Title: Apple Valley Gardens Assoc., Inc. v. Gloria MacHutta

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2009 WI 28 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
CASE NO.: 
2007AP191 
COMPLETE TITLE: 
 
 
Apple Valley Gardens Association, Inc., 
          Plaintiff-Respondent, 
     v. 
Gloria MacHutta and Steven MacHutta, 
          Defendants-Appellants-Petitioners. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2007 WI App 270 
Reported at:  306 Wis. 2d 780, 743 N.W.2d 483 
(Ct. App 2007-Published) 
 
 
OPINION FILED: 
March 27, 2009   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
October 7, 2008   
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Paul F. Reilly   
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
PROSSER, J., dissents (opinion filed).   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendants-appellants-petitioners there were briefs 
by Randall L. Nash and O’Neil, Cannon, Hollman, DeJong, S.C., 
Milwaukee, and oral argument by Randall L. Nash. 
 
For the plaintiff-respondent there was a brief by Matthew 
R. Jelenchick, Brian A. Romans, and Niebler, Pyzyk, Klaver & 
Carrig LLP, Menomonee Falls, and oral argument by Matthew R. 
Jelenchick. 
 
An amicus curiae brief was filed by Jonathan B. Levine, 
Jessica L. Boeldt and the Law Firm of Jonathan B. Levine, 
Milwaukee; and Daniel J. Miske and Petrie & Stocking SC, 
Milwaukee, 
on 
behalf 
of 
Community 
Associations 
Institute 
Wisconsin Chapter, Inc., and oral argument by Jonathan B. 
Levine. 
 
An amicus curiae brief was filed by Thomas D. Larson, and 
Debra P. Conrad, Madison, on behalf of the Wisconsin REALTORS® 
Association, and oral argument by John A. Kassner III. 
 
 
2009 WI 28
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.  2007AP191  
(L.C. No. 
2005CV623) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Apple Valley Gardens Association, Inc., 
 
          Plaintiff-Respondent, 
 
     v. 
 
Gloria MacHutta and Steven MacHutta, 
 
          Defendants-Appellants-Petitioners. 
 
 
 
FILED 
 
MAR 27, 2009 
 
David R. Schanker 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
MICHAEL J. GABLEMAN, J.   This is a review of a 
published decision of the court of appeals affirming the entry of 
summary judgment in favor of Apple Valley Gardens Association, 
Inc. (the "Association") by the Circuit Court for Waukesha 
County, Paul F. Reilly, Judge.1 Three issues are presented. 
First, may a condominium complex prohibit the rental of 
condominium units through an amendment to the bylaws, or must 
such a restriction be placed in the condominium's declaration? 
                                                 
1 Apple Valley Gardens Ass'n, Inc. v. MacHutta, 2007 WI App 
270, 306 Wis. 2d 780, 743 N.W.2d 483. 
No. 
2007AP191   
 
2 
 
Second, does the condominium declaration at issue here create a 
right to rent that precludes the enforcement of a bylaws 
amendment prohibiting condominium rentals? And third, does a 
prohibition on the rental of condominium units render title to 
those units unmarketable in violation of Wis. Stat. § 703.10(6) 
(2007-08)2?  
¶2 
Spouses Gloria and Steven MacHutta (collectively, "the 
MacHuttas") each currently own one condominium unit in the Apple 
Valley Gardens condominium complex. Steven MacHutta developed 
the complex in the late 1970s. The declaration of condominium, 
recorded in July 1979 to establish the condominium (the 
"declaration"), contained no restriction regarding rental of the 
units. However, on December 18, 2002, the Association amended 
the condominium bylaws (the "bylaws amendment") to prohibit 
rental of the condominium units. In 2004, Gloria MacHutta leased 
her condominium unit to a new tenant over the Association's 
objection, claiming that the rental prohibition was ineffective 
because it had not been added to the condominium declaration. 
The Association then filed an action in the circuit court 
seeking an order for declaratory judgment that the bylaws 
amendment was enforceable. The circuit court ultimately entered 
summary judgment in favor of the Association, which the court of 
appeals affirmed.  
                                                 
2 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version unless otherwise indicated. 
No. 
2007AP191   
 
