Facts
- Shanty Creek is a resort development in Antrim County, Michigan; the Valley View subdivision contains 56 residential lots subject to a recorded declaration of restrictions (1968, amended 1970).
- The restrictions limited each lot to “residential purposes,” “one single dwelling,” and “a single, private dwelling … occupied by not more than one (1) family, for residence purposes only,” plus a private garage.
- Resort Custom Builders, Inc. built a home on Lot 7 in Valley View and, after failing to sell it as a whole, adopted an “interval ownership” plan.
- The interval ownership declaration contemplated selling week-long occupancy intervals (up to 48 weeks per year, reserving four weeks for maintenance), granting each purchaser an undivided interest, and allowing participation in exchange programs to trade occupancy.
- Interval ownership was expressly authorized for certain condominiums elsewhere in the resort, but Valley View’s restrictions did not mention timesharing or interval ownership.
- Some Valley View homes were rented short-term, and some were jointly owned, but plaintiffs asserted the proposed interval scheme would change the subdivision’s residential character.
- Lot owners and the Shanty Creek Lodge Association sued to enjoin sales of interval interests as violating the restrictions; the trial court granted an injunction, the court of appeals reversed, and the Michigan Supreme Court granted review.
Issues
- Whether a timeshare-style interval ownership plan for a home violates restrictive covenants limiting each lot to a single private dwelling occupied by not more than one family for residential purposes.
- Whether the restrictions’ silence on timesharing permits interval ownership despite qualitative limits on use.
- Whether interval ownership is materially different from short-term rentals or ordinary joint ownership when evaluating compliance with single-family residential covenants.
Decision
- The Michigan Supreme Court reversed the court of appeals and reinstated the trial court’s injunction.
- The Court held the proposed interval ownership arrangement violated the Valley View restrictions limiting use to a single private dwelling occupied by not more than one family for residential purposes.
- The Court concluded the covenants restricted not only the structure but also the manner and pattern of occupancy, and the developer’s plan constituted a prohibited use.
- Injunctive relief was proper because the restrictions authorized lot owners to seek equitable enforcement to prevent violations.
Legal Principles
- Restrictive covenants are interpreted by their plain language to effectuate the intent expressed in the instrument; clear limitations defining a subdivision’s residential character are enforceable.
- Covenant language limiting a lot to a “single, private dwelling” occupied by “not more than one family” may impose qualitative limits on use and occupancy patterns, not merely on the physical building.
- A commercially structured interval ownership program involving numerous rotating owners and predictable high-turnover occupancy can be inconsistent with single-family residential covenants even if, at any given time, only one family occupies the dwelling.
- Silence in the covenants about timesharing does not negate an otherwise applicable single-family residential limitation; where drafters intended to permit interval ownership, they can do so expressly.
- Short-term rentals or ordinary co-ownership do not necessarily equate to timesharing; courts may treat timeshare-style arrangements as a distinct, more intensive use altering the subdivision’s residential character.
Conclusion
The court held that selling week-based interval ownership interests in a subdivision restricted to single-family residential use violated covenants requiring a single private dwelling occupied by no more than one family, and it reinstated an injunction barring the interval ownership sales.