SENATE BILL No. 1048

 

 

September 10, 2014, Introduced by Senator BOOHER and referred to the Committee on Banking and Financial Institutions.

 

 

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending sections 3130, 3208, and 3236 (MCL 600.3130, 600.3208,

 

and 600.3236) and by adding section 3106.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 3106. (1) An interest of record under an oil and gas lease

 

or other instrument related to the exploration for or production of

 

oil, gas, or other hydrocarbons from property is not affected in

 

any way by a judgment entered in an action under this chapter to

 

foreclose a mortgage of the property, by an act taken under this

 

chapter as a result of the filing of the action, or by a

 

foreclosure pursuant to the action, unless either of the following

 

occurs:


 

     (a) Within 15 days after the action is filed, a copy of the

 

complaint is sent by certified mail, return receipt requested, to

 

the holder of record of the interest.

 

     (b) The holder is made a party to the action and properly

 

served with a summons and a copy of the complaint.

 

     (2) This section does not apply to an action filed before the

 

effective date of the amendatory act that added this section.

 

     Sec. 3130. (1) The person making the a sale under section 3125

 

shall execute deeds specifying the names of the parties in the

 

action to foreclose the mortgage or land contract, the date of the

 

land contract or mortgage or land contract, when and where it was

 

recorded, a description of the premises property sold, and the

 

amount for which each parcel of land described in the deed was

 

sold. ; and he

 

     (2) The person making a sale under section 3125 shall indorse

 

upon on each deed executed under subsection (1) the time it becomes

 

operative if the premises are property is not redeemed according to

 

law. Unless Except as provided in subsection (3), unless the

 

premises property or any a parcel of them are the property is

 

redeemed within the time limited for redemption, the deed shall

 

become becomes operative as to all parcels not redeemed , and shall

 

vest vests in the grantee named in the deed , his or the grantee's

 

heirs , or assigns all the right, title, and interest which that

 

the mortgagor had at the time of the execution of the mortgage or

 

land contract or at any time thereafter.after the execution of the

 

mortgage or land contract.

 

     (3) An interest of record in a non-surface-activity oil and


 

gas lease of record of property described in a deed executed under

 

this section that was created or recorded after the lien of the

 

mortgage took effect has priority over the mortgage, even though

 

created or recorded after the lien of the mortgage took effect. The

 

grantee named in a deed executed under this section and the

 

grantee's heirs and assigns are subject to the non-surface-activity

 

oil and gas lease and are entitled to all royalties provided for in

 

the non-surface-activity oil and gas lease that accrue to the

 

royalty interest that the mortgagor had by reason of production

 

after the execution of the deed and the receipt of notice of the

 

deed by the person responsible for payment of the royalty.

 

Notwithstanding anything to the contrary in the non-surface-

 

activity oil and gas lease or any amendment to the lease, the rate

 

of royalty payable to the grantee named in the deed and the

 

grantee's heirs and assigns shall be the greater of 1/8 or the rate

 

stated in the lease or the amendment to the lease. As used in this

 

subsection, "non-surface-activity oil and gas lease" means an oil

 

and gas lease that does not grant the right to conduct surface

 

operations of any kind on the lands subject to the oil and gas

 

lease, including, but not limited to, drilling of a well from the

 

surface, pipeline installation, or the creation of a route for

 

ingress and egress.

 

     (4) Subsection (3) does not apply to a mortgage entered into

 

before the effective date of the amendatory act that added this

 

subsection.

 

     (5) (2) The deed of sale as As soon as practicable and within

 

20 days after the sale, the person executing a deed under this


 

section shall be deposited deposit the deed with the register of

 

deeds of the county in which the land therein property described in

 

the deed is situated, and the located. The register shall indorse

 

upon on the deed the time it was received, and shall record the

 

deed at length in a book to be provided in his the register's

 

office for that purpose, and shall index the deed in the regular

 

index of deeds. , and the The fee for recording the deed shall be

 

included among the other costs and expenses allowed by law.

