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REAL ESTATE 33: Lien against property for attorney fees under condominium’s bylaws.

Plaintiff owns Unit 233 at the Condominium complex. Defendant is its owners’ association. In June 2016, plaintiff proposed to lease Unit 233 to a tenant, and accordingly submitted a lease application to defendant for its approval. Under defendant’s bylaws, an owner must submit a lease application for defendant’s approval at least 10 days before entering into a lease agreement with a proposed tenant.

Defendant failed to respond to plaintiff’s application for 22 days, and, due at least in part to that delay, plaintiff’s proposed tenant decided not to rent Unit 233 from plaintiff. Plaintiff then rented the Unit 233 to another tenant without giving defendant advance notice. Defendant subsequently informed plaintiff that it would not approve the tenant’s lease and that plaintiff was in violation of defendant’s bylaws.

In July 2016, plaintiff filed a complaint in the small claims division of the 51st District Court seeking damages in the amount of $371 plus costs and fees. The complaint alleged that plaintiff lost 12 days of rent due to defendant’s failure to timely approve plaintiff’s original lease application.

Plaintiff and defendant mutually agreed to dismiss that case without costs.

Defendant then filed a lien against plaintiff’s property for attorney fees under defendant’s bylaws, which provides, in pertinent part:

In any proceeding arising because of an alleged default by a Co-owner, lessee, tenant, non-Co-owner resident and/or guest, the Association, if successful, shall be entitled to recover the costs of the proceeding and such reasonable attorney fees (not limited to statutory fees) as may be determined by the Court, but in no event shall any Co-owner be entitled to recover such attorney fees. The Association, if successful, also shall be entitled to recoup the costs and attorney’s fees incurred in defending any claim, counterclaim or other matter asserted against the Association from the Co-owner asserting the claim, counterclaim or other matter.

In October 2017, plaintiff filed the complaint in this case, seeking to enjoin defendant from foreclosing on its lien, and seeking a declaration that the lien was invalid. Plaintiff moved for summary disposition, contending that defendant’s bylaws was unenforceable because it conflicted with the provisions governing the recovery of attorney fees in the Michigan Condominium Act, MCL 559.101 et seq.

The trial court, however, granted summary disposition in favor of defendant under MCR 2.116(I)(2), holding that the Condominium Act did not conflict with defendant’s bylaws. The trial court subsequently denied plaintiff’s motion for reconsideration.

An entity’s bylaws are a contractual agreement between the entity and its members. Condominium association bylaws constitute a binding contractual agreement between the governing entity and its members to the extent that the bylaws do not conflict with or are not inconsistent with state law.

Plaintiff argues that, because the article of defendant’s bylaws at issue in this case allows for the recovery of attorney fees in situations other than those contemplated by MCL 559.206(b) and 559.207, they conflict with the Condominium Act. The court disagreed. It does not conflict with or contradict either of the cited statutory provisions; rather, it merely provides for the recovery of attorney fees by defendant in additional circumstances.

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