3 
 
¶3 
We 
hold 
that 
the 
condominium 
bylaws 
amendment 
prohibiting the rental of condominium units is permissible under 
Wis. Stat. § 703.10(3). We further conclude that the condominium 
declaration in this case does not conflict with the bylaws 
amendment prohibiting unit rental. Having been duly adopted by 
the Association, the bylaws amendment is therefore enforceable 
under Wis. Stat. § 703.10(1). Additionally, in accord with Wis. 
Stat. § 703.10(6), the bylaws amendment constitutes a mere 
restriction on the use of the condominium units, and does not in 
any way affect the quality of the units' title or marketability. 
Under the undisputed facts of this case, the Association is 
entitled to summary judgment as a matter of law. Accordingly, we 
affirm the decision of the court of appeals. 
I. BACKGROUND 
¶4 
In 1979, Steven MacHutta built, developed, declared, 
and incorporated the Apple Valley Gardens condominium complex. 
The condominium declaration provided in pertinent part: 
8. 
PURPOSE——RESTRICTION ON USE. The buildings and 
each of the units are intended for the purpose of 
single family residential use only and are restricted 
to that use. Any lease or oral or written rental 
agreement 
shall 
not 
relieve 
an 
owner 
from 
his 
obligation to pay common expenses or any other 
obligations 
imposed 
upon 
unit 
owners 
by 
this 
Declaration.  
¶5 
In 1988, following a dispute between the MacHuttas and 
the Association, the parties entered into a settlement agreement3 
                                                 
3 As it was not briefed or argued before the Court, we 
decline to revisit the question of whether the 1988 settlement 
agreement between the Association and the MacHuttas permits 
No. 
2007AP191   
 
4 
 
that limited Steven MacHutta, his immediate family members, and 
his business to ownership of a maximum of four condominium 
units. The agreement also granted Steven MacHutta the right to 
rent the units he owned. The agreement did not grant Gloria 
MacHutta the right to rent any condominium units, and she did 
not own the unit at issue in the present case at the time the 
settlement agreement was entered.  
¶6 
Steven MacHutta now owns Unit 2-110, and Gloria 
MacHutta owns Unit 2-206. Gloria MacHutta leases her unit to a 
tenant. The use of Steven MacHutta's unit is not at issue in the 
present case.   
¶7 
In 2002, the Association membership duly amended 
Article VI, ¶6.1(j) of the condominium bylaws to prohibit rental 
of the condominium's units as follows: 
 
j. Owner occupied. 
i. 
Effective January 1, 2003, all units 
are required to be owner occupied. No 
residential 
unit 
owner 
shall 
rent, 
lease 
or 
otherwise 
so 
demise 
any 
residential unit or any part therein. 
Owners shall not permit the use of said 
unit by any party other than owner or 
owner's immediate family member.  
ii. An owners' [sic] observance of and 
performance under a rental agreement, 
lease, or other instrument granting 
occupancy in a residential unit in 
effect as of December 18, 2002 shall 
not be a violation of this subparagraph 
(j) . . . . 
When 
the 
existing 
tenants . . . vacate 
their 
respective 
                                                                                                                                                             
Gloria MacHutta to rent her condominium unit notwithstanding the 
bylaws amendment.   
No. 
2007AP191   
 
5 
 
units, said units shall become owner 
occupied under this subparagraph (j), 
irrespective of the effective date of 
the rental agreement, lease, or other 
instrument 
granting 
occupancy 
in 
a 
residential unit.  
¶8 
The Association also duly amended the bylaws to 
include a provision in Article IX, ¶9.1 requiring written 
consent from the board of directors for the renewal or extension 
of any lease or rental agreement. 
¶9 
In 2004, Gloria MacHutta's then-tenant vacated the 
rental unit. Wishing to lease the unit to a new tenant, Gloria 
MacHutta submitted a lease application to the Association's 
board of directors for its consent. The board refused, however, 
invoking the 2002 bylaws amendment. Undeterred, Gloria MacHutta 
proceeded to lease her unit to the new tenant. 
II. PROCEDURAL HISTORY 
¶10 The Association filed suit against the MacHuttas 
seeking a declaratory judgment that the 2002 bylaws amendment 
prohibiting 
unit 
rental 
was 
enforceable. 
The 
MacHuttas 
counterclaimed, alleging that the Association had tortiously 
interfered with the new rental contract and had breached the 
1988 settlement agreement between the Association and the 
MacHuttas which permitted Steven MacHutta to lease condominium 
units. The MacHuttas moved for judgment on the pleadings, which 
the circuit court denied, and the court of appeals denied the 
MacHuttas' petition for leave to appeal denial of their motion 
for judgment on the pleadings. The parties then filed cross 
motions for summary judgment. The circuit court entered summary 
No. 
2007AP191   
 
