Update: Unfortunately, SB 610 was signed into law by Governor Snyder and has been effective since 9/21/16. The following was our argument against the legislation.
The Meisner Law Group, P.C. strongly opposes Senate Bill 610 because it undermines the rights of co-owners to ensure that a developer will complete the condominium project in a timely fashion. That is why Section 67 of the Condominium Act was adopted, and the fact that developers have in some instances been unable to develop condominiums within the time prescribed because of the economy or because other developers choose to enter a project well after the time has passed for a developer to build additional units is not a reasonable justification for this statute.
The Senate Bill would have a significant impact on the state and local government in that it would create untoward problems for government, allowing condominium projects to be completed well after the initial construction ended.
Another problem is the new notice requirement that the association cannot claim ownership of the land until the expiration of sixty (60) days after the developer’s “receipt” of the required written notice. Many of the developers who abandoned these projects cannot be located and/or the entities were dissolved, which is why the original statute was established in the first place, to deal with the abandoned land. Consequently, a condominium association may never be able to prove the developer’s “receipt” of the notice. If this unfortunate bill is signed into law, condominium associations will be forced to deal with that likely scenario.
But perhaps most troubling of all, SB 610 will result in untold numbers of condominium co-owners losing title to millions of dollars of land. Under the current law, if a developer does not complete construction of a condominium project within a certain amount of time, the undeveloped land automatically becomes general common elements of the project, owned by all co-owners in common, and the developer’s rights to build expire forever. But SB 610 will retroactively apply and result in title to these undeveloped lands transferring to the developer. Regardless of whether the co-owners took title to the land yesterday or twenty years ago, the developer will now own it unless the association of co-owners complies with the new law’s written notice requirement. But even if that notice is sent, the developer then merely needs to redesignate land as “must be built” or withdraw it from the project. It is a simple fact that SB 610 will result in the government taking millions of dollars of land from private co-owners and giving it to directly to, in some cases, unscrupulous condominium developers. SB 610 is going to cause substantial litigation over this unconstitutional taking, and courts are going to have to wrestle with the uncertainty of who now owns these undeveloped lands, and whether it is legal to, through legislation, take title to real property from co-owners and give it directly to private condominium developers. SB 610 should not be retroactive.
This is simply an attempt by certain special interests to get legislation through, just as they did with respect to the Nonprofit Corporation Act, without any opposition.