Your New Build Up North Isn’t on a Lot. It’s a “Unit” — and One Five-Day Letter Decides Whether You Inherit the Seller’s Debts

Drive out past the Commons, or up North Long Lake Road, or through most of what has been built in Elmwood Township since the mid-2000s, and you will pass rows of ordinary single-family houses on what look like ordinary lots. Mailbox, driveway, attached garage, somebody’s kid’s bike in the grass.

A lot of them are legally condominiums.

Not the stacked-flat kind with a shared hallway. Michigan calls these site condominiums, and since the Legislature passed the Condominium Act in 1978 they have quietly become one of the standard ways to cut residential land into building sites in this state. If you bought new construction in a development up here in the last twenty years, there is a real chance you bought a condominium unit and nobody ever used that word out loud.

Two statutes, one identical-looking street

Michigan gives a developer two ways to turn a field into building sites.

Door one is the Land Division Act, the old Subdivision Control Act of 1967. You survey it, you plat it, it clears a state-level review process, and at the end you have lots. That is your classic platted subdivision.

Door two is the Condominium Act. The developer records a master deed, a set of condominium bylaws, and a condominium subdivision plan at the register of deeds, and the project exists. No state plat review. Faster, cheaper, and the developer keeps a lot more control over timing, which is exactly why so many projects up here went that route.

The two streets look the same from a car. The paperwork underneath them is not remotely the same, and almost nothing in a normal transaction forces anyone to explain the difference to you.What you actually own

In a platted subdivision you own a lot. In a site condominium you own a unit, and the boundaries of that unit are drawn on the condominium subdivision plan attached to the master deed.

Sometimes the unit is generously drawn. Sometimes it is barely bigger than the foundation. Everything between your walls and the unit line is often limited common element: yours exclusively, but technically common element, governed by the master deed rather than by you.

The road, the entrance island, the stormwater basin, the strip of woods along the back are general common elements, owned in common by every unit owner as an incident of ownership. Your taxes are still assessed separately on your unit and your mortgage is still a normal mortgage. From the road it is a house on a lot. On paper it is a unit in a project.

The five-day letter is the one that costs money

This is the part that turns into a real number, so I am putting it in bold.

Under MCL 559.211, a purchaser is entitled to a written statement from the association showing exactly what the seller owes: unpaid assessments, interest, late charges, fines, costs, and attorney fees. Get that statement, and you cannot be held liable for a dime more than the number on it.

Skip it, and the statute is blunt. Unless the purchaser requests that written statement at least five days before the sale, the purchaser is liable for any unpaid assessments against the unit, plus the interest, costs, fines, late charges, and attorney fees racked up trying to collect them.

Yes, the same statute says unpaid assessments are supposed to come out of the sale price ahead of everything except taxes and a first mortgage, and yes, title companies usually catch it. Usually is doing a lot of work in that sentence. The statute assigns the risk to you, and the fix is a five-day-old email. Ask for it in writing, every time, on every condominium purchase, including the ones that look like houses.The empty lots next door might not be lots anymore

Here is the one that is specific to Northern Michigan, and it is the reason this is worth twelve hundred words instead of a paragraph.

A condominium subdivision plan is supposed to label every unit either “must be built” or “need not be built.” Under MCL 559.167, a developer only gets a fixed window to actually build the ones that need not be built, historically ten years from commencement of construction. Miss the window without building or formally withdrawing the land, and under the pre-2016 version of the statute that undeveloped ground stays in the project as general common elements and the right to build on it ceases by operation of law. Automatically. No vote, no filing, no notice.

The Legislature amended Section 167 in 2016. Now the clock runs from the recording date, and reversion is not automatic; it takes an affirmative two-thirds vote of the co-owners plus notice to the developer.

So which version governs your project depends on when it started, and that ambiguity is why this keeps landing in front of judges: Cove Creek Condominium Association v Vistal Land & Home Development (330 Mich App 679, 2019), Elizabeth Trace Condominium Association v American Global Enterprises (340 Mich App 435, 2022), and this past November a Calhoun County judge held that 34 units in a 78-unit project had reverted back in 2014, because the master deed never labeled them as anything at all.

Now count how many developments around Grand Traverse, Leelanau and Antrim counties recorded a master deed in 2004, 2005 or 2006, sold six units, and then met 2009. There are a lot of them, and some are still sitting half-finished behind a gravel stub road and a Phase II sign bleached white.

So the vacant ground beside your prospective house is one of three things: a future neighbor, permanent green space you now co-own, or somebody’s lawsuit. Those are wildly different purchases, and nothing on the MLS distinguishes them.

There is a budget consequence too. Phantom units on the books skew the assessment math, because the annual budget gets divided by units that will never send in a check.

You do not get to just build the shed

MCL 559.147 lets you do what you want inside the unit. It also says a co-owner shall not do anything that changes the exterior appearance of the unit or any other part of the project except as the condominium documents specifically allow.

Read that again with a Northern Michigan brain. The detached garage. The fence for the dog. The shed. The paint color. The tree you would like gone. In many site condos those are association decisions, not yours, and people move up here for approximately the opposite of that arrangement.

We see this collide with buyer expectations constantly, and it is entirely avoidable by reading the bylaws during inspection instead of after closing.The reserve number nobody checks

Michigan requires condominium associations to maintain a reserve fund, and the administrative rule sets a minimum contribution of 10% of the association’s current annual budget, non-cumulative. The rule also requires the bylaws to warn that 10% may not be enough, which tells you what the state itself thinks of 10%.

Where that bites up north: if the road is a general common element, the association owns the road. Repaving a mile of it, or fixing what frost heave did to it, comes out of reserves or out of a special assessment with your name on it. This is a first cousin to the private road math we have written about before, and it lands the same way in February.

And a word on why nobody flags any of this at the closing table: Fannie Mae waives full project review for detached condominium units, so your loan sails through. A waived review is not the same thing as a review that came back clean. It means nobody looked at the reserves, the litigation, or the unbuilt units. That is your job now.

The Master Deed Test

Four questions. Run them before your inspection contingency expires, not after.

1. Pull the documents yourself. Master deed, bylaws, and condominium subdivision plan, from the county register of deeds. Find your unit on the plan and see where the line actually falls. Your yard may not be your yard.

2. Request the written statement of unpaid assessments, in writing, more than five days before closing. It is free and it caps your exposure. There is no reason to skip it.

3. Look for undeveloped units on the plan. Are they labeled “must be built,” “need not be built,” or nothing at all? What year was the master deed recorded, and when did construction commence? Then ask the board what they believe happened to those units.

4. Ask who owns and maintains the road, and what is in reserves against it. Get the last two years of budgets and the current reserve balance. If the road is common element and the reserve is a rounding error, you have found your future special assessment.

Between us, Janel has been writing offers in this market for 25 years and I have spent plenty of hours in county records rooms chasing exactly these documents. None of this makes a site condominium a bad buy. Plenty of the nicest newer homes around Traverse City and out in Elmwood Township are units rather than lots, and their owners are perfectly happy. The problem is only ever the gap between what a buyer thinks they bought and what the recorded documents say they bought.

Close that gap before you sign and the whole thing is a non-issue.

If you are looking at new construction up here and want a second set of eyes on a master deed, or you just want to know whether the place you are touring this weekend is a lot or a unit, reach out. We pull these documents for clients all the time and we are glad to do it for you. Worth a look at what is currently on the market while you are at it.

Taylor Brown, Realtor
Taylor@taylorbrownrealtor.com