Sowell-Law PLLC

In Elizabeth Trace Condominium Association v American Global Enterprises, a published opinion of the Michigan Court of Appeals, the developer established a 46-unit condominium in 2004; 19 units were designated as “must be built” and the remaining 27 were designated as “need not be built.” The developer ran into financial difficulty and conveyed the unbuilt units to its lender through a deed in lieu of foreclosure. The lender subsequently sold the units to the defendant in 2012. Plaintiff Association filed suit in 2018 seeking to quiet title to the unbuilt units, claiming that they had reverted to general common elements by operation of law pursuant to the version of MCL 559.167 which existed prior to 2016. Defendant argued that MCL 559.167 did not apply because it was not a developer. The trial court granted judgment in favor of the association on cross motions for summary disposition. The defendant appealed.

The decision was affirmed on appeal. The Michigan Court of Appeals held that the plain language of the statute did not limit its application only to developers or successor developers, finding that the express language of the statute contemplated there may be a scenario where the developer is not the same legal entity as the owner of the unbuilt units.

Defendant also argued that the filing of two construction liens demonstrated that construction had commenced on all units including the unbuilt ones. The court held that the commencement of construction on common elements did not satisfy the statute, which requires that construction on need-not-be-built units be completed within 10 years.