A homeowners association (HOA), through its bylaws, mandated preapproval of all new development by an architectural control committee, created additional building standards, and required submission of a fee for all plans. Property owners, who were seeking to build more homes, sued the HOA in an effort to invalidate these new requirements. In Conlin v. Upton, 313 Mich. App. 243 (2015), the Court of Appeals confirmed that HOA bylaws which purport to “interpret” a restrictive covenant will not be enforced if they amount to an additional burden on the land.
Property owners argued the HOA used the procedural mechanism of its bylaws, which required only approval of the majority of the owners, to improperly institute additional restrictive covenants on the neighborhood. Under Michigan common law, restrictive covenants require unanimous owner approval.
Not surprisingly, the HOA claimed the bylaws did not contain new restrictions, but were merely an interpretation of the existing covenants or an extension of express powers granted to it.
The court held that the original restrictive covenant that all plans be “in harmony with the development” could not be interpreted or extended by the HOA into a mandated, detailed set of building criteria not contemplated by the original covenants. Allowing this, the court reasoned, would effectively circumscribe the discretion of the developer or his assign, which discretion was clearly contemplated by the original covenants.
Practice Tip for Those Representing HOAs: While it is an accepted and common practice for HOAs to approve bylaws or other rules for covenant interpretation, this case warns that bylaws creating new obligations which go beyond the scope of existing restrictive covenants may prove to be unenforceable.
