty/Quitclaim deed
– Bill of Sale
– Tax prorations
– Home owners association documents
– Condominium documents (often 100 pages or more)

Make inquiries where necessary.