Michigan Court of Appeals holds that Condominium Association could not satisfy pre-litigation approval requirement by after-the-fact ratification

Michigan Court of Appeals holds that Condominium Association could not satisfy pre-litigation approval requirement by after-the-fact ratification

May 31, 2018 | Articles, Bylaws, News, Nonprofit Corporation Act, Rules and Regulations | 0 comments

In a recent case from the Michigan Court of Appeals, the court considered whether an Association properly ratified a circuit court bylaw violation lawsuit. The Association’s Bylaws required a majority vote of co-owners prior to instituting litigation for a bylaw violation. The Bylaws specifically state the votes must be cast “in person or by proxy…at a given meeting of the members of the Association duly called and held.” Although a majority of co-owners did ultimately vote to ratify the lawsuit, the Court of Appeals reversed the trial court’s determination that this was a proper ratification. Specifically, there was no provision in the Bylaws allowing for such action without a meeting, even by consent vote to waive the meeting. The Board of Director’s consent resolution which was circulated to collect votes stated the co-owners were agreeing to waive a formal meeting and notice of meeting for purposes of the vote. The court held that when a formality is required (here, votes to be placed at a meeting), this formality cannot be waived, even by co-owner consent. The fact that this vote lacked a required formality caused it to fail to ratify the litigation. The broader provisions contained in the Michigan Non-Profit Corporation Act (specifically, MCL 450.2407(3)) did not change this result because the more limiting requirement in the Condominium Bylaws was held to be controlling. Sawgrass Ridge Condominium Association v. Alarie, Unpublished, Case No. 335144, January 9, 2018.