The Michigan Condominium Act, specifically MCL 559.106(2), defines a “Developer” of a Michigan Condominium as follows:
(2) “Developer” means a person engaged in the business of developing a condominium project as provided in this act. Developer does not include any of the following
(a) A real estate broker acting as agent for the developer in selling condominium units.
(b) A residential builder who acquires title to 1 or more condominium units for the purpose of residential construction on those condominium units and subsequent resale.
(c) Other persons exempted from this definition by rule or order of the administrator.
The above definition of a “Developer” is very broad, and arguably includes any person or entity that has some responsibility for constructing, designing, marketing, planning or selling units in a Condominium that is not specifically included within the above exemptions. Accordingly, while the Master Deed of a Condominium often identifies a “Developer”, as does the Disclosure Statement required by MCL 559.184a, the fact that a person or entity is or is not named in the Master Deed or Disclosure Statement is not necessarily determinative of whether or not they meet the statutory definition of a “Developer” as set forth in MCL 559.106(2).
In many cases, the entity identified as the “Developer” in the Master Deed or Disclosure Statement is merely a shell company set up to develop a single project. Experienced Developers often set up a separate entity for every new Condominium, despite the fact that they advertise that the Condominium is developed by a larger entity with a known reputation. In many cases, more than one (1) entity will be responsible for different aspects of developing a Condominium and there will be multiple “Developers” of a Condominium. This setup is intended to shield the owner of the “Developer” from liability, leaving an undercapitalized and often defunct entity to respond to a complaint from the Condominium Association or a Co-Owner several years later when problems arise. As such, it is important for a prospective purchaser to look beyond the Master Deed and Disclosure Statement in determining the identity of a “Developer” or “Developers” of a Condominium prior to purchasing.
