Michigan condominiums can breathe a bit easier after the recent Michigan Court of Appeals decision in Cove Creek Condominium Association v. Vistal Land and Home Development, which affirmed the lower court’s ruling that the language of the 2016 amendment to Section 67 of the Michigan Condominium Act should not be interpreted to apply retroactively.

Prior to the 2016 amendment, elements identified by the developer as “need not be built” on the condominium plan and which were never built would automatically become common elements of the condominium after a certain period of time if the developer did not withdraw the land or convert them to “must be built” elements. We refer to this as conversion to common elements “by operation of law,” meaning the law itself is enough to transfer title of the property without notice to the parties involved or anything required to be recorded with the county register of deeds.

The 2016 amendment no longer allows this to happen by operation of law. The amendment now requires a two-thirds majority vote of the members in good standing to declare the land shall revert to common elements. Additionally, “the association of co-owners shall provide written notice of the declaration to the developer or any successor developer by first-class mail at its last known address. Within 60 days after receipt of the notice, the developer or any successor developer may withdraw the undeveloped land or convert the undeveloped condominium units to ‘must be built’.”

A major cause of this litigation was confusion regarding the language of the 2016 amendment and whether it applied retroactively to “need not be built” elements that had already converted to common elements by operation of law. Would every condominium association that had considered “need not be built” elements to have converted to common elements by operation of law years ago have to try and seek out the original developer in order to give them a second shot at withdrawing the property? What would happen if the association had built a clubhouse on the land, for example? This situation would seem unimaginable, but that may have been the outcome if the Court of Appeals had reasoned differently.

Simply stated, if a “need not be built” element converted to common elements by operation of law prior to the effective date of the 2016 amendment (9/21/16), then the 2016 amendment did not change that conversion. However, if the time period under the old law for withdrawal or conversion to “must be built” elements had not yet expired as of 9/21/16, then the association must follow the new voting and notice requirements under the 2016 amendment before they may revert to common elements via a recorded declaration in the office of the register of deeds.

Not sure about your rights with respect to “need not be built” elements? Contact us today so we can provide the guidance you need.