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Most homeowners associations require that owners within the subdivision be members of the association.  While these types of homeowner associations are the norm, they are not the only type of homeowners associations in existence.  A voluntary homeowners association is just that, an HOA where membership is voluntary.  But as a voluntary homeowners association, some members may believe that the association’s restrictive covenants are more of guidelines than rules, and that the HOA cannot enforce the restrictions within its declaration.  This article examines two cases from the Michigan Court of Appeals that discuss voluntary homeowners associations and whether they can enforce the restrictions with their declarations.

 

Is an Unincorporated Voluntary Homeowners Association a Legal Entity?

In Suttons Bay Yacht Village Condo Ass’n v Board of Representative of Port Sutton Community, unpublished per curiam opinion of the Court of Appeals, issued May 19, 2016 (Docket No. 325327), the Michigan Court of Appeals held that an unincorporated voluntary association had the authority to administer and enforce its restrictive covenants as a master homeowners association.  The Port Sutton Community was established pursuant to a declaration of covenants, conditions, and restrictions, and consisted of four separate condominium associations.  Under the declaration, the members of the Port Sutton Community could assign their rights, duties, and obligations under the declaration “to the condominium associations collectively.”  The declarant thereafter executed an assignment that provided:

Each Association shall appoint one voting representative to the informal Board of Representatives of the Port Sutton Community.  Each voting representative shall be entitled to cast the number of votes which represents the number of dwelling units within the Condominium represented by him/her; provided, that if no dwelling units have yet been completed in the Condominium represented, the voting representative shall be entitled to cast one vote.

In accordance with the assignment, an informal Board of Representatives was created and assumed responsibility for governing the Port Sutton Community, and all the four individual condominium associations approved their respective Board representatives to act on their behalf.

Suttons Bay Yacht Village Condominium Association, one of the condominium associations within the Port Sutton Community, filed a lawsuit against the Port Sutton Community and its Board of Representatives challenging the Board’s existence as a legal entity and its authority to take action under the declaration.  After reviewing past caselaw and statutes, the Court of Appeals determined that an unincorporated association is a legal entity.  Further, the assignment established (1) the Board’s intent to manage the rights and responsibilities of the four condominium associations, (2) the method for choosing the members of the Board and their votes, and (3) the four condominium associations approved the Board’s governance.  Therefore, the Port Sutton Community was an unincorporated voluntary association.

After determining that an unincorporated association is a legal entity and that the Port Sutton Community was an unincorporated voluntary association, the Court of Appeals held that the Board had the legal authority to take action on behalf of the Port Sutton Community.  Although the Port Sutton Community did not have a constitution, bylaws, articles of agreement, or rules governing its conduct, there was no legal requirement that an unincorporated association needed such documents to legally take action.  Moreover, the condominium associations and members approved resolutions authorizing the Port Sutton Community to act on their behalf.  Therefore, the Port Sutton Community was authorized by the assignment and the resolutions of its membership to take action.

 

Can a Voluntary Homeowners Association Enforce Its Deed Restrictions?

In Civic Ass’n of Hammond Lake Estates v Hammond Lake Estates No. 3 Lots 126-135, 271 Mich App 130; 721 NW2d 801 (2006), the Michigan Court of Appeals held that the Civic Association of Hammond Lake Estate (the “Civic Association”), a voluntary homeowners association, had standing to enforce the deed restrictions against the owners of the subdivisions within Hammond Lake Estates.  Hammond Lake Estates was a voluntary association comprised of eight subdivisions numbered 0 through 7, and approximately 109 to 120 of the 168 to 170 lots were members of the homeowners association.  Each of the eight subdivisions, except for Hammond Lake Estates No. 3, contained a deed restriction in its declaration that prohibited the owners from using motorboats on the lake.[1]  Despite the deed restriction, owners began to use motorboats on the lake, and the Civic Association filed a lawsuit against the offending owners.

The Michigan Court of Appeals held that the Civic Association, despite not owning any lot in the subdivisions, represented the interests of the owners and had standing to enforce the deed restriction that prohibited owners from using motorboats on the lake.  Although the Civic Association was a voluntary homeowners association, the vast majority of the owners in the subdivisions were members of the association.  Further, the Civic Association’s sole purpose was to represent the interests of its members.  Therefore, the Civic Association and its members had a sufficient and substantial interest in the common use and enjoyment of the lake to bring a lawsuit to enforce the deed restrictions: “To permit one set of lot owners to use the lake in a manner adverse to and inconsistent with the restrictions that apply to all the other properties adversely affects surrounding property owners, the majority of whom are members of the subdivision association.”  Accordingly, the Michigan Court of Appeals upheld the Civic Association’s enforcement of the deed restrictions that prohibited the owners from using motorboats on the lake.

 

Conclusion

As these cases show, a voluntary homeowners association can enforce restrictive covenants.  As such, members of a voluntary association should abide by the declaration and the homeowners association should enforce the declaration as if it were a mandatory homeowners association.  It is important to know that simply because an owner opts out of membership in a voluntary homeowners association, does not mean the owners is opting out of the restrictive covenants, as these are two distinct things.  In most cases, the restrictive covenants run with the land and an owner cannot opt out of compliance with the restrictive covenants, even if they can opt out of membership in the homeowners association.

Michael T. Pereira is an attorney with Hirzel Law, PLC and focuses his practice on community association law.  Mr. Pereira received his Bachelor of Arts in Political Science from the University of Michigan.  He then obtained his Juris Doctor degree from the University of Detroit Mercy School of Law, where he graduated second in his class and served as the Executive Editor of Outside Articles on the Detroit Mercy Law Review.  After law school, Mr. Pereira worked as a research attorney at the Michigan Court of Appeals before clerking for the Honorable Patrick M. Meter and the Honorable Anica Letica in the Michigan Court of Appeals.  Mr. Pereira can be reached at (248) 397-6596 or mpereira@hirzellaw.com.


[1] The Court of Appeals also held that the motorboat restriction also applied to Hammond Lake Estates No. 3 under the reciprocal negative easement doctrine because there was a common grantor, Hammond Lake Estates was developed pursuant to a general plan, and the deed restrictions contained restrictive covenants that ran with the land in accordance with the general plan in deed granted by the common grantor.

 

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