Michigan Court of Appeals Issues Important Opinion Concerning Reversion of Undeveloped Condominium Units to General Common Elements
On September 17, 2025, the Michigan Court of Appeals issued an unpublished Opinion in the matter of Charter Twp of Fenton v Fenton Orchards Condo Ass’n, unpublished per curiam opinion of the Court of Appeals, issued September 17, 2025 (Docket No. 370733) addressing the reversion of undeveloped condominium units under the 2002 version of MCL 559.167. The Michigan Court of Appeals affirmed the trial court’s ruling that several unbuilt units in the Fenton Orchards Condominium Project (the “Condominium Project”) reverted to general common elements by operation of law after the developer failed to withdraw them within the statutory timeframe. The case provides important guidance to condominium associations, developers, and municipalities regarding the reversion process and what qualifies as a “developed” unit under the statute.
Factual Background
The developer established the Condominium Project in 2000 with 52 units, each of which were “traditional” attached condominium units. In 2003, the developer amended the master deed to add an additional 14 units, which apparently were intended to be “site” condominium units for single family detached homes. The developer completed and sold a number of units to third party purchasers, but 28 units in the Condominium Project were never completed (the “Undeveloped Units”). According to the Charter Township of Fenton (the “Township”), the developer went out of business and stopped paying property taxes on the Undeveloped Units between 2007 and 2009.
Following property tax foreclosure, the Genesee County Treasurer transferred title to the Undeveloped Units to the Township in accordance with the Michigan General Property Tax Act. In 2022, after learning that the Township planned to sell the Undeveloped Units to a new developer, the condominium association recorded an amendment to the master deed asserting that ownership of the Undeveloped Units reverted to general common elements pursuant to the 2002 version of MCL 559.167. The Township responded by suing the association, seeking a declaratory judgment that it held valid title to the Undeveloped Units, and seeking monetary damages for slander of title and tortious interference.
The trial court granted summary disposition in favor of the condominium association, holding that the Undeveloped Units had reverted to general common elements pursuant to MCL 559.167 and that the Township had no further ownership interest or right to develop the Undeveloped Units. The Township appealed and the Court of Appeals affirmed on all counts.
The Proper Designation of Units on the Condominium Subdivision Plan
One of the critical issues for the Court to decide in Fenton Orchards concerned the proper designation of the Undeveloped Units as either “must be built” or “need not be built” on the condominium subdivision plan. Under MCL 559.166(2)(j), a condominium subdivision plan must include a designation of “any proposed structure and improvement” as either “must be built” or “need not be built”. Although Michigan law requires all units to be designated as either “must be built” or “need not be built”, it is not uncommon for developers to neglect to do this and to leave units without any designation.
In analyzing this issue, the Court focused on the fact that MCL 559.167 allows a developer to “withdraw from the project all undeveloped portions of the project not identified as ‘must be built’.” The Court further held that, in this case, the Undeveloped Units were not designated as “must be built,” were never built, and were not timely withdrawn from the Condominium Project. Accordingly, Fenton Orchards stands for the position that if no designation of either “must be built” or “need not be built” is given on the condominium subdivision plan, any such undeveloped units will be subject to reversion under MCL 559.167 if not withdrawn within the required timeframe.
Applicability of MCL 559.167 to “Site” Condominiums
A second important issue addressed by the Court in Fenton Orchards was the applicability of MCL 559.167 to “site” condominiums. While “site” condominium is not a legal term that is defined by the Michigan Condominium Act, the phrase is generally used to refer to condominium units in which the “unit” is a “building site” typically used for construction of detached single-family homes. This differs from “traditional” attached condominiums in which the “unit” is typically described as air space within a building, the structural elements of which are typically designated as common elements.