6 
 
judgment in favor of the Association, holding that: (1) Wis. 
Stat. § 703.09(1) does not prohibit condominium bylaws from 
containing 
use 
restrictions; 
(2) 
Wis. 
Stat. 
§ 703.10(3) 
expressly allows condominium bylaws to contain use restrictions; 
(3) the Association duly amended the bylaws to prohibit the 
rental of units; (4) Wis. Stat. § 703.10(1) requires condominium 
unit owners to strictly comply with the bylaws as they are 
amended from time to time; (5) the bylaws amendment prohibiting 
unit rental does not affect the quality of owners' title to 
their units, and thus does not violate Wis. Stat. § 703.10(6); 
and (6) the 1988 settlement granted Steven MacHutta, but not 
Gloria MacHutta, permission to rent units, and it in no way 
relieved Gloria MacHutta of her duty to comply with the bylaws 
amendment prohibiting unit rental. 
¶11 The court of appeals affirmed, concluding that: (1) 
Wis. Stat. § 703.10(3) permits use restrictions to be placed in 
the bylaws; (2) the unit rental prohibition in the bylaws does 
not render unit title unmarketable in violation of Wis. Stat. 
§ 703.10(6); and (3) the 1988 settlement agreement did not 
relieve Gloria MacHutta of her obligation to abide by the rental 
prohibition. Apple Valley Gardens Ass'n, Inc. v. MacHutta, 2007 
WI App 270, 306 Wis. 2d 780, 743 N.W.2d 483. The MacHuttas then 
sought review before this court. 
III. STANDARD OF REVIEW 
¶12 Because the present case was determined on cross 
motions for summary judgment based on undisputed facts, this 
court's review is de novo, and we apply the summary judgment 
No. 
2007AP191   
 
7 
 
methodology specified in Wis. Stat. § 802.08. See LaCount v. 
Gen. Cas. Co. of Wis., 2006 WI 14, ¶20, 288 Wis. 2d 358, 709 
N.W.2d 418. We thus determine under Wis. Stat. § 802.08(2) 
whether there is any genuine issue as to any material fact, and 
if not, which party is entitled to judgment as a matter of law. 
The present case also involves interpretation of condominium 
documents and statutes, all of which present matters of law 
reviewed de novo. See Jones v. Jenkins, 88 Wis. 2d 712, 722, 277 
N.W.2d 815 (1979) (holding that the interpretation of written 
instruments is reviewed de novo); Plachta v. Plachta, 118 
Wis. 2d 329, 332, 348 N.W.2d 193 (Ct. App. 1984) (holding that 
the construction of statutes is reviewed de novo). 
IV. ANALYSIS 
A. 
¶13 The first question is whether a condominium complex 
may prohibit the rental of condominium units through an 
amendment to the bylaws, or whether such a restriction must be 
placed in the condominium's declaration. The MacHuttas contend 
that the applicable statutes require a restriction on renting 
units to be placed in the declaration. Because that did not 
occur here, the MacHuttas assert the bylaws amendment is 
unenforceable. We disagree. Wisconsin law is clear, and we hold 
that use restrictions, including restrictions on the ability of 
owners to rent their units, may be enacted through the bylaws.    
¶14 It is true that condominium declarations do and must 
include information regarding the usage of the units. Wisconsin 
Stat. § 703.09(1)(g) requires that a declaration contain a 
No. 
2007AP191   
 
