Real Property Notes Blog
Option to Purchase Not Invalid for Lack of Definite Price
In Crown Motors Ltd. v Rodenhouse Property Mgt LLC, an unpublished Michigan Court of Appeals opinion, the parties entered into a lease which contained an option to purchase. The option provided that if the parties could not negotiate an agreed price, the tenant/purchaser would obtain an appraisal of the property. If the landlord/seller did not agree with the appraisal, it could obtain its own appraisal. If these two appraisals did not result in a price, the option provided that the parties can either continue to negotiate for 30 days, or obtain a third appraisal and the price would be the average of the three appraisals. The tenant attempted to exercise the option, but the landlord claimed the option was invalid. The tenant obtained an appraisal, the landlord obtained a second appraisal, but the landlord refused to cooperate with obtaining the third appraisal. The tenant sued and the trial court granted the tenant specific performance.
On appeal, the landlord argued among other things that the option was void because it did not contain a definite purchase price. The trial court concluded, and the appeals court agreed, that while the contract did not contain a definite price, it contained a mechanism by which a definite purchase price could be arrived at. This was sufficient.
Easement Not Part of Common Elements, but Association Required to Contribute to Road Expenses under Common Law
The Homestead is a large planned unit development in Leelanau County established in the 1970’s and consisting of a hotel, several condominiums, and a beach club. In 2017, the successor developer of the development sued five of the condominium associations (among the earliest established) that declined to sign an expense sharing agreement, claiming that an easement granted to each across a shared road was a common element of each of the projects and that each was required to, but failed, to contribute to the expense of maintenance and repair of the road. Defendants answered and denied that the road as a part of their respective common elements, and that the claim for any expense was barred by waiver or laches. Following trial, the trial court found that the easement was not a common element of any of the condominium projects, but that each was obligated by common law to share in the expenses of the road. Finally, the court held that the condominiums were obligated only for future expenses because the claim for prior expenses was barred by laches. The developer appealed.
In Bayberry Group, Inc. v Crystal Beach Condominium Association, a published opinion of the Michigan Court of Appeals, the court affirmed the finding that the road was not a common element of the condominiums and that the condominiums were obligated by common law to contribute to the expenses, but held that the claim was not barred and remanded the case to the trial court to determine the expenses due and because the cost-sharing formula fashioned by the trial court was based in part on assumption and not fact.
Landlord Did not Violate Anti-Lockout Statute by Changing Locks Without Court Order
In McLaurin v Miles, an unpublished Michigan Court of Appeals opinion, Plaintiff rented property from defendant. Plaintiff stopped paying rent and defendant filed eviction proceedings, resulting in a judgment requiring plaintiff to vacate by June 25, 2018. Defendant’s wife visited the property on June 14 and observed that plaintiff had moved all of her possessions out of the property, taking photographs to confirm this. She then tried to contact plaintiff repeatedly to confirm she had moved out, but plaintiff did not respond. The wife again visited the property on June 17 and again observed no sign of plaintiff. Defendant informed plaintiff on June 21 that he intended to change the locks on June 27, and did so. Plaintiff returned to the property, changed the locks herself, and defendant changed the locks again. Plaintiff filed suit claiming a violation of the Anti-Lockout Statute, MCL 600.2918, which prohibits interfering with a right of possession of a tenant.
After an evidentiary hearing, the trial court found no violation had occurred. The statute provides that no unlawful intereference occurs if the owner believes in good faith that the tenant has abandonded the premises, and after didligent inquiry has reason to believe the tenant does not intend to return, and current rent is not paid. Because the belongings were removed, because plaintiff did not respond to multiple attempts to contact her, and because rent was unpaid, plaintiff’s claim was properly dismissed.
Condominium Did Not Violate PWDCRA By Denying Requested Modification
In Estate of Romig v Boulder Bluff Condominiums, a published Michigan Court of Appeals opinion, the unit owner requested that the condominium association approve installation of a railing on the porch and stairs of the condominium unit. The request was initially denied, but the a second request was submitted with disability information and the need for the rails. This request was subsequently approved. However, the plaintiff had fallen twice before the approval and subsequently died.
His estate filed suit claiming discrimination under Michigan’s Persons with Disabilities Civil Rights Act (PWDCRA), which prohibits discrimination “in connection with a real estate transaction.” “Real estate transaction” is defined by the Act as the sale, exchange, rental or lease of real property or an interest therein. Because the decedent purchased the unit nine years before the modification request was made, the decedent was not engaged in a real estate transaction and thus the PWDCRA did not provide a cause of action.
