Real Property Notes Blog
Co-op Member Not Entitled to Recover from Co-op for Slip and Fall on Snow/Ice
In Jeffrey-Moise v Williamsburg Towne Houses Cooperative, Inc., a published Michigan Court of Appeals opinion, a co-op member slipped and fell on black ice while shovelling the snow from her porch, sustaining injuries. She sued the co-op for the injuries sustained. The co-op filed a motion for summary disposition on the issues of liability, which was denied by the trial court, and the co-op appealed by leave.
The Michigan Court of Appeals reversed and remanded the case for entry of a judgment for the co-op. After first determining that the plaintiff’s complaint sounded in premises liability, not negligence. The issue then became whether the plaintiff was on the land of another. In a condominium case, Francescutti v Fox Chase Condo. Assn, 312 Mich App 640, 886 NW2d 891 (2015), the court held that a co-owner who slipped and fell on the general common elements could not sue the association on a premises liability theory, because the co-owner owned his proportionate share of the common elements and thus was not on the land of another for purposes of a premises liability claim. Here, however, the court held that membership in the cooperative only gave a right of occupancy of the apartment and use of the common walkways, while the co-op retained posession and control over the common areas, thus making the plaintiff on the “land of another” at the time of the injury.
However, the court went on to hold that the hazard of snow was open and obvious, and that the property was fit for its intended use. The case was remanded to the trial court to enter a judgment in favor of the co-op.
Reasonablness of Fines is a Question of Fact; Fines Not Subject to Lien and Foreclosure
In Channel View East Condominium Association, Inc. v Ferguson, an unpublished Michigan Court of Appeals opinion, Defendants purchased a unit in the site condominium. The condominium documents required construction to be completed within 12 months. Defendant failed to do so and the association began levying fines of $1,000 per month and recorded a lien to secure the fines. When the work was still not completed, the Association filed suit seeking injunctive relief, money damages (137,800 in fines), and foreclosure of its lien. The parties moved for summary disposition on cross motions. The court granted judgment in favor of the Association and the co-owner appealed.
The appeals court ruled that the association had the authority to levy fines against the unit, but that the reasonableness of the fines was a question of fact to be determined by the trier of fact. The court also held that neither the condominium documents nor the MI Condominium Act authorized a lien or its foreclosure solely for unpaid fines. In interpreting MCL 559.208, the court held that the words “together with” in the statute indicate that interest, late charges, advances, attorney fees, and fines are secured by a lien, but only if there is a lien for unpaid assessments. The court remanded the case for a determination of the reasonableness of the fines.
This is the parties second trip to the Michigan Court of Appeals; the result from the first appeal can be found here.
Condo Lien Foreclosure Reversed on Appeal due to Appellant’s Unauthorized Practice of Law
In Mitan v Farmington Square Condominium Association, an unpublished Michigan Court of Appeals opinion, the plaintiff, a suspended attorney and the personal representative of his father’s estate which owned a condominium unit, filed suit against a condominium association, its management company, and the association’s attorney. The association counterclaimed for foreclosure of its lien for unpaid assessments. The association moved for summary disposition of the complaint and counterclaim, which the trial court granted. the plaintiff appealed.
On appeal, the court held that the complaint was properly dismissed because plaintiff could not demonstrate that alleged assignments of claim to him were valid. However, the judgment of foreclosure of the association’s lien was reversed, because in defending the estate the plaintiff/suspended attorney was engaging in the unauthorized practice of law. The case was remanded to the trial court with instructions to pick up at the filing of the counterclaim; if the estate did not defend by a retained attorney, the trial court was instructed to proceed as in a default.
Failure to Award Attorney Fees held Abuse of Discretion
In Homestead Shores Association v Entwistle, a condominium association filed suit claiming the defendants violated condominium document provisions regarding exterior maintenance. The co-owner failed to defend and the association obtained a default judgment. The trial court awarded the association its court costs, but declined to award attorney fees. The association appealed.
The Michigan Court of Appeals, in an unpublished opinion, held that the trial court abused its discretion. Both the MI Condominium Act and the condominium documents provided that if the association was successful, it shall be entitled to recover its reasonable attorney fees. Because the provisions were mandatory, the trial court abused its discretion in declining to award them. The case was remanded for a determination of a reasonable attorney fee.
