Disappearing Units Big Win for Condominium Associations Against Prospective Developers

Disappearing Units Big Win for Condominium Associations Against Prospective Developers

Dec 27, 2019 | Articles, Common Elements, News | 0 comments

In a significant development impacting certain types of incomplete condominiums in Michigan, the Michigan Court of Appeals published a decision in Cove Creek Condominium Association v Vistal Land & Home Develop, LLC, _ Mich App _, Nos. 342372 & 343144 (2019), which confirmed that under MCL 559.167(3), also known as Section 67, unbuilt “need not be built” units in condominiums disappeared and all rights to build them ceased by automatic operation of law without the Association needing to take any action. If you live in an incomplete condominium, and even if a builder or developer still claims a right to build the rest of the units, your Association may have a valid claim to exclusive ownership and control of all remaining unbuilt land. This valuable property right can be lost if you and your Association do not act to assert your rights against “need not be built” Units.

As for the underlying case, Cove Creek Condominium was created in 1989. 14 Units were designated as “need not be built,” and in fact were never were built. The Court of Appeals held that unbuilt “need not be built” units disappeared automatically after the expiration of the 10-year time period under the statute, and that the Association’s rights in the remaining common elements “vested by operation of law, without any action.” Nothing more than the passage of time was required for the “need not be built” units to “disappear.” The result was that the Cove Creek Condominium Association alone had ownership and control over all remaining unbuilt land.

Further, the Cove Creek Court rejected the argument advanced by the successor developer that a September 21, 2016 amendment to Section 67 applied retroactively and prevented the units from disappearing, holding that the statute only applied to unbuilt “need not be built” units that still existed as of the date of the amendment. As a result, the successor developer lost all rights to build the unbuilt “need not be built” units, and the Cove Creek Condominium Association alone was vested with title to, and control over, all remaining vacant land.

Depending on when your project was created, and how units were designated in the condominium plans, your community may be similarly situated to the association in Cove Creek. Our firm will counsel you on this unique area of the law and whether you have the same right as Cove Creek to regain control over undeveloped land.