8 
 
"[s]tatement of the purposes for which the building and each of 
the units are intended and restricted as to use." The use 
restrictions in mind here are general in nature. Nothing in this 
provision or in any other section of the Wisconsin Condominium 
Ownership 
Act 
(Wis. 
Stat. 
ch. 
703) 
requires 
that 
all 
restrictions on use must be identified in the declaration. 
Similarly, no statute suggests that a prohibition on the rental 
of condominium units must be placed in the declaration to be 
effective. Declarations are not required to be exhaustive as to 
permissible uses of condominium units. 
¶15 This is where bylaws come in. Bylaws govern the 
administration of condominiums. Wisconsin Stat. § 703.10(1) 
explains:  
(1) 
BYLAWS 
TO 
GOVERN 
ADMINISTRATION. 
The 
administration of every condominium shall be governed 
by bylaws. Every unit owner shall comply strictly with 
the bylaws and with the rules adopted under the 
bylaws, as the bylaws or rules are amended from time 
to time, and with the covenants, conditions and 
restrictions set forth in the declaration or in the 
deed to the unit. Failure to comply with any of the 
bylaws, rules, covenants, conditions or restrictions 
is grounds for action to recover sums due, for damages 
or injunctive relief or both maintainable by the 
association or, in a proper case, by an aggrieved unit 
owner.  
This section requires strict compliance with restrictions that 
are added to a condominium's bylaws after the declaration is 
recorded. 
¶16 Wisconsin Stat. § 703.10(3) expressly authorizes the 
placement of additional use restrictions in condominium bylaws:  
No. 
2007AP191   
 
9 
 
PERMISSIBLE ADDITIONAL PROVISIONS. The bylaws also may 
contain any other provision regarding the management 
and 
operation 
of the condominium, including any 
restriction on or requirement respecting the use and 
maintenance of the units and the common elements. 
(Emphasis added.) 
This provision does not contain limitations on the types of 
restrictions that can be implemented through bylaw amendments.  
Therefore, as long as use restrictions do not conflict with the 
declaration (an issue taken up in Section IV.B. below) or with 
state or federal law, they are valid and enforceable.     
¶17 We 
recognize 
that 
this 
empowers 
condominium 
associations to take actions that limit the rights of individual 
owners. There is an inherent tension between the competing 
interests of supermajority owners4 and individual owners. A unit 
owner might be frustrated, financially or otherwise, by the loss 
of her ability to rent out her unit. But the statutes are clear 
that associations have this power. Condominium ownership is a 
statutory 
creation 
that 
obligates 
individual 
owners 
to 
relinquish rights they might otherwise enjoy in other types of 
real property ownership. When purchasing a condominium unit, 
individual owners agree to be bound by the declaration and 
bylaws as they may be amended from time to time. See Le Febvre 
v. Osterndorf, 87 Wis. 2d 525, 532, 275 N.W.2d 154 (Ct. App. 
1979) ("The bylaws may provide for restraints on the use of 
condominium units for the benefit of all unit owners.").  
                                                 
4 Wisconsin 
Stat. 
§ 703.10(5) 
requires 
a 
67 
percent 
supermajority to amend a condominium’s bylaws.  
No. 
2007AP191   
 
10 
 
¶18 The MacHuttas' argument, then, that a restriction on 
the 
rental of condominium units must be placed in the 
declaration, 
simply 
does 
not 
square 
with 
the 
applicable 
statutes. The fact that lenders and purchasers rely on recorded 
declarations is irrelevant. If lenders and purchasers wish to 
know whether and under what conditions a condominium unit may be 
rented out, they may easily inquire of both the declaration and 
the bylaws. Even so, the association, if not prohibited by the 
declaration, could choose to withdraw an owner's ability to rent 
out his or her unit at a later date. This is one of the 
sacrifices of condominium ownership under the current statutory 
scheme.5 
B. 
 
 
¶19 The 
second 
question 
is 
whether 
the 
condominium 
declaration at issue here creates a right to rent, and therefore 
precludes the enforcement of the bylaws amendment prohibiting 
                                                 
5 The MacHuttas also assert that their position is supported 
by a condominium drafting treatise, citing the older 2004 
edition of the treatise. The updated version of the treatise, 
however, 
states: 
"Use 
restrictions 
often 
appear 
in 
the 
declaration, but they can just as easily be placed in the 
association's bylaws or rules and regulations." Jesse S. 
Ishikawa & Brian W. Mullins, Drafter's Guide to Wisconsin 
Condominium Documents, § 3.66 (State Bar of Wisconsin CLE Books, 
2007). The treatise further advises that "use restrictions 
should be flexible, and as a result, are more appropriately 
included in the bylaws or the rules and regulations." Id. 
Regardless, we here make clear that use restrictions, including 
prohibitions on renting units, may properly be placed in the 
bylaws under Wisconsin law. 
No. 
2007AP191   
 