NOTE: this case has gone through additional appeals; this opinion has been vacated. See this post.
MCL 559.140 Interpreted to Apply to Developer Deviations Only
In Carney v Haskell, an unpublished Michigan Court of Appeals opinion, a dispute arose between adjacent unit owners in a site condominium as to the location of the defendant’s driveway. Plaintiff sued seeking to remove the encroachment. Defendants denied any encroachment and asserted adverse possession and acquiescence. On cross motions for summary disposition, the court found that MCL 559.140 applied and dismissed Plaintiff’s case. Plaintiff appealed.
MCL 559.140 provides "To the extent that a condominium unit or common element encroaches on any other condominium unit or common element, whether by reason of any deviation from the plans in the construction, repair, renovation, restoration, or replacement of any improvement, or by reason of the settling or shifting of any land or improvement, a valid easement for the encroachment shall exist. This section shall not be construed to allow or permit any encroachment upon, or an easement for an encroachment upon, units described in the master deed as being comprised of land and/or airspace above and/or below said land, without the consent of the co-owner of the unit to be burdened by the encroachment or easement.”
The trial court ruled that MCL 559.140 applied and granted defendant an easement. The Court of Appeals held that this section, when read in conjunction with other sections of the MI Condominium Act regarding relocation of boundaries, was meant to apply only to developer deviations in construction. Because there was no testimony whether the driveway was poured by the developer or a co-owner, or when the driveway was poured, there remained issues of fact to be developed and decided in the trial court. The case was remanded.
Change of Directors Sparks Management Company Lawsuit
In Vista Property Group, LLC v Schulte, an unpublished Michigan Court of Appeals opinion, the existing board of directors of Northwood Hills Condominium Association decided to change management companies. It terminated the existing management company and signed a contract with Vista. However, before the new contract went into effect a special meeting of the association was held, the board recalled, and a new board elected. The new board repudiated the Vista Contract and retained the prior management company to continue as property manager. Vista sued for breach of contract. The association defended by claiming that Vista first breached the contract by failing to provide a copy to the association; under the “first substantial breach” doctrine, the failure to provide a copy excused the association from paying Vista. The matter went to a jury, which returned a verdict of no cause of action. Vista appealed.
The appeals court found that nothing in the Vista contract required Vista to provide a copy of the contract beyond the initial copy provided to the (recalled) president of the association and thus the claim of first substantial breach failed as a matter of law. The court remanded the case for the trial court for entry of a judgment in favor of Vista and for a determination of its damages.
The author is frequently asked whether a board of directors can reverse a decision made or cancel a contract entered into by a former board of a community association. The answer is yes, but doing so can have adverse consequences. In this case, deciding to keep the present management company and repudiate the contract with the new management company signed by a prior board cost the association quite a bit of money.
Court Must Examine Validity and Reliability of Evidence Regarding Need for Emotional Support Animal
In Riverbrook v Fabode, a published Michigan Court of Appeals opinion, the landlord started eviction proceedings against a tenant when her co-occupant obtained an alleged pit bull mix, an apparently forbidden breed. The brother obtained a letter from a limited license professional counselor declaring a need for an emotional support animal (ESA). Skeptical of the letter, the landlord requested additional information from the counselor, who replied in general terms. The landlord proceeded with an eviction. The tenants opposed the eviction.
The court limited the landlord’s questioning of the counselor and other challenges to the credibility of the evidence, believing that the Fair Housing Act limited the inquiry. The court denied the eviction and the landlord appealed, first to the circuit court which affirmed the district court and then to the Michigan Court of Appeals, which reversed and remanded.
The court held that the lower courts avoided their role as gatekeeper to determine the validity and reliability of the evidence presented by the tenant in support of his claim of disability. Because no examination was allowed, the case was remanded to the trial court for hearing.
It appears from the opinion that the brother found the counselor from a web site which promised a doctor’s letter to support a request for an ESA for a fee of $179, that the tenant contacted the counselor only after the landlord notified of the lease violation, and that the counselor issued her letter after only one brief phone call with the brother.
UPDATE: in an Order dated November 29, 2022, the Michigan Supreme Court vacated a portion of the lower court’s opinion to the extent it could be read to stand for the proposition that expert witness testimony is required in all cases where a person is seeking a reasonable accommodation under either the Fair Housing Act or the Persons With Disabilities Civil Rights Act.