Real Property Notes Blog
Gender-based Swim Time in Association Pool Violates Fair Housing Act
In Curto v A Country Place Condominium Association, an opinion issued by the federal 3rd Circuit Court of Appeals, the condominium association issued pool rules providing for separate times for men and women to use the community pool. According to an association representative, these rules were implemented to accommodate the Orthodox principle of tznius, or modesty, according to which it is improper for men and women to see each other in a state of undress—including bathing attire. However, the rules allocated the majority of the evening hours to men. After two residents were fined for violating the rules, they sued claiming discrimination under both the Fair Housing Act and under New Jersey state laws regarding discrimination. The trial court granted summary disposition to the condominium association, finding that the gender-based rules applied to men and women equally.
The court of appeals reversed, finding that the while the rules provided roughly the same amount of use for men and women, the times of use were discriminatory because they allocated most of the evening hours to men, which assumed that women did not work outside the home and disproportionately impacted working women. The court of appeals reversed, remanding the the trial court for entry of a judgment in favor of the residents.
While Michigan is not in the 6th Circuit Court of Appeals and thus the opinion is not binding on Michigan condominiums, the opinion is persuasive because the principles under the Fair Housing Act apply across the United States; it seems likely the 6th Circuit Court of Appeals would rule similarly.
Excess Proceeds are “Surplus” only if Mortgage is Satisfied
In Atigarin v Bank of America, an unpublished Michigan Court of Appeals opinion, the Atagarins granted a mortgage on their home in Southfield, MI. They later filed a Chapter 7 case and received a discharge. Subseqent to the bankruptcy, they defaulted on the mortgage and the bank foreclosed. The bank bid a partial credit bid of $100,000, but a third party bidder ultimately paid over $140,000 for the property.
The Atigarins filed a claim with the sheriff claiming the excess over the opening bid was “surplus proceeds” under MCL 600.3252. The bank opposed the claim, arguing that the balance due on the mortgage was over $185,000, so the mortgage was not “satisfied” within the meaning of the statute and the surplus proceeds should be paid over to it. The trial court agreed and the Atigarins appealed.
The statute only applies to “any surplus money after satisfying the mortgage on which the real estate was sold . . . .” The court held that the underlying mortgage was not “satisfied” within the common meaning of the word when there remained a balance due on the mortgage after the sale. Thus, the proceeds over and above the amount of the bid were not “surplus” and were properly paid over to reduce the balance owed on the mortgage.
Ambiguities in Deed Restrictions Must Be Resolved by the Trier of Fact
In A2C2 Partnership LLC v Loch Alpine Improvement Association, an unpublished Michigan Court of Appeals opinion, the subdivision included lots that were used to develop and operate a golf course. When the golf course was foreclosed, the purchaser sought to use the lots comprising the golf course to build residential homes. The homeowner association opposed. After competing lawsuits were filed, and on competing motions for summary disposition, the trial court granted judgment in favor of the purchaser.
On appeal, the Michigan Court of Appeals reversed and remanded to the circuit court for trial. The court held that the restrictions against the property were ambiguous, providing at one point that use of the lots as a golf course was “alternative” to residential use of the lots and at another point that no use of the golf lots shall be other than operation of a golf course. The court held that this ambiguity in the documents could be resolved either by witness testimony or other extrinsic evidence, but could not be decided on summary disposition because there was a disputed issue of fact.
Contractual Provision for Recovery of Attorney Fees Not In Conflict with MI Condominium Act
In Stadler ve Fontainebleau Condominiums Association, an unpublished Michigan Court of Appeals opinion, the co-owner submitted a lease to the association for approval in accordance with the condominium bylaws. The association delayed in responding and the tenant declined to rent the condominium unit. The co-owner sued the association in small claims court for lost rent, but the co-owner and the association agreed to dismiss the case without costs. The association then recorded a lien against Defendant’s condominium unit for attorney fees under a section of the condominium bylaws, which provided “The Association, if successful, also shall be entitled to recoup the costs and attorney’s fees incurred in defending any claim, counterclaim or other matter asserted against the Association from the Co-owner asserting the claim, counterclaim or other matter . . . .” The co-owner then filed a circuit court lawsuit seeking a declaration that the lien was invalid and an injunction preventing the association from enforcing the lien by foreclosure, claiming that the bylaw provisions was inconsistent with the MI Condominium Act. The circuit court granted the association summary disposition, finding that the bylaws provision was not inconsistent with the Act.
The co-owner argued that that, because the article of defendant’s bylaws allows for the recovery of attorney fees in situations other than those contemplated by MCL 559.206(b) and 559.207, they are in conflict with the MI Condominium Act. Both the trial court and the court of appeals disagreed, finding that the provision did not conflict with the statute, it merely provided for recovery of attorney fees in additional situations not addressed by the statute. Because the bylaws are a contract between the association and the co-owner, and because a contract can provide for recovery of attorney fees, the association is entitled to recover attorney fees if it comes within the provision of the bylaws.
The court also held that the co-owner’s claim that the association was not “successful” as provided in the bylaws was not raised in the trial court and was not ripe for adjudication on appeal. The co-owner would be free to raise that defense should the association decide to pursue foreclosure of its lien.
While a statute may provide for recovery of attorney fees in a particular situation, the existence of the statute does not preclude recovery of attorney fees in other situations as provided by contract.
Legislature expands list of persons authorized to process evictions
Effective July 2, 2019, the list of law enforcement or court personnel who may serve and enforce an order of eviction will be expanded to include "a court officer appointed by or a bailiff of the issuing court, the sheriff or a deputy sheriff of the county in which the issuing court is located, or an officer of the law enforcement agency of the local unit of government in which the issuing court is located.”
The existing statute only authorizes "the sheriff, or any other officer authorized to serve the process” which means only officers authorized by the court that issued the order.
Landlord sanctioned for violating automatic stay, even though automatic stay was ultimately lifted
In In re Shrum, an opinion issued by Judge Shefferly of the United States Bankruptcy Court for the Eastern District of Michigan, the Landlord obtained a judgment of possession for nonpayment of rent in the state district court; the debtor then filed a Chapter 13 bankruptcy. The debtor also deposited one month’s rent with the bankruptcy court and filed Official Form 101A. At a subsequent hearing in the district court on the debtor’s motion for a new trial and the landlord’s motion for entry of an order of eviction, the debtor advised the court of the bankruptcy filing and the filing of Form 101A and the deposit of funds. The landlord’s attorney acknowledged notice of the filing, but argued that the debtor had falsified Form 101A because she stated she had the right to cure the default when, under the terms of the judgment, the time to cure had already expired. The district court went forward with the hearing, denied the debtor’s motion for new trial, and granted the landlord’s motion for the order. The debtor then filed a motion in the bankruptcy court to hold that the exception to the automatic stay applied because she complied with the statute, to extend the automatic stay (this was her second filing in a year) beyond 30 days as to all creditors, and to find the landlord violated the automatic stay and impose sanctions.
After hearing, the court found that the landlord had violated the automatic stay by choosing to go forward with the hearing in the district court rather than seeking to challenge the debtor’s certification on form 101A in the bankruptcy court. While acknowledging that a state court has jurisdiction to determine whether the automatic stay is in effect, that determination is not binding on the bankruptcy court and, if the bankruptcy court finds that the automatic stay was in effect, it can sanction the creditor for violating the automatic stay by proceeding in the state court action.
This case should be a caution to creditors: when in doubt, assume that the automatic stay may be in effect and seek relief from the automatic stay. In this case, the bankruptcy court awarded both damages to the debtor and sanctions against the creditor for a willful violation of the automatic stay.