In Channel View East Condominium Association v Ferguson, an unpublished Michigan Court of Appeals decision, the nonprofit corporation was formed in 2001 and the articles appointed an initial board of directors. Although annual meetings of the association should have been called, at the latest, in 2003. Defendants began construction of a home on their site condominium unit in 2003; when construction was still unfinished in 2005, the association started fining them for violation of the bylaws, which required construction to be finished within 12 months of commencement. The association imposed fines through 2016, when the association started a lawsuit for foreclosure and sale of the property for the $137,800 in fines and interest that had accrued.
Defendants filed a summary disposition motion claiming the association lacked capacity to sue because no annual meeting was called and, without a validly elected board of directors, the association could take no valid actions such as instituting the lawsuit. The circuit court agreed and dismissed the lawsuit. The association appealed.
The Michigan Court of Appeals reversed. As stated by the court, the essential question is whether the plaintiff has a valid board of directors at the time suit was filed in 2016. After analyzing the condominium documents and the Michigan Nonprofit Corporation Act, as well as prior case law, the court held that board members are not divested of their positions because no annual meetings were held; they continued in office and would continue until successors were elected. The court remanded for consideration of the other issues in the case.
Most condominium bylaws provide that directors remain in office until their successors are elected. Some further provide that directors remain in office until their successors are elected AND hold their first meeting.