Condominiums – they’re not just for attached townhouses anymore. In fact, if you’ve purchased, or looked at purchasing, a home built in the last decade or so there’s a good chance that it is a condominium.
Many traditional subdivisions with detached homes developed in recent years are technically “site condominiums.” While people often think of condos as only attached residences, or multistory buildings, where residents share walls and sometimes amenities such as pools, site condominiums resemble traditional subdivisions with each separate residence surrounded by its own yard, and with each homeowner responsible for maintaining their property. Shared property within the project often consists of retention/detention ponds, private roads and land located in or around the entry way.
In part because many site condominium projects that began in the last 10-15 years were only partially completed prior to the recession in 2008, the Michigan Condominium Act has been amended in ways that may be of interest to builders and site condominium homeowners alike. Projects are often developed in phases, and sometimes contain provisions that allow a developer to withdraw land from the project to be developed separately. The Act has historically contained deadlines of six or ten years, depending on the circumstances, for a developer to withdraw property from a project. If these deadlines were missed the property reverted to the common ownership of existing owners.
With the real estate crash many subdivisions never became fully developed, and the original developers frequently went out of business with roads and other improvements unfinished. This left many developments partially completed long after the deadlines described above passed, and resulted in land becoming common open space where that may or may not have been anyone’s intention. Michigan Condominium Act was recently amended to address this reality.
As noted above, property that was within the original project but not developed for 10 years would automatically, under prior law, become owned in common, which is referred to in condominium law as a common element. Under the changes to the Act, two-thirds of the owners must vote before property becomes a common element. If that two-thirds vote is obtained the developer must be given notice, and then has 60 days to withdraw the property or submit plans to incorporate it into the project. If that doesn’t happen the undeveloped land remains a common element.
This change reflects the reality that site condominium owners may, or may not, want to own, maintain and insure undeveloped property in common, and should have a say in what happens to that property going forward. There is also a revival in the housing market, which may lead to new developers seeking to purchase undeveloped property abandoned by the original developer. Condominium owners and builders buying into projects that are a decade old but not completed should look at the revisions to the Condominium Act and consider how this change affects their rights and options.
If you have questions regarding this article, please contact Peter Mooney at 810-235-9000 or firstname.lastname@example.org.