The Township argued that certain of the Undeveloped Units were not subject to reversion under MCL 559.167 because they were “site” condominium units, which the Township claimed were “developed” upon recordation of the master deed. The condominium association argued that all units in the Condominium Project should be considered “traditional” units since the condominium documents were drafted in a manner that reflected an “attached” condominium project as opposed to a site condominium. The Court agreed with the condominium association and held: “Defendant convincingly points out the fallacy of plaintiff’s arguments by discussing how hypothetical site condominium owners could not coexist with the other traditional condominium owners under the plain language of the master deed and bylaws.”
What Constituted a “Developed” Unit?
Finally, the Court provided guidance on what is considered a “developed” unit for purposes of the application of MCL 559.167. The Township argued that infrastructure work, including roads and utilities, were installed and therefore rendered the “site” condominium units as “developed” which would therefore avoid the reversion of said units to general common elements under MCL 559.167. The Court rejected this argument, despite the fact that roads and utilities were allegedly installed to service the undeveloped “site” condominium units.
Relying on Elizabeth Trace Condo Ass’n v American Global Enterprises, Inc, 340 Mich App 435, 446; 986 NW2d 412 (2022), the Court held that construction of common elements such as roads and water systems is insufficient to classify a unit as “developed” for purposes of MCL 559.167. Additionally, the Township presented no admissible evidence (such as affidavits or photographs) proving that the infrastructure had actually been completed. The only references were statements by the Township’s attorney, which the Court disregarded.
Conclusion
In closing, the Fenton Orchards case provides helpful guidance on two issues that regularly arise in relation to the reversion of undeveloped units to general common elements. First, if a developer fails to designate units as either “must be built” or “need not be built” on the condominium subdivision plan, these units will be subject to reversion if they are not developed or withdrawn from the condominium project within the required timeframe. Second, if a developer is seeking to create a unique condominium project that consists of a hybrid of structure traditional “attached” condominium units and “site” condominium units for single family detached homes, the developer must carefully draft the master deed to account for this structure. Third, construction of infrastructure, such as roads and utilities, is not enough to constitute “development” of units in a condominium project.
The Fenton Orchards decision serves as a cautionary tale for municipalities, developers, and condominium associations in older condominium projects. The Court’s firm application of the 2002 version of MCL 559.167 underscores that undeveloped units cannot linger indefinitely. Once the statutory window closes, the right to construct and develop those units permanently ceases, and the land reverts to general common elements. When the statutory deadline passes, condominium associations may act to clear possible issues in the chain of title by recording affidavits or master deed amendments confirming the status of undeveloped units that have reverted to general common elements. Additionally, municipalities and successor developers acquiring title to undeveloped units through tax foreclosure must proceed cautiously and should perform proper due diligence before purchasing or attempting to sell said units.
Brandan A. Hallaq is a Member of Hirzel Law, PLC where he litigates cases involving defective construction, contract disputes, shareholder/member disputes, quiet title actions to determine interests in property, enforcement of restrictive covenants, real estate foreclosure actions, and bankruptcy matters representing creditors. Mr. Hallaq is also a licensed Real Estate Broker in the State of Michigan and leads the real estate transactions department at Hirzel Law, PLC where he negotiates and prepares the necessary documents for business and real estate transactions, including purchase agreements, loan/financing documents, and commercial and residential leases and mortgages. In each year from 2018 through 2024, he has been recognized as a Rising Star in the area of real estate law by Super Lawyers Magazine, a designation that is given to no more than 2.5% of the attorneys in the State of Michigan each year. In the years 2021 through 2025, he has been recognized in the Best Lawyers in America: “Ones to Watch” list for professional excellence in categories including construction law, real estate law, and real estate litigation. He was also recognized as a 2020 Up & Coming Lawyer by Michigan Lawyer’s Weekly, an award given to no more than 30 attorneys in the state each year. Mr. Hallaq obtained his Juris Doctor degree, cum laude, from Wayne State University Law School where he served as an editor on the Wayne Law Review. Prior to joining Hirzel Law, PLC, Mr. Hallaq worked for a Federal Judge and in a Fortune 500 corporation’s in-house legal department. He can be reached at (248) 986-2290 or at bhallaq@hirzellaw.com.
