Background
Blue Harbor Resort in downtown Sheboygan opened in 2004 as part of a city redevelopment project combining a hotel, convention center, and water park with 64 condominium units. From the outset, the property was designated R-1 Transient Residential under Sheboygan’s building code—a classification for occupancies “primarily transient in nature (less than 30 days).” The condominium declaration and a related Amended Restrictive Covenant each contained an explicit 29-day continuous-occupancy restriction, tying the time limit to the city’s building code and the resort’s investment-oriented purpose. Every unit owner received and agreed to these documents before purchasing.
By 2021, some unit owners had grown frustrated: rental income had fallen short of projections and resale values had dropped. A Board majority, without taking a unit-owner vote, asked Sheboygan’s Redevelopment Authority to waive the 29-day restriction. The Authority voted 6–0 to authorize staff to “modify any necessary documents” to accomplish the waiver—but no documents were ever actually amended. Shortly after, a new Board majority took over and announced it would resume enforcing the restriction. Several unit owners responded by filing suit in Sheboygan County Circuit Court seeking a declaration that the 29-day limit was either ambiguous, unreasonable, or nullified by the Redevelopment Authority’s vote.
The circuit court (Judge Rebecca L. Persick) granted summary and declaratory judgment for Blue Harbor. The unit owners appealed to the Court of Appeals, District II, raising three arguments: (1) the restriction is ambiguous because it is tied to the Building Code; (2) a 29-day limit is so unreasonable it cannot be enforced; and (3) the Redevelopment Authority’s 2021 vote legally removed the restriction regardless of the absence of any written amendment.
The Court’s Holding
Writing for a three-judge panel, Judge Lazar affirmed on all points. On ambiguity, the court applied the established Wisconsin rule that a restriction is ambiguous only if it is “fairly susceptible to more than one reasonable interpretation.” The 29-day occupancy limit, the court held, meets no such standard—it means exactly what it says. The fact that the restriction references the Building Code as its source does not create ambiguity; the Code reference “merely offers an explanation for the precise timeframe.” The unit owners’ own conduct confirmed they understood the restriction: in 2021 they petitioned the Redevelopment Authority to waive it rather than arguing it did not apply, and they hired an architect specifically to study converting the units from R-1 to R-2 occupancy.
On reasonableness, the court noted that under Wisconsin law a clear and unambiguous restriction need not independently satisfy a reasonableness test to be enforceable. Even assuming it could be reviewed, the restriction is reasonable: “The Blue Harbor restriction…serves a just purpose and protects the legitimate interests of the other unit owners who, eyes wide open, decided to purchase condominium units in a resort complex that, from its inception, sought to encourage visitor renters.” Investment disappointment—lower-than-expected rents and falling resale prices—is not a legal basis to void a contract term freely agreed to at purchase.
On the Redevelopment Authority’s vote, the court held that a governmental body’s resolution has no legal effect unless the restriction’s formal amendment procedure is fully executed. The Declaration required the agreement of five parties—the city, the Authority, the managing agent, the condominium lender, and holders of at least 80 percent of unit votes—plus each mortgagee’s written consent. The Amended Restrictive Covenant required a written amendment signed by the city, the Authority, and Blue Harbor. Neither set of requirements was met. As the court put it, “intentions do not alter legal documents when written amendments are required.”
Key Takeaways
- A resort condominium’s time-limited occupancy restriction is fully enforceable as written when its language is clear and unit owners accepted it at purchase—even if they later believe the investment underperformed.
- Tying a restriction’s timeframe to a building code’s occupancy classification does not create ambiguity; the code reference explains the restriction’s origin and does not govern whether the restriction continues to apply.
- A governmental body’s vote to waive a recorded restrictive covenant is legally ineffective unless all parties required by the amendment provision actually execute a written amendment—a resolution instructing staff to “modify documents” is not itself an amendment.
- Wisconsin Statute § 703.10(1) requires strict compliance with condominium declarations; owners seeking to alter those documents must satisfy the amendment procedures in the declaration itself, not simply obtain a favorable board letter or agency resolution.
Why It Matters
Wisconsin’s resort communities—from Sheboygan and the Wisconsin Dells to Lake Geneva and the Door County peninsula—contain many condominium developments with similar transient-occupancy restrictions, often tied to R-1 building classifications approved at construction. Munnik provides clear authority that those restrictions are enforceable and that the path to changing them runs through the amendment procedures specified in the declaration itself, not through board resolutions, regulatory votes, or informal waivers. For buyers and sellers of resort-area condominium units, this decision underscores the importance of verifying not only whether an occupancy restriction exists in the declaration, but whether the property’s building-code classification would even permit the intended use.
For transactional counsel, Munnik is also a reminder that all required parties to an amendment must execute a writing. A governmental body’s vote authorizing staff to make changes—with no follow-through in signed documents—creates no legal effect, and the existing restriction continues to bind every unit owner. Practitioners who rely on a board letter or a municipal vote as evidence that a restriction has been removed do so at their clients’ peril.