## Facts

- Property owners in a platted subdivision held lots subject to recorded deed restrictions that included an amendment clause allowing change by a three-fourths vote of owners.
- A defendant lot owner entered into arrangements to construct and operate a residential care facility (a state-licensed group residential facility) on a subdivision lot under the then-existing restrictions.
- After the defendant had committed to the project, other subdivision owners voted to amend the deed restrictions to prohibit use of any lot for a state-licensed group residential facility.
- Plaintiffs (other lot owners) sued to enforce the amended restriction and block the proposed facility.
- The trial court granted summary judgment to defendants, concluding the amendment was unenforceable on constitutional grounds because it discriminated against mentally disabled persons.
- Plaintiffs appealed; defendants cross-appealed regarding the trial court’s treatment of retroactivity and public policy.

## Issues

1. Whether an amendment clause in subdivision deed restrictions permits owners to adopt a more restrictive amendment banning group residential facilities.
2. Whether an amended deed restriction can be enforced against a lot owner who, before the amendment, committed to a land use that the amendment later prohibits.
3. Whether justified reliance and prejudice can bar enforcement of a post-commitment amendment against that owner.

## Decision

- The Michigan Court of Appeals affirmed summary judgment for defendants.
- The court held that, even assuming the amendment was otherwise valid, it could not be applied to the defendant because the defendant committed to the use before the amendment in justified reliance on the existing restrictions and would be prejudiced by retroactive application.
- The court treated the controlling basis as reliance/estoppel principles limiting enforcement of the amendment against this defendant rather than resolving the case on equal protection grounds.

## Legal Principles

- Subdivision deed restrictions may include an amendment mechanism authorizing owners to modify restrictions, including by adopting more restrictive provisions.
- An amended deed restriction does not apply to a lot owner who, before the amendment, committed to a land use the amendment seeks to prohibit if:
  - the owner justifiably relied on the pre-amendment restrictions without notice of an impending change; and
  - the owner would be prejudiced if the amendment were applied.
- Owners seeking to enforce an amendment may be estopped from applying it retroactively when enforcement would unfairly frustrate actions undertaken in reliance on existing restrictions.

## Conclusion

The court allowed the residential care facility to proceed because the post-commitment amendment to the subdivision restrictions could not be enforced against a lot owner who had already committed to the use in justified reliance on the prior restrictions and would suffer prejudice from retroactive application.


McMillan v. Iserman, 327 N.W.2d 559 (Mich. Ct. App. 1982)