Can an HOA’s Deed Restrictions Block a Developer’s Plan to Build Homes on a Former Golf Course?
Disputes over the interpretation and application of deed restrictions are often challenging for condominium and homeowners associations to navigate. These restrictions can work to prevent future development on land that is inconsistent with its intended use. However, the key to ensuring restrictive covenants are enforceable rests on clear and unambiguous drafting. In A2C2 Pship, LLC v Loch Alpine Improvement Ass’n, unpublished per curiam opinion of the Court of Appeals, issued May 21, 2025 (Docket No. 367820), 2025 WL 1463786, the Michigan Court of Appeals considered whether a developer was prohibited from developing lots within a subdivision for residential use on a former golf course. The trial court found that the developer was restricted from developing lots within the subdivision for residential use. On appeal, the Michigan Court of Appeals affirmed this ruling, finding that there was no error by the trial court in allowing the jury to determine the proper interpretation of the deed restriction and that there was no abuse of discretion in denying the developer’s motion for a new trial. As discussed below, this case identifies how courts will evaluate deed restrictions and what considerations community associations should contemplate when amending restrictive covenants.
Facts
The Loch Alpine Improvement Association administered the affairs of a subdivision in Washtenaw County that included lots on which a golf course and country club were built. These “golf lots” were the subject of two restriction agreements related to residential use on these lots. The first restriction agreement was adopted in 1957 and granted the owners of lots within the subdivision an option to purchase the golf lots, and if this option was not exercised by the owners, then the golf lots could be used for residential purposes. In 1975, a second restriction agreement was recorded, which set aside the 1957 agreement. The second agreement included requirements for the kind of residences that could be built on the lots within the subdivision, but also stated that the golf lots could only be used for the operation of a private or semi-public golf course, or for park or recreational purposes.
In 2013, A2C2 acquired ownership of the country club and operated it until 2015, when it permanently closed. Following the country club’s closure, A2C2 sought permission from the Association’s Architectural Control Committee and Board of Directors to redevelop the golf lots for residential use. The Association denied A2C2’s request to approve its plan for residential development on the golf lots, maintaining that the 1975 agreement required these lots to be used only as a golf course.
A2C2 filed a lawsuit against the Association following its denial, seeking a declaration from the court that the golf lots could be used for residential purposes under the 1975 agreement. The Association counterclaimed, seeking a declaration from the court that the 1975 agreement limited the use of the golf lots to a golf course or other recreational purposes. Both parties filed competing motions for summary judgment, and judgment was granted in A2C2’s favor. The Association appealed, and the Court of Appeals vacated the trial court’s order and remanded the case to the trial court. Before trial, A2C2 bought a motion to have the case heard by a judge alone rather than a jury. This motion was denied, and the case was tried before a jury. The jury found in favor of the Association, finding that the 1975 agreement prevented residential development on the golf lots. A2C2 appealed.
Ambiguous Deed Restrictions Present a Question of Fact to be Decided by a Jury
On appeal, A2C2 contended that the trial court erred in denying its motion for a judge-only trial because the lawsuit concerned claims that were equitable in nature and only within the authority of a judge to decide. While the Court held that there was a request for declaratory relief, it was the interpretation of the 1975 agreement that needed to be decided, and this was properly before the jury. Specifically, the Court of Appeals determined that because the provisions of the 1975 agreement were ambiguous and contained internal inconsistencies, the contractual language presented a question of fact that could be decided by a jury. The Court of Appeals found that it was permissible for a jury to decide the meaning and application of the deed restriction, even though the interpretation of deed restrictions is often a matter of law for the court to decide.
The Court of Appeals rules that Residential Use and Development on the Golf Course Lots is not permitted under the Restrictive Covenants
A2C2 alleged that the trial court not only wrongfully denied its motion for the case to be decided by a judge alone, but also that the trial court abused its discretion because the verdict was against the great weight of the evidence. The Court of Appeals disagreed.
