In Paris Meadows, LLC v. City of Kentwood, Michigan Court of Appeals.  Docket Number 286978, January 12, 2010, the Court of Appeals ruled that a city could not tax the common element of a condominium development independent of the condominium units.  The disputed property is designated as a “convertible area” on the subdivision plan and is defined in the Master Deed as part of the “general common elements” of the condominium project.

The Court ruled the Tax Tribunal erred in concluding that the developer's reservation of rights to develop the disputed property rendered the property not a common element, and thus separately taxable.  According to the language in the Master Deed and the Michigan Condominium Act, the disputed property was a common element, in which the co-owners held an undivided, inseparable interest, and the fact that the developer retained the right to withdraw or develop the property for six years did not vitiate this fact.

Property taxes may only be assessed against the individual condominium units and the prorated value of the common elements must be added to the condominium unit's tax bill.  The court rejected the city's argument that the taxes on the disputed property could be assessed against the developer as the agent of the co-owners because under Michigan law [MCL 211.3], where the owner is known the owner is taxed and here the owners of the disputed property are known, the co-owners of the individual condominium units.