Michigan condominium associations and co-owners should be aware that the Michigan Condominium Act, MCL 559.101, et seq., contains a specific procedure that allows for condominium units to be divided. A single co-owner may purchase a large site condominium unit and later decide to divide the lot into two separate units. However, condominium associations should be aware that an amendment to a master deed that subdivides a condominium unit is not subject to the traditional requirements contained in MCL 559.190 and MCL 559.190a. As will be set forth below, MCL 559.149 provides a special procedure for amending a master deed to subdivide a condominium unit.
Does the master deed permit a condominium unit to be divided?
A condominium unit cannot be divided unless the master deed or condominium bylaws expressly allow the division of condominium units. Specifically, MCL 559.149(1) provides as follows:
If the condominium documents expressly permit the subdivision of any condominium units, then the condominium units may be subdivided in accordance with this section and any restrictions not otherwise unlawful which the condominium documents may specify. A condominium unit shall not be subdivided unless the condominium documents expressly permit it.
Accordingly, if the master deed or condominium bylaws do not expressly permit a condominium unit to be subdivided, the master deed must be amended under MCL 559.190, with 2/3 co-owner approval, to include a provision that expressly allows for condominium units to be divided.
Who approves the amendment to the master deed to subdivide condominium units?
Unlike a traditional amendment to the condominium documents that requires 2/3 co-owner approval, an amendment to the master deed that subdivides a condominium unit is approved by the principal offer of the condominium association, which is typically the president. MCL 559.149(2) provides as follows:
If the co-owner of a condominium unit which may be subdivided desires to subdivide the condominium unit, then the principal officer of the association of co-owners or other persons as the condominium documents specify, shall, upon written application of the co-owner, prepare and execute an amendment to the master deed duly subdividing the condominium unit pursuant to the condominium documents and this act.
What should be contained in amendment to the master deed that subdivides a condominium unit?
MCL 559.149(3) and (4) provide as follows with respect to the contents of an amendment to a Master Deed that subdivides a condominium unit:
(3) An amendment to the master deed shall assign new identifying numbers to the new condominium units created by the subdivision of a condominium unit and shall allocate to those condominium units, on a reasonable basis, all of the undivided interest in the common elements appertaining to the subdivided condominium unit. The new condominium units shall jointly share all rights, and shall be equally liable, jointly and severally for all obligations, with regard to any limited common elements assigned to the subdivided condominium unit except to the extent that an amendment shall provide that portions of any limited common element assigned to the subdivided condominium unit exclusively should be assigned to any, but less than all, of the new condominium units.
(4) An amendment to the bylaws shall allocate to the new condominium units, on a reasonable basis, the votes in the association of co-owners allocated to the subdivided condominium unit, and shall reflect a proportionate allocation to the new condominium units of the liability for expenses of administration and rights to receipts of administration formerly appertaining to the subdivided condominium unit.
Accordingly, when preparing an amendment to a master deed, the subdivided units will need to be assigned new unit numbers. The Administrative Rules to the Michigan Condominium Act, specifically R 559.408(a) states that “Each unit within a proposed condominium project shall be numbered consecutively, beginning with number 1, throughout the entire project.” Accordingly, one of the resulting units could keep the existing unit number and the other would need to be assigned a new unit number that would be the last numbered unit in the condominium.
Each unit would also have an undivided interest in the general common elements as set forth in the Master Deed and MCL 559.137. The amendment that subdivides a unit should also specify how any limited common elements from the original unit are assigned. By way of example, if the original unit only had one limited common element parking space, it is unlikely that a co-owner would simply split the parking space in half. Rather, the parking space would be assigned to one of the resulting units as permitted under MCL 559.139.
Finally, any amendment to a master deed that subdivides a condominium unit must allocate the voting power of the subdivided condominium unit. See e.g. MCL 559.154(7) (“The bylaws may allocate to each condominium unit a number of votes in the association of co-owners proportionate to the percentage of value appertaining to each condominium unit, or an equal number of votes in the association of co-owners.”). Additionally, the amendment must reflect the financial responsibilities of the resulting units to pay assessments. See e.g. MCL 559.169.
Conclusion
The Michigan Condominium Act, MCL 559.101, et seq., provides a simple procedure for subdividing existing condominium units. However, given that a request to subdivide condominium units is not frequently encountered by many condominium associations, board members should be aware that the requirements under MCL 559.149 differ from a traditional amendment under MCL 559.190, and should engage counsel to ensure that any such amendment to the condominium documents is properly drafted.
Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2019, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel has been named a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine in 2018 and 2019, an award given to less than 5% of the attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or kevin@hirzellaw.com.