Detroit Condominium and Conversion Ordinances

By Paul Thursam, Giarmarco, Mullins & Horton PC and Nickolas Guttman, Wayne State Law School

With the urban real estate market reviving, attention may turn to two City of Detroit ordinances related to condominiums. One is the Detroit Condominium Conversion Ordinance 400-H, 1984 Detroit City Code § 26-6-1through § 26-6-13, which regulates conversion of rental units to condominiums and grants certain rights to tenants. A Wayne County Circuit Court decision declared the ordinance unconstitutional. Anderson v. Indian Village Manor, Wayne Co. No. 04 424661-CH (2006). However, the Conversion Ordinance remains within the City Code since the circuit court decision is, at best, persuasive and not binding precedent. The Conversion Ordinance was originally authorized by the Michigan Condominium Act which preempts all local ordinances giving certain rights to tenants of proposed condominium conversions unless the enacting city has more than one million people. MCL 559.241(2). Detroit was the only City with a population over one million when Michigan first adopted the Condominium Act, but the City has fewer inhabitants today. The ruling in Anderson and the City’s population decline suggest the Conversion Ordinance’s validity is in substantial doubt. As a comparison, MCL 141.503(2) authorizes the City of Detroit to levy a higher income tax than other municipalities. This statute has a similar population threshold which the Legislature reduced from 750,000 to 600,000 in 2011 so that the City could still levy the tax despite the population decline. The Legislature considered a similar amendment to the Condominium Act to reduce the threshold to 750,000 people, but its failure suggests the Legislature no longer intends this Section to be effective.

Also of note: developers of new condominium projects should review the amendments to the Detroit Zoning Ordinance, Chapter 61-Article III, imposing certain document and approval requirements for new construction condominium projects.

Paul Thursam

Nickolas Guttman