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REAL ESTATE 76: The trial court held that the First Amendment violated the Master Deed.

This case concerns a condominium project, its governing documents, and attempted amendments thereto. The Master Deed provides that a Co-owner may lease his Unit and the Developer may lease any number of Units in the Condominium in its discretion without approval by the Association and the Master Deed shall not be amended nor shall the provisions thereof be modified without the written consent of the Developer.

Amendment to Bylaws

In 2018, the Association voted on a proposed First Amendment to the Master Deed that would amend Section 2 of the Bylaws to provide, in relevant part, A Co-owner may only lease a Unit if the Co-owner has obtained the Board of Director’s prior written approval.

The First Amendment was ratified by the requisite two-thirds of Association voters and was recorded with the Wayne County Register of Deeds in October 2018. Plaintiff did not approve the First Amendment.

Developer Consent

Plaintiff sued defendant that month, alleging that at the time it made its purchase in 2013, it anticipated possibly building the 39 units to lease but that it now could not do so under the First Amendment to Section 2. That is, according to plaintiff, while it could still actually build the 39 units, doing so would be futile because it would be unable to lease more than one of them under the First Amendment.2 Plaintiff then filed this lawsuit, alleging in Count I that defendant breached the Master Deed by amending the Bylaws without its written consent and that it was damaged by the ongoing loss of anticipated lease revenue.

The parties filed competing motions for summary disposition.

Trial Court

The trial court held that the First Amendment violated the Master Deed because the Bylaws provided that the Developer may lease any number of Units in the Condominium, the Master Deed provides that the Master Deed may not be amended without the written consent of the Developer, and defendant purported to amend the Bylaws without obtaining the written consent of plaintiff.

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If you are facing a residential or commercial real estate, seek the advice of an experienced and skilled real estate litigation attorney at Aldrich Legal Services in Plymouth.

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