Michigan Court of Appeals rules that Unincorporated HOA may govern under Declaration

In Suttons Bay Yacht Village Condominium Association, et. al. v Board of Representatives of Port Sutton Community, et. al., Docket No. 325327 (May 19, 2016) (Unpublished Opinion), the Michigan Court of Appeals held that an unincorporated voluntary association had legal authority to administer a declaration as a master homeowners association.  In 1982, a declarant recorded a declaration of covenant, conditions, and restrictions that established the Port Sutton Community.  The Port Sutton Community was composed of four separate condominium associations.  The declaration allowed for the declarant to assign and delegate its rights and responsibilities under the declaration to the “condominium associations collectively.”  On December 26, 1996, the declarant executed a written assignment to an informal board of representatives of the Port Sutton Community.  Each condominium association was allowed to appoint one voting representative to the informal board of representatives.  An informal board of representatives was created in 1997 and assumed responsibility for governing the Port Sutton Community.  Each of the condominium associations adopted resolutions appointing board members to the board of representatives.

In 2012, one of the condominium associations disputed whether the board of representatives had legal authority to administer the declaration after it had participated on the board of representations since 1997. In affirming the decision of the trial court, the Court of Appeals held that an unincorporated voluntary association is a legal entity that was capable of receiving a written assignment from the original declarant.  The Court held that an unincorporated voluntary association was not required to have a constitution, articles of agreement, bylaws or rules in order to operate as a legal entity since it was not subject to the Michigan Nonprofit Corporation Act.  Accordingly, the court affirmed the dismissal of the Plaintiff’s case and ruled that the board of representatives could continue to govern pursuant to the written assignment.

This case represents the importance of having an attorney carefully review the language of a declaration to ensure that a homeowners association obtains a written assignment from a declarant as a basis to govern. While it is an unpublished case, and not precedentially binding, it also indicates that if the language of the declaration permits, courts may allow an unincorporated voluntary association to act as a homeowners association, as well as an incorporated entity, if a proper written assignment is obtained.

Kevin Hirzel is a Michigan Condominium Attorney and Partner at Cummings, McClorey, Davis & Acho, P.L.C. where he leads the Community Association Practice Group.  He frequently represents Builders, Community Associations, Condominium Associations, Cooperatives, Co-Owners, Developers, Homeowner Associations, Investors, Property Owners and Property Managers throughout the State of Michigan. Cummings, McClorey, Davis & Acho, P.L.C. has Michigan offices in Clinton Township, Grand Rapids, Livonia and Traverse City.  Mr. Hirzel can be contacted at (734) 261-2400 or khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at http://micondolaw.com for additional resources on Michigan Community Association Law.