Paul A. Thursam

November 2015 Election Postmortem

This year, I had the honor and privilege of running for Grosse Pointe Shores City Council. I am a long-time resident of Grosse Pointe, and have always had a desire to service the community. Although exhausting, I enjoyed campaigning for the position – it permitted me to speak with dozens of families in the community, and learn about their concerns for the city and the future. Ultimately, I missed a seat on the council by 20 votes.

I wanted to use this platform to express my sincere thanks to all those who voted for me, and supported me throughout the campaign. This would include the PAC committee at GMH. I look forward to campaigning for a seat again in 2017.

Michigan’s Qualified Agricultural Property Exemption

10 million acres of agricultural land in Michigan contain 56,000 farms which produce $5.7 billion in products annually. These farms and other lands eligible for favorable treatment under certain legislation can take advantage of real property tax relief and transfer emptions under the General Property Tax Act, MCL 211.1 et seq. and Farmland and Open Space Preservation Act, MCL 324.36101 et seq. Under the General Property Tax Act Section 211.7ee, agricultural land is entitled to the Qualified Agricultural Property Exemption. The Qualified Agricultural Property Exemption exempts certain defined property from the State 18 mill school operating millage. As an example, Holly Township in Oakland County levies a total of about 56 mills including the State school operating millage. On a property with a taxable value of $200,000.00 the property tax bill is about $11,200.00. But if the Qualified Agricultural Exemption is used, the real property taxes are reduced by 32%, to about $7,600.00.

Additionally, the sale of Qualified Agricultural Property is not a “transfer of ownership” or an uncapping event that reassesses the property. In most other instances when real property in Michigan is sold, the sale triggers a so called uncapping event and the taxable value, which is usually lower than the State Equalized Value (“SEV”), rises to the SEV thus increasing total property taxes. Transfers of Qualified Agricultural Properties do not uncap provided that: (a) the property remains Qualified Agricultural Property after the transfer, and (b) the new owner files certain forms with the local assessor’s office, and the register of deeds where the property is located after the transfer is made.

For these purposes “Qualified Agricultural Property” is either (a) property that is classified as agricultural, or (b) property that is not classified as agricultural, but which nonetheless uses more than 50% of its acreage for agricultural uses. The definition allows for some interesting alternative scenarios. For example, in theory, a property may be classified or zoned as residential, but be eligible for the exemption if more than 50% of the acreage is used for agricultural purposes regardless of the zoning classification or, if a property is classified by zoning as agricultural, the owner can still qualify for the exemption even if none of the property is used for agricultural purposes.

Additionally, aside from the exemption from the 18 mill state education millage, owners of properties enrolled in the Farm Land and Open Space Preservation tax credit program can receive a credit against income taxes due the State of Michigan (not a mere deduction against income). Under this system, the landowner receives a tax credit on property taxes in excess of 3.5% of the landowner’s income. The Michigan Department of Agriculture gives the following example, “if the owner has an income of $20,000 and property taxes on the farm total $2,000, he/she would subtract $700 (3.5 percent of $20,000) from the $2,000 property tax for an income tax credit of $1,300.” At some point, the landowner’s income will be too large to take advantage of the credit (i.e., the value of the credit declines as income rises).

There are further benefits associated with the Farmland Preservation Act Credit program: properties enrolled in this program are also exempt from future (not current) special assessments for water, sewer and some drainage projects, though road improvement levies still apply. While the exemptions from special assessments are subject to recapture if the property is sold (or the farmland contract is released prior to the expiration date of the agreement), the amount of the recapture cannot exceed the amount the assessment would have been at the time of the exemption and does not include any interest or penalty. Also, if the land is sold and it is not used for agricultural purposes (i.e. developed), then there is a recapture of part of the actual income tax credit (usually the past 7 years’ credits).

In any of these instances there are a number of fact-specific scenarios which require deeper analysis. Improved parcels, especially those with a functioning house or related commercial operation, may only partially qualify for the Qualified Agricultural Exemption and the local unit of government may require satisfactory proof that land not zoned for agricultural use is indeed being farmed before granting the exemption or credit. Additionally, there are other rules that can exempt certain timberlands from the 18 mill state school operating millage under Michigan’s Qualified Forest Program. Finally, keep in mind that these exemption and credit programs are not like conservation easement donations under federal income tax laws, and are not subject to deductions from income for federal income tax purposes.