The Court of Appeals held that ambiguous contractual language presents a question of fact that can be decided by a jury. The Court further held that the trial court did not abuse its discretion on the basis that the jury’s verdict was against the great weight of the evidence.
In coming to its decision, the Court of Appeals held that substantial deference must be given to a jury’s decision. The Court found that there was nothing within the evidence presented at trial that would have made it unjust for the jury to find in favor of the Association. The jury examined evidence presented by both parties that related to the intention at the time the restriction agreement was drafted and the apparent purpose behind the restriction agreement. In doing so, the jury was free to make a factual determination as to the meaning behind the restriction agreement. The Court of Appeals held that although there was evidence presented that conflicted with a portion of the 1975 restriction agreement that appeared to contemplate residential development on the golf lots, the jury was not precluded from finding that residential development was prohibited in light of the other evidence presented.
The Court further noted that despite public policy favoring the free use of real property, parties are free to enter into contracts that contain deed restrictions that preserve a neighborhood’s character, and these restrictions will generally be enforced. As a result, the Court concluded that a jury was permitted to interpret the meaning of the deed restriction, and the evidence the jury considered in making its decision did not weigh so heavily against the verdict that it would be a miscarriage of justice to allow it to stand.
Best Tips for Homeowners Associations to Ensure Restrictive Covenants are Enforceable
The Court of Appeals’ decision in A2C2 Pship, LLC v Loch Alpine Improvement Ass’n, unpublished per curiam opinion of the Court of Appeals, issued May 21, 2025 (Docket No. 367820), 2025 WL 1463786, p *2, underscores the importance for community associations to make sure their deed restrictions and restrictive covenants are carefully and clearly drafted. While the homeowners association was successful in enforcing the deed restrictions in this case to prevent the residential development of the golf lots, the opposite result could have occurred based on the ambiguous language and internal inconsistencies within the restriction agreement.
- Consult with an experienced Community Association Attorney. If your homeowners associations is faced with a situation in which a declarant or developer is trying to re-develop a golf course, or otherwise has questions as to whether a property is subject to a commercial use or residential use restriction in the restrictive covenants , getting a formal opinion from an experienced community association attorney is crucial.
- Adopt clear and unambiguous deed restrictions. It is best practice for community associations to clearly state what is prohibited within a subdivision to ensure enforcement is consistent with the intention and purpose behind these restrictions. Ambiguous terms can lead to costly litigation, and the restrictive covenants should be amended if they are unclear.
Need Help Understanding Restrictive Covenants?
If you’re uncertain about the restrictive covenants within your Michigan condominium or homeowners associations, contact Hirzel Law. Our experienced community association lawyers can assist you in drafting, interpreting, and enforcing restrictive covenants within your communities. If your condominium association or HOA needs assistance, our firm is here to help!
Erika DiLoreto obtained her Bachelor of Arts degree with an honors specialization in Criminology with Distinction from the University of Western Ontario in 2019. She then went on to obtain her Master of Arts degree in Sociology from Carleton University in 2022. She continued her academic journey at the University of Detroit Mercy School of Law and the University of Windsor School of Law, where she pursued her Dual Juris Doctorate (J.D) degree and graduated Cum Laude in 2024. During her time in law school, Ms. DiLoreto was actively engaged in various roles and responsibilities. She volunteered with community-based clinics on both sides of the border, assisting individuals with various legal matters. Ms. DiLoreto also served as a judicial extern for the Honorable Matthew F. Leitman in the United States District Court for the Eastern District of Michigan. Following law school, Ms. DiLoreto completed her articles at Brown Beattie O’Donovan in London, Ontario, Canada, where she handled litigation matters involving construction, employment, and real estate disputes, as well as landlord and tenant matters. Following the completion of her articles, Ms. DiLoreto was called to the bar in Ontario and is now a dually licensed attorney in both the Province of Ontario and the State of Michigan. Ms. DiLoreto is dedicated to assisting individuals with legal matters and committed to working hard for her clients. She may be reached at (248) 986-2290 or ediloreto@hirzellaw.com.