 

     (6) If the premises property described in a deed executed

 

under this section or any a parcel of them are the property is

 

redeemed, the register of deeds shall write on the face of the

 

record the work word "Redeemed" and he shall write at what the date

 

the entry is made and shall sign the entry with his or her official

 

signature.

 

     Sec. 3208. (1) Notice that the a mortgage will be foreclosed

 

under this chapter by a sale of the mortgaged premises, property,

 

or some part of them, the property, shall be given by publishing

 

the same notice for 4 successive weeks at least once in each week,

 

in a newspaper published in the county where the premises included

 

in the mortgage and intended to be sold, or some property or part

 

of them, are situated. the property is located. If no newspaper is

 

published in the county, the notice shall be published in a

 

newspaper published in an adjacent county. In every case within

 

Within 15 days after the first publication of the notice under this

 

subsection, a true copy of the notice shall be posted in a

 

conspicuous place upon on any part of the premises property

 

described in the notice.


 

     (2) The interest of record under an oil and gas lease or other

 

instrument related to the exploration for or production of oil,

 

gas, or other hydrocarbons from property is not affected in any way

 

by the foreclosure of a mortgage of the property under this chapter

 

or by any action taken pursuant to this chapter as a result of the

 

foreclosure unless, within 15 days after the first publication of

 

the notice under subsection (1), a copy of the notice is sent by

 

certified mail, return receipt requested, to the holder of record

 

of the interest of record.

 

     (3) Subsection (2) does not apply to a foreclosure in which

 

the first notice under subsection (1) is published before the

 

effective date of the amendatory act that added this subsection.

 

     Sec. 3236. (1) Unless the premises property described in such

 

a deed shall be executed under section 3232 is redeemed within the

 

time limited for such redemption as hereinafter provided in this

 

chapter, such the deed shall thereupon become becomes operative ,

 

and, shall vest subject to subsection (3), vests in the grantee

 

therein named , his in the deed and the grantee's heirs or assigns

 

, all the right, title, and interest which that the mortgagor had

 

at the time of the execution of the mortgage, or at any time

 

thereafter, after the execution of the mortgage, except as to any

 

parcel or parcels which may that have been redeemed and canceled ,

 

as hereinafter provided ; and the record thereof shall thereafter,

 

for all purposes be deemed in this chapter. After the operative

 

date of the deed, the previous recording of the deed is a valid

 

record of said deed without the deed being re-recorded, but no

 

rerecorded.


 

     (2) A person having any who has a valid subsisting lien upon

 

the mortgaged premises, on property sold under section 3216 or any

 

part thereof, of the property that was created before the lien of

 

such the mortgage took effect , shall be is not prejudiced by any

 

such the sale , nor shall his of the property and the person's

 

rights or and interests be are not in any way affected thereby.by

 

the sale.

 

     (3) An interest of record in a non-surface-activity oil and

 

gas lease of record of property sold under section 3216 that was

 

created or recorded after the lien of the mortgage took effect has

 

priority over the mortgage, even though created or recorded after

 

the lien of the mortgage took effect. The grantee named in the deed

 

executed under section 3232 and the grantee's heirs and assigns are

 

subject to the non-surface-activity oil and gas lease and are

 

entitled to all royalties provided for in the non-surface-activity

 

oil and gas lease that accrue to the royalty interest that the

 

mortgagor had by reason of production after the execution of the

 

deed and the receipt of notice of the deed by the person

 

responsible for payment of the royalty. Notwithstanding anything to

 

the contrary in the non-surface-activity oil and gas lease or any

 

amendment to the lease, the rate of royalty payable to the grantee

 

named in the deed and the grantee's heirs and assigns shall be the

 

greater of 1/8 or the amount stated in the lease or amendment to

 

the lease. As used in this subsection, "non-surface-activity oil

 

and gas lease" means an oil and gas lease that does not grant the

 

right to conduct surface operations of any kind on the lands

 

subject to the oil and gas lease, including, but not limited to,


 

drilling of a well from the surface, pipeline installation, or

 

creation of a route for ingress and egress.

 

     (4) Subsection (3) does not apply to a mortgage entered into

 

before the effective date of the amendatory act that added this

 

subsection.