Real Property Notes Blog

Association Cannot Impose Greater Restrictions on Subdivision through Adoption of Bylaws

In Conlin v Upton, a published Michigan Court of Appeals opinion, the court held that a set of bylaws, adopted by an association established by the developer, could not impose greater or different restrictions on the construction of homes in the subdivision than those established by the developer.  Provisions that were different or more restrictive than those established by the developer were invalid.

However, a question of fact remained whether the developer had assigned his architectural rights to the association and the case was remanded to the trial court for resolution of that fact question.

The opinion contains a fairly complete discussion of the state of the law on covenants running with the land, who is burdened by them, and when and under what circumstances they may be amended.

The Adage “you snooze, you lose” Applies to Claims for Surplus Funds

In Moon Lake C. A. v RBS Citizens, an unpublished Court of Appeals opinion, a condominium association applied to the circuit court when foreclosure of the first mortgage on the condominium unit resulted in surplus funds.  However, a second mortgage had already applied for the surplus funds and the circuit court had already ordered them disbursed to the second mortgagee.  The association’s claim was dismissed as untimely.

On appeal, the court of appeals upheld the dismissal.  The statute does not require an applicant to provide notice to other potentially interested parties.  The association did not explain why it waited over six weeks before making the application, or why it could not have determined the status of the funds much earlier.

The association raised the argument on appeal that its lien took priority over the second mortgagee who received the funds; however, the court did not address the isssue, finding that the claim had been properly dismissed as untimely.

Association Has No Authority to Allow Encroachment into Common Areas

In Boyle v Huron Dunes Association, an unpublished Michigan Court of Appeals opinion, one lot owner filed suit against the association because the association granted to another lot owner permission to erect a deck which extended into a park area reserved to the use of all owners.

The court said that allowing a permanent deck to be installed encroaching on the park area would be inconsistent with the grant to all lot owners to use the park areas.

Doctrine of Merger Applied to Prevent Mortgagee from Avoiding Payment of Condominium Assessments

For the second time, the Michigan Court of Appeals has held that a mortgagee who accepts a deed to a condominium unit subject to its mortgage is barred by the doctrine of merger from later foreclosing that mortgage in an attempt to avoid payment of condominium assessments.  

In FNMA v Hsiung, an unpublished court of appeals opinion, a condominium association foreclosed its lien, resulting in a sheriff’s deed in favor of the association.  For reasons not made clear by the opinion, the mortgagee of the unit acquired the association’s interest by quit claim deed.  Two years later, when the mortgagee had not paid assessments, the association recorded a new lien and began a new foreclosure.  The mortgagee then began foreclosure of its mortgage.  The mortgagee then sued the association seeking a detemination of whether who had the superior title.

Although the trial court ruled in favor of the mortgagee, the court of appeals reversed, holding that, by virtue of accepting the quit claim deed from the association without an express reservation of its mortgage from merger, the mortgage merged with the fee title and the mortgagee became obliged to pay assessments.  Because of the merger, it had no mortgage to later foreclose.

Condominium Act Amended

In a non-event, Section 66 of the Michigan Condominium Act was amended by Public Act 170 of 2015.  The amendment now makes clear that a site plan must be prepared by a licensed architect, a licensed professional engineer, or a licensed professional surveyor.  Previously, the Act required the site plan to be prepared by “an architect, land surveyor, or engineer licensed to practice.  

The new law also provides that the site plan need not contain detailed project design plans; they must be filed with the enforcing agency for the state construction code; i.e., the local municipality.

© Steve Sowell 2018