A slander of title claim is predicated on a simple concept – protecting title to your property and punishing those that have sought to harm it through the recording of erroneous statement. The elements of slander of title are (1) the publication of a false statement and (2) doing so with malice or desire/intent to injure the plaintiff. Depending on the type of slander claim being brought, a plaintiff may also need to establish special damages, which include litigation costs, impairment of vendibility, loss of rental profits, or other damage to the plaintiff’s property interests.
Claims for slander of title can be brought under both statute and common law. Statutorily, a claim for slander of title may be brought pursuant to MCL 565.108, which states:
No person shall use the privilege of filing notices hereunder for the purpose of slandering the title to land, and in any action brought for the purpose of quieting title to land, if the court shall find that any person has filed a claim for that reason only, he shall award the plaintiff all the costs of such action, including such attorney fees as the court may allow to the plaintiff, and in addition, shall decree that the defendant asserting such claim shall pay to plaintiff all damages that plaintiff may have sustained as the result of such notice of claim having been so filed for record. MCL 565.108.
The necessary elements to prove a claim for slander of title under MCL 565.108 are the same as those which are required under common law (falsity and malice).
As to the first element, falsity is established when the published (i.e., recorded) statement (such as a lien, affidavit, mortgage, or other recordable instrument) is untrue. Consequently, truth is a complete defense to a claim for slander of title. Falsity can be proven in a variety of ways. For example, where a mortgage or other lien is filed against a property without an underlying legal basis (such as to secure a debt), falsity will be established where a plaintiff demonstrates the absence of any such basis. This often arises in the construction industry, where subcontractors and contractors erroneously file liens against property without an underlying written agreement governing the scope of their construction work. In particular, Section 114 of the Construction Lien Act, codified at MCL 570.1114, states, “A contractor does not have a right to a construction lien on the interest of an owner or lessee in a residential structure unless the contractor has provided an improvement to the residential structure under a written contract between the owner or lessee and the contractor and any amendments or additions to the contract are also in writing.”
As to malice, Michigan courts have concluded that the second element of a slander of title claim can be proven with evidence that the defendant either knew that the statement (lien, affidavit, mortgage, or other recordable instrument) was false when it was recorded, or that the defendant recorded the statement without a good-faith basis for doing so. In other words, if a defendant records a mortgage (or other statement) against plaintiff’s property, despite knowing that there is no underlying loan or other agreement with the property owner, malice may be established. If the recorded statement is false but made in good faith, such as where a defendant honestly believes in the existence of his or her right to claim an interest in the property, a court is not likely to find malice.
Slander of title claims arise in a variety of situations. The most common involve mortgages or liens that are erroneously recorded against property. For example, in one case, a defendant recorded a mortgage against property that he had previously “gifted” to the plaintiffs. The gift was unconditional and there was no underlying agreement granting defendant the right to record the mortgage. Given the fact that the defendant was the person who gifted the property, the court determined that he inherently knew there was no legal basis for the mortgage, which in turn established the element of malice. Consequently, the defendant was liable for slander of title and the plaintiffs were able to pursue damages, including their attorney fees and costs incurred in pursing the lawsuit.
Claims for slander of title are an essential weapon in the arsenal of protective measures to keep your property title free and clear of erroneous claims or encumbrances that could prevent you from selling. The attorneys at Dalton & Tomich have successfully litigated these claims in a variety of circumstances and are happy to speak with you if your title has been slandered.