In SLG-TC Development LLC v Peninsula Bay Resort Co-owners Association, an unpublished Michigan Court of Appeals opinion, Peninsula Bay Resort was originally formed in 2005 by the recording of the Master Deed. The original developer constructed one building, but the Developer encountered financial difficulties. In 2007, a receiver for the Developer conveyed the Developer’s rights for construction and establishment of a proposed Future Building B to another entity.
On the last date for expansion of the project, the entity recorded an amendment to the Master Deed stating that it was exercising the right to build 25 additional units on the Building B site. The amendment included floor plans for Building B; however, no construction had taken place.
in 2011, the entity and the condominium association executed a 5th Amendment to the Master Deed, agreeing that “physical construction, if any” on Building B had to commence not later than January 4, 2017. The amendment also stated that the entity had no right to withdraw any property from the project.
The entity never started construction, and its principal died. His widow sought to sell the entity’s interest, but no purchaser was found until after the deadline. When the condominium association refused to consider the matter further, the purchaser sued seeking a judgment quieting title to the unit.
After carefully considering the Master Deed and amendments in connection with the Michigan Condominium Act and common law, the court found that, although the entity had properly exercised the right to add Building B to the project, it conditioned the right to construct upon commencement of actual construction by a deadline, which was not met.
While no particular precedent was set, it does highlight the need for careful drafting and precise language in contracts and amendments, as vested rights can be bargained away.