11 
 
unit rentals. The MacHuttas insist,6 and the dissent agrees, 
that the declaration does conflict with the bylaws amendment, 
rendering it unenforceable.  
¶20 Wisconsin Stat. § 703.30(4) states: "If there is any 
conflict between any provisions of a declaration and . . . any 
provisions of the bylaws, the provisions of the declaration 
shall control." Thus, if the declaration does create a right to 
rent, 
the 
bylaws 
amendment 
prohibiting 
rental 
would 
be 
unenforceable. 
¶21 Paragraph 8 of the Association's declaration, the 
provision in question here, provides as follows:  
8. 
PURPOSE——RESTRICTION ON USE. The buildings and 
each of the units are intended for the purpose of 
single family residential use only and are restricted 
to that use. Any lease or oral or written rental 
agreement 
shall 
not 
relieve 
an 
owner 
from 
his 
obligation to pay common expenses or any other 
obligations 
imposed 
upon 
unit 
owners 
by 
this 
Declaration.  
                                                 
6 The MacHuttas' position is not entirely clear. They 
claimed in their reply brief in support of their motion for 
judgment on the pleadings that conflict exists between the 
declaration and bylaws. The MacHuttas later disclaimed any 
reliance on any conflict between the declaration and the bylaws 
in their reply brief in support of their motion for summary 
judgment: "The Association misunderstands and misstates the 
MacHuttas' argument, stating erroneously that it is based on a 
conflict between the bylaws and the Declaration." However, while 
they do not expressly state the word "conflict" in their initial 
brief to this Court, the MacHuttas do contend that "any doubt as 
to the appropriate interplay of the statutes or the relationship 
between the declaration and the bylaws . . . should be resolved 
against a restriction on use being effective." They also contend 
in their reply brief that the alleged conflict between the 
declaration and the bylaws must be resolved by honoring the 
declaration.  
No. 
2007AP191   
 
12 
 
The issue, then, is whether this provision does in fact 
establish an affirmative right to rent one's unit. We believe 
that it does not create or imply a right to rent.  
¶22 The first sentence of paragraph 8 states the general 
purpose and restriction as to use, that is, "single family 
residential use." The second sentence then recites that owners 
who lease their units are still financially responsible to the 
Association.  
¶23 This second sentence obviously contemplates that units 
might be rented out. Steven MacHutta certainly did not intend to 
foreclose the option of leasing one's unit in the condominium 
declaration. No one disputes this. Indeed, we agree with the 
dissent that "the declaration itself does not impair a unit 
owner's right to lease or rent a condominium unit." Dissent, 
¶57.  
¶24 But the dissent overplays its hand. The dissent argues 
that the declaration's recognition of the possibility of unit 
rentals and its clear openness to leasing somehow creates an 
affirmative right to rent. See Dissent, ¶57. This simply does 
not follow. When read in context, this provision neither grants 
a right to rent one's unit nor prohibits it. The gravamen of the 
sentence has nothing to do with a right to rent. Rather, its 
purpose is to emphasize the unyielding nature of the owners' 
financial obligations whether a unit owner rents or occupies his 
or her unit. The dissent makes the mistake of believing that a 
declaration's neutral contemplation of unit rentals somehow 
constitutes a positive right to lease one's unit. No provision 
No. 
2007AP191   
 
13 
 
of the declaration expressly permits renting units. On the 
contrary, 
paragraph 
21 
of 
the 
declaration 
specifically 
authorizes the Association to "make reasonable rules and 
regulations governing the use of the units," which is precisely 
what the Association did when it amended the bylaws to prohibit 
rental after the current tenants vacated their units. 
¶25 The declaration contains no explicit, implicit, or 
inherent right to rent one's unit. Accordingly, we hold that the 
restriction on renting effectuated by the 2002 bylaws amendment 
does not conflict with the declaration and is enforceable 
against the MacHuttas. 
C. 
¶26 The third issue is whether the prohibition on renting 
one's condominium unit violates Wis. Stat. § 703.10(6) by 
rendering title to the subject units unmarketable. The MacHuttas 
contend that the rental prohibition use restriction created by 
the Association's bylaws amendment reduces the pool of potential 
purchasers of Gloria MacHutta's currently rented unit, thereby 
rendering it unmarketable in violation of the statute. We 
disagree.  
¶27 Wisconsin Stat. § 703.10(6) provides:  
TITLE TO CONDOMINIUM UNITS UNAFFECTED BY BYLAWS. Title 
to a condominium unit is not rendered unmarketable or 
otherwise affected by any provision of the bylaws or 
by reason of any failure of the bylaws to comply with 
the provisions of this chapter.  
Wisconsin courts have held that "[a] marketable title is 'one 
that can be held in peace and quiet; not subject to litigation 
No. 
2007AP191   
 
