Michigan Court of Appeals rules that co-owner is responsible for pre-existing bylaw violations after purchasing condominium unit

Kevin Hirzel, Brandan Hallaq and Kayleigh Long of Hirzel Law, PLC represented the Fox Pointe Association in this case.

In Fox Pointe Association v Ryal, unpublished opinion of the Court of Appeals, issued July 23, 2019 (Docket No. 344232), the Michigan Court of Appeals held that a co-owner was responsible for the pre-existing bylaw violations of a prior co-owner after purchasing a condominium unit.  The court also held that the condominium association did not waive its right to enforce the bylaw violations when it waited two (2) years after the co-owner purchased the condominium unit in taking action to enforce the bylaws.  Therefore, the Michigan Court of Appeals 1) affirmed the trial court’s grant of summary disposition in favor of the condominium association, in which the trial court granted an injunction and ordered the co-owner to remedy the bylaw violation 2) affirmed the trial court’s award of all of the condominium association’s attorney’s fees and costs incurred in the trial court, in the amount of $15,836.75, and 3) remanded the case to the trial court to award the condominium association additional appellate attorney’s fees and costs.

Facts

Defendant, Mary Ryal, purchased a condominium in the Fox Pointe Condominium in 2013.  In 2015, the Fox Pointe Association became aware that alterations had been made to the condominium unit’s entrance door without permission from the condominium association as required by the master deed and bylaws.  Specifically, no permission had been given to re-paint the front door a different shade of white, install a square door lock, install a pewter-colored lever door handle and install new larger address numbers on the unit’s door. Article 9.1 of the master deed stated as follows:

A Co-owner may make improvements or alterations to a Condominium Unit that do not impair or diminish the appearance of the Project or the view, privacy or other significant attribute of any Unit which adjoins or is proximate to the Unit, subject to the approval of the Developer as provided in § 6.3 of the Bylaws during the Development Period, and thereafter subject to the approval of the Association.

Article 6.3(a) of the condominium bylaws further provided as follows:

No Co-owner shall make any alterations, additions or improvements to any Common Element, nor make changes to the exterior appearance or structural members of his or her Unit without the prior written approval of the Association.  The Association shall not approve any alterations or structural modifications which would jeopardize or impair the soundness, safety or appearance of the Project and the Association may provide plans and/or specifications required to be used for any particular improvement . . . .

The condominium association sent numerous letters to Ryal regarding the bylaw violations and Ryal failed to make requested changes to the door.  The condominium association then adopted  rules specifically addressing entrance doors, including rules requiring approval of any alteration or modification of “locks, door numbers, handles, and storm doors[.]”  The entrance door policy allows door handles of the lever or knob variety and it provided that all “entrance door handles, locks and numbers shall be polished or bright brass in color.”  After adopting the rules, the condominium association sent Ryal additional demand letters seeking compliance with the governing documents. Mary Ryal refused to make any changes to her front door and the condominium association filed an action seeking injunctive relief.

In responding to the complaint, Ryal took the position that she had not painted the door or changed the address numbers on the door; they were exactly how they appeared when she purchased the condominium unit in 2013. Ryal claimed that she never installed the square lock, just the lever handle.   She also contended that she installed the lever-type door handle as part of an “immediate repair,” describing the handle as an “emergency handicapped accessible replacement.”  Ryal asserted that she was physically disabled and was entitled to keep the door handle as a result of her disability.  The Michigan Department of Civil Rights ultimately dismissed her administrative fair housing complaint as the association permitted her to have a lever style door handle to accommodate her disability but required that the color of the door handle comply with the Association’s rules and regulations regarding aesthetic appearance.  The trial court granted summary disposition in favor of the condominium association and awarded the association  $15,836.75 in attorney’s fees and costs.  Ryal then appealed the trial court’s order.

Analysis

The Court of Appeals started its analysis with the Michigan Condominium Act and stated that MCL 559.153 provides that “[t]he administration of a condominium project shall be governed by bylaws recorded as part of the master deed, or as provided in the master deed.”  The court further stated that MCL 559.206(a) provides that “[f]ailure to comply with any of the terms or provisions of the condominium documents, shall be grounds for relief, which may include without limitations, an action to recover sums due for damages, injunctive relief, foreclosure of lien if default in payment of assessment, or any combination thereof.”  The court further relied on Village of Hickory Pointe Homeowners Ass’n v Smyk, 262 Mich App 512; 686 NW2d 506 (2004), and stated that:

Under Michigan law, a covenant constitutes a contract, created by the parties with the intent to enhance the value of property.  As such, a covenant is a valuable property right….It is a well-understood proposition that a breach of a covenant, no matter how de minimis the damages, can be the subject of enforcement . . . . If the construction of the instrument be clear and the breach clear, then it is not a question of damage, but the mere circumstance of the breach of the covenant affords sufficient ground for the Court to interfere by injunction.  Id. at 515-516.

