Tax Foreclosure on Condo Garages Held Void

Carola Condominium was established in Wayne County by the recording of a master deed and three subsequent amendments to the master deed.  The first amendment established “garage units.”  The second and third amendments clarified that the “garage units” were limited common elements appurtenant to units in the condominium project.  All three amendments were tax-certified by the Wayne County Treasurer.

Notwithstanding, taxes were assessed separately against the “garage units” and, when the taxes went unpaid, the garage units were included in the tax foreclosure process and ultimately sold to a third party.  The association then filed a quiet title action, seeking to declare the tax sale of the garages as void.  The trial court agreed, granting summary disposition for the Association.  On appeal, the Michigan Court of Appeals affirmed, in Carola Condominium Association v Chappell, an unpublished opinion.

The case points up the difficulty some developers have in correctly identifying garages (or carports) as limited common elements, especially when there are fewer (and less often, more) garages than their are units.  It took three tries for the developer to get it right, and eventually the garages involved were properly identified as limited common elements.  However, having incorrectly listed them as “garage units,” the treasurer had issued them tax identification numbers and assessed taxes against them as units.  Those tax identification numbers were not vacated when the third amendment to master deed was recorded.

The court relied upon the treasurer’s tax certification, especially of the third amendment to master deed.  Before an amendment to a master deed may be recorded, the amendment must be certified that the taxes on the property have been paid.  By certifying that the taxes were paid for a period of time that included the taxes which were foreclosed, the treasure was in effect stating that there were no taxes on the property.

© Steve Sowell 2017