For these and other reasons, we recommend the services of an attorney, especially if you are negotiating the purchase or sale of agricultural land, considering enrolling land in one of the programs or plan on taking one of these exemptions. Experienced real property lawyers at Giarmarco, Mullins & Horton, P.C. can be reached at (248) 457-7000, or send your inquiry via email to pthursam@gmhlaw.com

UCC Article 9 Update

The rules regarding Article 9 UCC filings have changed, effective July 1, 2013. As a result of these changes, when dealing with an individual debtor:
1. Search and file under the EXACT name as it appears on the individual’s DRIVER’S LICENSE even if the name is obviously misspelled. Be sure that the license is valid and unexpired.
2. As a best practice, you should also search and file under the individual’s common law name (i.e., the name they are commonly known by). You should also search and file under the common law name if the debtor has no driver’s license.
3. In the transaction documents, obtain a warranty regarding the debtor’s primary residence, the debtor’s name(s) and aliases, and include a covenant to notify the secured party in the event of any changes.
4. If there is a concern regarding the debtor’s primary residence, file in multiple jurisdictions.

Paul A. Thursam Appointed to State Bar of Michigan Representative Aseembly

Paul A. Thursam, associate attorney at Giarmarco, Mullins & Horton, P.C. has been appointed to fill a vacancy in the Representative Assembly for the State Bar of Michigan.  Established in 1972, the Representative Assembly constitutes the final policy-making body of the State Bar.  The State Board of Commissioners then implements policy adopted by the Assembly.  The Representative Assembly meets at least twice each year, in April and September in conjunction with the meetings of the Board of Commissioners.  Mr. Thursam’s appointment runs through calendar year 2013, at which time he intends to run for formal election to a three-year term.  You can read more about the Representative Assembly by visiting: www.michbar.org.

Mr. Thursam is 5th year associate at Giarmarco, Mullins & Horton, P.C.  He holds various distinctions, including Superlawyer—Rising Star and DBusiness Top Lawyer.  He is also a member of the Executive Board for the Italian American Bar Association of Michigan, and a member of the Grosse Pointe Shores Board of Review.

LANDLORD/TENANT LAW UPDATE

Statutory Law Update:  On May 22, 2012, Governor Snyder signed into law Public Acts 139 and 140 of 2012. These bills—originally drafted three years ago—make it easier to rid rental properties of tenants who commit criminal behavior.  Specifically, the new laws:

  • Do not require that a formal police complaint be filed “by the landlord” in order to evict someone based upon the already-existing drug eviction statute.  Now, a police complaint can originate from any source, including the police themselves.  MCL 554.134(4), amended by 2012 PA 140 (eff. May 22, 2012); MCL 600.5714(1)(b), amended by 2012 PA 139 (eff. May 22, 2012).
  • Add a new way to recover possession of the premises based upon violence or the threat of violence on the landlord’s premises, so long as the victim calls the police.  MCL 600.5714(1)(e), amended by 2012 PA 139 (eff. May 22, 2012).  The act does not apply if the individual who was threatened or injured is the tenant or a member of the tenant’s household.  The act requires service of a 7 day notice to take advantage of this remedy.

Case Law Update:  A court will not apply the material breach doctrine in a lease that includes an express termination clause.  Majestic Golf, LLC v Lake Walden Country Club, Inc, No 300140, ___Mich App ___ (July 10, 2012).  Generally speaking, under the material breach doctrine, a party must be in “material” breach of a contract before the other party is entitled to a remedy.  In Majestic, according to the plain and unambiguous terms of the lease, landlord could “cancel and terminate” the lease if tenant failed to comply with any obligation (with the exception of the failure to pay rent) and that failure to perform continued for 30 days after tenant was formally notified, pursuant to paragraph 31 of the lease, of the failure to perform.  The tenant was so noticed, and did not cure.  The lower Court held that the tenant’s breach was not material, and granted tenant’s request for summary disposition.  In reversing the lower court, the Court of Appeals found the pertinent lease provisions unambiguous, and enforced them as written.  The express termination clause was upheld.

If you have any questions about the contents of this article, or landlord/tenant law in general, please contact Paul Thursam at (248) 457-7189 or pthursam@gmhlaw.com.

Mr. Thursam is an associate attorney at the law firm of Giarmarco, Mullins & Horton, P.C.  He has been recognized as a “Top Lawyer” by dbusiness magazine for 2012 and 2013.  He is also a Super Lawyer—Rising Star for 2013.