In applying these principles to the instant case, the Court of Appeals stated that there was no dispute that either Ryal or the former owner made changes to the square door lock, the pewter-colored lever door handle, the address numbers on the door and the color of the door, without the condominium association’s approval as required by the condominium bylaws.  Accordingly, the court held that injunctive relief was appropriate to make Ryal comply with the master deed, condominium bylaws and rules.

Ryal argued that there was a factual dispute regarding whether the alterations impaired or diminished the appearance of the complex and that summary disposition was improper. However, the Court of Appeals held:

The problem with this argument is that neither Ryal nor the former owner went through the required procedure of seeking FPA approval.  We cannot support the proposition that a unit owner can unilaterally make alterations to his or her unit without approval by the governing association and then avoid any penalty or consequence by arguing after the fact that the alteration did not impair or diminish the complex’s appearance. Ryal also argues that she made no changes to the color of the door, the address numbers, and to the lock, which were as they currently appear when she purchased her condominium unit.  This argument does not undermine our ruling.  When Ryal purchased the unit she became subject to the requirements of the master deed and the bylaws, and the entrance door policy was not even adopted until after her purchase, which she was also required to follow.  See MCL 559.165 (“Each unit co-owner, tenant, or nonco-owner occupant shall comply with the master deed, bylaws, and rules and regulations of the condominium project and this act.”).  Whether Ryal made any of the alterations or modifications herself is irrelevant for purposes of the injunctive relief sought by FPA.  (emphasis added).

The Court of Appeals also rejected Ryal’s argument that the condominium association had waited to long in enforcing the condominium bylaws.  However, the court stated that:

Article 6.10(c) of the bylaws provides:  The failure of the Association to enforce any right, provision, covenant or condition which is granted by the Condominium Documents shall not constitute a waiver of the right of the Association to enforce such right, provision, covenant or condition in the future.  Ryal is bound by the bylaws.  Accordingly, we reject Ryal’s waiver argument.

Finally, the court discussed the attorney’s fees and costs that were awarded to the condominium association and remanded the case for an additional award of appellate attorney’s fees and costs in favor of the condominium association.  Specifically, the Court of Appeals held:

Article 17.2 of the bylaws provides:  In any proceeding arising because of an alleged default by any Co-owner, the Association, if successful, will be entitled to recover the costs of the proceeding and such reasonable attorneys’ fees (not limited to statutory fees) as may be determined by the court, but in no event will any Co-owner be entitled to recover such attorneys’ fees. Additionally, MCL 559.206(b) states:  In a proceeding arising because of an alleged default by a co-owner, the association of co-owners or the co-owner, if successful, shall recover the costs of the proceeding and reasonable attorney fees, as determined by the court, to the extent the condominium documents expressly so provide.  FPA is entitled to attorney fees for the work completed on the appeal.  Both the bylaws and the statute provide that FPA is entitled to recover the costs of “the proceeding ….In the case before us, FPA initiated the legal action or proceeding to obtain injunctive relief that would require Ryal to comply with the bylaws, master deed, and entrance door policy.  Participation in this appeal was required to achieve that goal, and it was an integral part of the legal proceeding filed by FPA.  As a result, FPA is entitled to a remand for a determination of additional attorney fees and costs.

Conclusion

Fox Pointe Association v Ryal, unpublished opinion of the Court of Appeals, issued July 23, 2019 (Docket No. 344232) stands for the proposition that a purchasing co-owner will remain responsible for a violation of the condominium bylaws even if the violation was committed by a prior owner of the condominium unit.  If a co-owner was able to escape bylaw violations by transferring a unit, it would create a world where strawman transactions would occur by deeding units back and forth simply to avoid any penalty for violating the condominium documents.  Similarly, this case is also beneficial for condominium associations as it not only permits a condominium association to recover attorney’s fees and costs in the trial court, but also appellate attorney’s fees and costs if a co-owner violates the master deed, condominium bylaws or rules.   Finally, this case demonstrates that importance for condominium associations to diligently pursue bylaw violations.  While the waiver argument in this case was not successful, the longer that a condominium association waits to pursue a bylaw violation, the greater the likelihood that a co-owner will raise a waiver defense that must be dealt with in litigation.

Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2019, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel has been named a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine in 2018 and 2019, an award given to less than 5% of the attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or kevin@hirzellaw.com.