Requirement that lawsuit be funded by special assessment cannot be circumvented by increasing the general assessment

In another opinion dealing with provisions designed to make it difficult for associations to sue developers (or really, file any lawsuit unrelated to collecting assessments or enforcing restrictions), the Michigan Court of Appeals has held that the specific provision relating to funding litigation control over general provisions relating to financing the operation of a condominium.  The association lacked funds to meet its usual obligations only because it was spending money on litigation that it would have otherwise have used to meet its obligations.  An additional assessment levied “to raise additional funds to properly fund the lawsuit” was invalid.  In Nottingham Village C. A. v Pensom, the Court of Appeals reversed a judgment in favor of the association and remanded the case for entry of a judgment in favor of the co-owner, as well as a determination of the co-owner’s fees and costs.  

The court did state, in dicta, that the requirement that the attorney chosen for litigation list every lawsuit he’s ever been involved in was probably invalid.

I previously discussed another case dealing with these anti-litigation provisions.  It seems clear that such provisions will be upheld.

© Steve Sowell 2017