Amendment to Condominium Bylaws Not Approved by Co-Owners; Association Cannot Enforce
In Bell v Chase, an unpublished Michigan Court of Appeals opinion, the defendant owned 10 unit in Lochmoor condominium, a site condominium. The condominium documents provided that anyone seeking to build a dwelling was required to obtain approval from the developer. The condominium association board of directors recorded a “First Amendment to Master Deed” appointing itself the “successor developer” of the project and amending the bylaws to require association approval for new construction. The association filed suit against the defendant alleging it violated the bylaws by not seeking approval. Defendants defended on the ground that the bylaws amend was invalid and unenforceable and the plaintiff lacked standing. Defendants filed a motion for summary disposition, supporting it with the proir bylaws and an affidavit which stated that the members of the condominium had not been given an opportunity to vote on the bylaw amendment. Plaintiffs failed to file a timely response and the court granted the motion, dismissing the case. The association appealed.
The Michigan Court of Appeals affirmed. Both the pre-amendment bylaws and the MI Condominium Act required the approval of 66-2/3% of co-owner to any amendment. Because the defendant presented evidence that the amendment had not been so approved and the association failed to respond with evidence to demonstrate there was a question of fact, the trial court properly granted summary disposition.
First Mortgagee Purchases Property from Second Mortgagee after Foreclosure of Second Mortgage; Debt Secured by First Mortgage held Satisfied
In Federal Home Loan Mortgage Corporation v Werme, a published opinion of the Michigan Court of Appeals, the property owner granted two notes and mortgages. The first ultimately wound up in the hands of FHLMC; the second with Huntington National Bank. The mortgagor defaulted under both. Huntington foreclosed and the property owner failed to redeem, although the property owner engaged in protracted litigation with both mortgagees. After the redemption period expired, Huntington conveyed the property to FHLMC, which started eviction proceedings. The former owner filed a counterclaim to quiet title, which was removed to the circuit court while the district court retained the eviction proceedings. The district court entered a judgment of possession in favor of FHLMC, and the circuit court dismissed the property owner’s claims to quiet title to the property. The owner appealed.
On appeal, the Michigan Court of Appeals upheld both the possession judgment and dismissal of the quiet title action. When the property owner failed to redeem from foreclosure of the second mortgage, all of her rights in the property were extinguished. Thus, FHLMC was entitled to possession, and the property owner could not establish title to the property.
However, the case was remanded to the circuit court for entry of an order that the debt underlying the first mortgage was equitably satisfied. Relying upon case law holding that when the same entity holds two mortgages on the property and forecloses the second mortgage it extinguishes the debt underlying the first mortgage, the court held that the same principles equitably discharged the debt here because, even both debts were not held by the same entity at the time of the foreclosure of the second.
HUD Revises Single-unit and Project Approval Questionnaires
The US Department of Housing and Urban Development issued Mortgagee Letter 2021-09 on March 15, 2021, revising its forms 9991 and 9992, questionnaires for the board or management company to complete when a prospective purchaser is seeking an FHA loan to purchase a unit. Form 9991 is for spot approval; Form 9992 is for project approval. Both forms are simplified and should be easier for boards or management companies to complete.
Settlement Agreement Forgiving Assessments Not a Modification of Percentages of Value, but Former Board Members can be Sued under Member Oppression Provision of Nonprofit Corporation Act
In Deep Harbor Condominium Assn v Sanford, an unpublished Michigan Court of Appeals opinion, the condominium association and several co-owners sued attempting to void a settlement agreement executed to resolve earlier litigation. The settlement agreement provided that certain unit owners were “released and forgiven from paying any assessments levied against their units until the units were conveyed or leased.
In the second case, the court held that the association could not collaterally attack the settlement agreement with the unit owners because it did not allege sufficient grounds under MCR 2.612. The court held that the remaining plaintiffs who were not parties to the earlier litigation could attack the settlement agreement, but had not alleged sufficient grounds to do so.
The plaintiffs argued that the settlement agreement modified the percentages of value state in the Master Deed and therefore ran afoul of the MI Condominium Act. The court held that the agreement did no such thing: the association could continue to assess the units in accordance with the percentage of value, but could not collect the assessments until the conditions were fulfilled. The practical effect of the settlement agreement was to leave a severe deficit in the association’s operating budget, but it did not change the assessment levied against the Plaintiffs’ units. The court affirmed the long-held principal that "a court will not interfere with an otherwise lawful contract merely because the agreement later proves to be imprudent.”
However, the court held that the plaintiffs had sufficiently pled a cause of action against former board members that by entering into the settlement agreement, they had engaged in “illegal, willfully unfair and oppressive acts” in violation of MCL 450.2489, which may authorize the court to set aside the settlement agreement. The case was remanded to the trial court to consider this claim.