Action seeking to quiet title & alleging a violation of the anti-lockout statute (MCL 600.2918); Standing; MCL 600.2932(1); MOSES Inc v SEMCOG; Race-notice; MCL 565.29; Constructive notice by possession; Smelsey v Guarantee Fin’l Corp; Whether defendant was a good-faith purchaser; Unclean hands; New Prods Corp v Harbor Shores BHBT Land Dev, LLC; Estoppel by laches; Home-Owners Ins Co v Perkins

The court held that the trial court did not err by granting plaintiffs summary disposition as to their quiet title claim. Both parties received deeds to the property from the original owner. Plaintiffs sought to quiet title and alleged defendant violated Michigan’s anti-lockout laws. The trial court granted summary disposition for plaintiffs on the quiet title claim and to defendant on the anti-lockout claim. On appeal, the court first found that because plaintiffs claimed title to the property, they had standing. It next found that defendant was not a good-faith purchaser, noting defendant had actual knowledge that plaintiffs “possessed the property (which constituted constructive notice of title) but refrained from gaining any knowledge about their potential interest therein.” It noted defendant waived “all of the provisions in its purchase agreement” that would have confirmed plaintiffs “were, in fact, tenants.” And while it “took some steps to determine title to the property by buying title insurance, the policy [it] purchased did not protect against ‘[r]ights of claim of parties in possession not recorded in Public Records,’ i.e., any unrecorded claim [plaintiffs] may have had in the property.” Further, despite its knowledge of plaintiffs’ occupancy, defendant “never made ‘[a] simple inquiry directed to’ [them]—an inquiry that Smelsey says was ‘required’ after” defendant learned of their “possession—to determine their interest in the property.” Because defendant “not only failed to reach out to [plaintiffs] before purchasing the property but took affirmative steps to ensure its ignorance about [their] interest in the land despite its actual knowledge of” their possession, the court found defendant “was not a good-faith purchaser.” The court also rejected defendant’s claim that the trial court erred by finding it had unclean hands, and that plaintiffs had uncleans hands by failing to timely record the deed. Defendant was “not entitled to equitable relief because it does not have superior title” and it presented “no evidence in this matter indicating that” plaintiffs sought to mislead or deceive it. Finally, the court rejected defendant’s alternative argument that plaintiffs were not entitled to relief based on estoppel by laches, even though they “waited a significant amount of time to record the quit claim deed[.]” Affirmed.