Background
The dispute concerned 14 proposed units in the Richard Rowhouses condominium development. The master deed designated the units as “need not be built,” and construction commenced in March 2004. Bank of America acquired the units through foreclosure and later transferred its developer rights to Triple Properties Detroit, LLC. Triple purported to sell the units to PCJ Investments, LLC in 2019, but the units had not been completed or withdrawn from the condominium project within 10 years after construction began.
PCJ sued to quiet title, and Triple filed a cross-claim against the condominium association. The circuit court ruled that the units had reverted by operation of law to the project’s general common elements in 2014 under the former version of MCL 559.167(3). PCJ and Triple later placed a settlement on the record under which Triple would pay PCJ $1 million in two installments. Triple subsequently disputed whether payment depended on the association recording its ownership interest and appealed orders concerning both the property dispute and enforcement of the settlement.
The Court’s Holding
The Court of Appeals first held that it had jurisdiction. The June 10, 2024 order dismissed the action with prejudice and resolved all claims, even though the circuit court retained limited jurisdiction to enforce the settlement and later released the second payment from escrow. That later disbursement order did not further adjudicate the parties’ claims.
On the merits, the court held that the unfinished units automatically became general common elements in 2014 under the version of MCL 559.167(3) then in effect. Partial construction did not prevent reversion because that version required completion within 10 years unless the undeveloped portions were timely withdrawn. A proposed amendment to the master deed did not reinstate the units because it was never recorded, and the association’s conduct did not support equitable estoppel. The court also rejected Triple’s constitutional challenge, following binding precedent holding that the statutory lapse resulted from the owner’s failure to act within the statutory period and did not violate due process or effect an unconstitutional taking.
The court further held that PCJ and Triple formed an enforceable settlement agreement when the complete terms were stated and accepted in open court. Recording a deed or other document reflecting the association’s ownership was not a condition precedent to Triple’s payment obligations. Triple’s later refusal to sign the written memorialization amounted to a change of heart and did not defeat the settlement, so the circuit court properly required both $500,000 payments and entered the written agreement without Triple’s signature.
Key Takeaways
- Under the applicable former version of MCL 559.167(3), “need not be built” condominium units reverted to the general common elements when they remained incomplete and were not withdrawn within 10 years after construction commenced.
- An amendment to a recorded condominium document is ineffective until recorded, even if the required co-owner vote has occurred.
- A settlement stated and accepted in open court is binding under MCR 2.507(G), and a party cannot avoid it through a later change of position or refusal to sign a written memorialization.
Why It Matters
The decision reinforces the consequences of the former Michigan condominium-reversion statute for developers and successors holding unfinished “need not be built” units. Partial work, the absence of a recorded replat, and informal conduct recognizing a purported owner do not prevent an automatic statutory reversion when construction was not completed and the property was not timely withdrawn.
It also underscores that attorneys and authorized representatives should treat settlement terms placed on the record as final. Courts may enforce those terms and enter a conforming written agreement despite a party’s later refusal to sign.