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No Common Area Construction
by Ron Davis

Owners of a Michigan shopping center have forced a tenant to abandon plans calling for the center’s configuration.

The shopping center, located in the Calhoun area of the state, is governed by a “declaration of property assignment.” A problem arose when the tenant decided to expand but, in doing so, would challenge the declaration.

The tenant’s reason for wanting that configuration change is to allow construction of a building that would house a restaurant. The center’s owners refused to agree with those plans. In response the tenant sued, explaining that the court must give consent to the expansion plan. That’s because, added the tenant, the center’s owners do not possess a “good-faith basis” for denying their consent.

Michigan law, however, supports “the right of property owners to create and enforce covenants affecting their own property.” Generally, restrictive covenants “are to be strictly constructed against the would-be enforcer…and in favor of the free use of property.”

But where the covenant is unambiguous, the general rule does not apply. In this case, then, the granting in favor of the center’s owners might not be proper. That of course mostly depends on the circumstances. In most such situation, the property owner has the right to refuse consent to the proposed creation of a change in configuration.

In such a situation as this one involving such a change, the solution seemed inevitable. The law states that no building, (such as proposed in this case), “may be built on any part of the common areas without the prior written approval of the owner.”

Because the center owner chose not to give that approval, there is nothing in the declaration that conditions a right to refuse consent or requires a good-faith basis for such an approval.

At a subsequent trial, the judge stated, “Where there is no ambiguity, as here, the covenant is enforced as written with no regard given to this general rule of construction.”

Finally, the judge issued an opinion regarding the tenant’s last-ditch efforts to win the argument:

“The request is for the creation of improvements, rather than a request to conduct construction in the existing outlot.

“The shopping center will not withhold its consent for construction of improvements...only if the planned improvements are compatible with the businesses conducted in the shopping center and attractive to customers and retail trade.”

(LSPV MINGES LLC. v. MCM II LLC, Docket no 327016, July 18, 2016)

Decision: August 2016
Published: August 2016



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