MAGWV proudly represented Fenton Orchards Condominium Association, the prevailing party, in a Michigan Court of Appeals decision affirming the trial court’s ruling in the Association’s favor. The Court’s opinion considered the pre-2016 version of Section 67 of the Michigan Condominium Act (MCL 559.167), which states that undeveloped condominium units automatically revert to general common elements after ten years if not timely withdrawn from the project (in this case, the reversion to common elements occurred prior to 2016).
Background
The Charter Township of Fenton, as plaintiff, appealed a trial court ruling granting summary disposition in favor of the Fenton Orchards Condominium Association, the defendant. The dispute centered on ownership and development rights over several undeveloped condominium units within the Fenton Orchards Condominium project in Genesee County.
The condominium project was established in 2000 by the developer, with a master deed approved by the Township. Amendments in 2003 adjusted the number of units, ultimately authorizing a total of 66. The developer later went out of business around 2007–2009, ceased paying taxes, and multiple units were foreclosed upon and transferred to the Township through tax foreclosure in 2011 and 2017.
In 2018 and 2022, the Association notified the Township that the undeveloped units had reverted to the condominium’s general common elements under MCL 559.167(3) (the pre-2016 or “old Section 67” of Michigan’s Condominium Act), which provided that “undeveloped” units not withdrawn within ten years would automatically revert to the common elements. The Association also recorded an affidavit and a third amendment to the master deed reflecting this reversion with the Genesee County Register of Deeds. The Township then filed suit seeking declaratory relief, invalidation of the amendment, and damages for slander of title and tortious interference.
Issues and Arguments
The Township argued that the units were not “undeveloped” under the old Section 67. The Township claimed the condominium units in question were site condominiums, which are “developed” upon recording, and it pointed to the developer’s disclosure statement regarding the units in question which referred to them as “individual building sites.” The Township argued further that even if the court were to find that the units in question were not site condominiums, the roads and utilities were built, making the units “developed.” Therefore, the units never reverted to common elements and remained the Township’s property.
The Association countered that the project is not a site condominium development but an attached condominium, as defined by the master deed and bylaws. The developer’s disclosure statement conflicted with the recorded governing documents, as the recorded governing documents do not contain any drawings or language that would be necessary to incorporate site condominium units within the same development. The master deed only describes multi-unit buildings sharing common elements like walls and roofs, consistent with attached condominiums. Accepting the Township’s interpretation would make key provisions of the master deed meaningless and create unreasonable assessment and maintenance obligations. The undeveloped units were never withdrawn within ten years, so the Association claimed they reverted to common elements by law.
Court’s Analysis
The Court held that the project was an attached condominium, not a site condominium. The condominium documents (master deed, amendments, and bylaws) described multi-unit buildings sharing common elements. The disclosure statement describing “building sites” did not control, as it was not part of the recorded documents.
Additionally, the Township’s assertion that the installation of roads and utilities rendered the units “developed” was not supported by prior case law. The Court cited Elizabeth Trace Condominium Association v. American Global Enterprises (2022), which held that even constructing common elements like roads or utilities does not make individual units “developed” under the old Section 67. And in any case, the Township offered no proof of the installation beyond its attorney’s statements.
This case highlights an issue we see repeatedly: associations are often reluctant to challenge claims of control over undeveloped units, particularly when those claims come from sophisticated parties with an interest in future development. But the Michigan Condominium Act is not ambiguous on this point, and when properly applied, it can restore ownership and control to the association itself. As a result of this decision, Fenton Orchards Condominium Association now holds the ability to decide what happens next, whether that means exploring development on its own terms or maintaining the property as open space consistent with the expectations of its co-owners. The takeaway for associations is clear: these rights are real, they have value, and they are worth asserting.
Section 67 of the Michigan Condominium Act has always been fertile ground for lawsuits in our state, even after it was amended in 2016. If you have any questions about whether units in your association were properly withdrawn by the developer, be sure to contact us.
Author: Benjamin J. Henry
Reprinted with permission from MAGWV, PLLC – Condominium & HOA Lawyers, Michigan
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