This case involved a dispute between a homeowners association (Association) and the owner of five condominiums that were part of Association (Owner) that were leased to third-party tenants by Owner in violation of lease restrictions that were contained in Associations governing documents.
Factually, during 2015 and 2016, Owner purchased five units in the complex governed by Association and then rented out each of the units to third-parties in violation of lease restrictions that were contained in Associations bylaws. In December of 2016, Association filed a complaint against Owner which sought to enforce the bylaws and terminate Owners rental activity. In response to the claims alleged in the complaint, Owner contended that he had not received a copy of the bylaws and was unaware of the restrictions and that he had not been given an opportunity to object to conditions he deemed unreasonable. Additionally, Owner alleged the affirmative defenses of equitable estoppel, waiver, and plaintiffs unclean hands based on Owners assertions that, for the past decade, other condominium owners, including former members of Associations board of directors, repeatedly leased units to third-parties in violation of the same provisions of Associations bylaws.
In support of his argument that Association had waived the right to enforce the restriction, Owner offered evidence that other members of Associations board of directors had offered to sell him units that they were using as rental properties. Owner argued that, because such board members were acting with apparent authority of Association, Association waived the right to enforce the leasing restriction contained in its bylaws against Owner.
Because Associations bylaws also contained an anti-waiver clause which stated that Associations failure to enforce any right, provision, covenant or condition granted by Associations Condominium Documents would not constitute a waiver of Associations right to enforcement in the future, the trial court ruled that Associations lease restrictions could not be waived. Accordingly, the trial court granted summary judgment in favor of Association. Owner then filed an appeal.
On review, the appellate court found that the actions of Association board members who had also leased out units were outside the scope of the directors authority as delineated by Associations bylaws and, therefore, could not be binding on Association. Further, under the plain language of the anti-waiver clause, the fact that former boards may not have enforced the lease restriction provisions in Associations bylaws did not prohibit Association from enforcing the restrictions against Owner. The court stated that by purchasing a unit in the condominium complex, owners were agreeing to follow Associations bylaws and all of the owners are free to modify the bylaws, but only in accordance with the procedures for modification set forth in the bylaws. The court further stated that, Nothing in the bylaws supports defendants contention that the ultra vires conduct of certain board members and the prohibited conduct of a few co-owners effectively modify plaintiffs bylaws. Finally, in affirming the trial courts judgment, the appellate court stated, The anti-waiver clause in the bylaws provides plaintiff with the authority to enforce its bylaws, even if co-owners or a prior board of directors failed to do so, and nothing in the record indicates that the co-owners amended the bylaws to allow for defendants use of his units a rental properties.
The appellate court also found that Association was entitled to recover its attorneys fees, including those that were incurred in connection with the appellate proceedings. The case was remanded back to the trial court for a determination of the proper amount of attorney fees to be awarded to Association.
UNPUBLISHED Michigan Appellate Court decision (January 3, 2019).
See case decision: Dearborn_W._Vill._Condo._Ass’n_v._Makki_(Mich._App._2019)1