Venue and Michigan Case Law on Amendment of CC&Rs

2008 November 23
Initial post: 2009 Apr 07. Click History for a list of changes and updates.

__The continuation of this post is an email to MOA Board Director Jay Welter concerning the board's proposal to seek an amendment to the Declaration of Covenants, Conditions and Restrictions ("DMCCR") defining venue for all purposes to be the courts in Otsego County. The reason for considering the amendment is a companion decision of the board to pursue collection of unpaid dues and special assessments in small claims court in Otsego County.

__Two significant questions are involved: (1) the requirements for amending the DMCCR for a new provision; and (2) whether or not third parties can change a resident's right of Michigan law that the venue for lawsuits is the county of the defendant (owner) for personal debt. Consequently, the amendment would affect venue only for owners of restricted property in Michaywé who are residents of another county or state. The effect of the amendment is to transfer the inconvenience of which court from MOA to the individual non-Otsego County resident.

__The analysis indicates that unanimous approval for such an amendment would likely be required to effect a redefinition of venue for litigation against an individual owner. To respect the rights of owners/members, the board should ensure that the proposed action is unquestionably valid under the law and governing documents.

Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain. ------------------------------------------------------------------------------------------------------

• Key Words:_ Attorney Issues; Governing Documents,; Members' Rights venue; amendment; governing documents; CC and Rs; Covenants Conditions and Restrictions; restrictive covenants

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Venue and Michigan Case Law on Amendment of CC&Rs (continued)

____ From:_ Don Nordeen
_____Date:_ 2008 November 23 06:37:53 EST
______ To:_ Todd Chwatun (for making copy for Director Jay Welter)
__ Subject:_ [Venue and] Michigan Case on Amendment of CC&Rs

Dear Jay,

__Per our discussion, I am attaching Ardmore Park v Simon which states that an amendment must be approved by a majority of all owners to be binding on all owners. Other states have similar court rulings. My understanding of the reasoning is that, since restrictive covenants are a valuable property right, an amendment should not be able to be imposed by a few on the many through a lesser amendment requirement in the CC&Rs. Amend means to fix, correct, adjust, refine, etc. not a fundamental change.

__While the proposed amendment concerning venue may contain only a few sentences, it appears to be a fundamental change because it proposes to replace a section of the statutory law with amendment to the CC&Rs. There is no provision concerning venue in the current CC&Rs. Courts have ruled that a fundamental change requires approval of all owners because a fundamental is treated as a new covenant. While the venue change is an amendment to an existing CC&R, it is a fundamental change because it is new. There is something fundamentally wrong with a group of people being able to negate part of the law and impose the change on still other people, let alone a majority of other people. The applicable sections of the RJA are highlighted in color, and are Sections 600.1605 and Sec. 600.1621. You will also find that the case law requires amendments to be prospective, not retrospective. The Lake Isabella case, which refers to Ardmore Park, discusses this question and describes the negation of rights if amendments were applied retrospectively. The prospective application is a protection for the owners. Debts incurred in the past are likely governed by the past.

__All of the above should have been part of a competent legal analysis in my view. I believe members are entitled to review legal opinions that affect their rights. What is the harm? What is being covered up? The board's policy only allows withholding release if release would cause material harm to the Association.

__Does the board have an obligation to protect the rights of owners/members? Should the board have the obligation of the burden of proof. Because owners who are delinquent in their dues, is the board no longer obligated to protect their rights?

Don Nordeen
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REVISED JUDICATURE ACT OF 1961 (EXCERPT) Act 236 of 1961 CHAPTER 16 VENUE

600.1601 Venue.
__Sec. 1601. The provisions of this chapter relate to venue and are not jurisdictional.
__History: 1961, Act 236, Eff. Jan. 1, 1963. 600.1605 Venue; real actions; replevin. #600.1605
__Sec. 1605. The county in which the subject of action, or any part thereof, is situated, is a proper county in which to commence and try the following actions:
__(a) the recovery of real property, or of an estate or interests therein, or for the determination in any form of such right or interest;
__(b) the partition of real property;
__(c) the foreclosure of all liens or mortgages on real property; and
__(d) the recovery of tangible personal property.
__History: 1961, Act 236, Eff. Jan. 1, 1963. 600.1611 Venue; action on probate bond.
__Sec. 1611. The county in which a probate bond is filed is a proper county in which to commence and try actions upon the bond.
__History: 1961, Act 236, Eff. Jan. 1, 1963. 600.1615 Venue; actions against governmental units.
__Sec. 1615. Any county in which any governmental unit, including but not limited to a public, municipal, quasi-municipal, or governmental corporation, unincorporated board, public body, or political subdivision, exercises or may exercise its governmental authority is the proper county in which to commence and try actions against such governmental units, except that if the cause of action arose in the county of the principal office of such governmental unit, that county is the proper county in which to commence and try actions against such governmental units.
__History: 1961, Act 236, Eff. Jan. 1, 1963. 600.1621 Venue; determination; exceptions. #600.1621
__Sec. 1621. Except for actions provided for in sections 1605, 1611, 1615, and 1629, venue is determined as follows:
__(a) The county in which a defendant resides, has a place of business, or conducts business, or in which the registered office of a defendant corporation is located, is a proper county in which to commence and try an action
__(b) If none of the defendants meet 1 or more of the criteria in subdivision (a), the county in which a plaintiff resides or has a place of business, or in which the registered office of a plaintiff corporation is located, is a proper county in which to commence and try an action.
__(c) An action against a fiduciary appointed by court order shall be commenced in the county in which the fiduciary was appointed.
__History: 1961, Act 236, Eff. Jan. 1, 1963;3/4Am. 1969, Act 333, Imd. Eff. Nov. 4, 1969;3/4Am. 1974, Act 52, Imd. Eff. Mar. 26, 1974 ;3/4Am. 1976, Act 375, Eff. Jan. 1, 1977;3/4Am. 1986, Act 178, Eff. Oct. 1, 1986;3/4Am. 1995, Act 161, Eff. Mar. 28, 1996.

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