14 
 
to determine its validity; not open to judicial doubt.'" Turner 
v. Taylor, 2003 WI App 256, ¶11, 268 Wis. 2d 628, 673 N.W.2d 716 
(quoting Baldwin v. Anderson, 40 Wis. 2d 33, 43, 161 N.W.2d 553 
(1968)). 
¶28 It is plain that the rental prohibition bylaws 
amendment does not render Gloria MacHutta's title to her 
condominium unit unmarketable because it in no way affects her 
ability to convey her interest in the unit. See Le Febvre, 87 
Wis. 2d at 531-32 (holding that rental restrictions affect the 
use of the unit, not the owner's ability to alienate his or her 
property). Gloria MacHutta retains precisely the same quality of 
title she possessed prior to the adoption of the bylaws 
amendment, and nothing about that amendment subjects her title 
to "litigation to determine its validity." See Turner, 268 
Wis. 2d 628, ¶11. The bylaws amendment restricted the use of the 
unit. It did not affect the quality of the unit's title or its 
alienability. 
¶29 The MacHuttas cite Bankers Trust Co. of Cal. v. 
Bregant, 2003 WI App 86, 261 Wis. 2d 855, 661 N.W.2d 498, for 
the proposition that condominium use restrictions prohibiting 
unit rental adversely impact marketability. The MacHuttas' 
reliance on Bankers Trust is misplaced. In that case, the 
condominium owners association invoked Wis. Stat. § 703.10(6) as 
part of its effort to prevent a sale of a condominium unit to a 
purchaser who expressed his intent to ignore the owner occupancy 
restriction in the bylaws. Id., ¶17. The court of appeals 
permitted the sale to proceed, stating:  
No. 
2007AP191   
 
15 
 
[E]ven the potential of [the purchaser's] failure to 
occupy his purchased unit has no recognized legal 
relationship 
to 
the . . . transfer 
of 
title. . . . Wis. Stat. § 703.10(6) [] protects the 
title to a condominium unit in that its title cannot 
be rendered unmarketable or otherwise affected by any 
provision of the bylaws.  
Id., ¶16. This holding is in direct contradiction to the 
interpretation of the statute advanced by the MacHuttas. Rather, 
the court in Bankers Trust reaffirmed that the proscription 
contained within Wis. Stat. § 703.10(6) is a protection of the 
title and is not a vehicle for a finding of impairment. Id., 
¶¶18-19.  
¶30 Both the statute and case law are clear: bylaws which 
comport with the declaration and state and federal law may not 
properly be construed as impairing the title or rendering it 
unmarketable. 
V. CONCLUSION 
¶31 We 
hold 
that 
the 
condominium 
bylaws 
amendment 
prohibiting the rental of condominium units is permissible under 
Wis. Stat. § 703.10(3). We further conclude that the condominium 
declaration in this case does not conflict with the bylaws 
amendment prohibiting unit rental. Having been duly adopted by 
the Association, the bylaws amendment is therefore enforceable 
under Wis. Stat. § 703.10(1). Additionally, in accord with Wis. 
Stat. § 703.10(6), the bylaws amendment constitutes a mere 
restriction on the use of the condominium units, and does not in 
any way affect the quality of the units' title or marketability. 
Under the undisputed facts of this case, the Association is 
No. 
2007AP191   
 
16 
 
entitled to summary judgment as a matter of law. Accordingly, we 
affirm the decision of the court of appeals. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
 
No.  2007AP191.dtp 
 
 
 
1 
 
¶32 DAVID T. PROSSER, J.   (dissenting).  The majority 
opinion states the principal issue as follows: "[M]ay a 
condominium complex prohibit the rental of condominium units 
through an amendment to the bylaws, or must such a restriction 
be placed in the condominium's declaration?"  Majority op., ¶1. 
¶33 In my view, the majority asks the wrong question 
because the question it asks is not susceptible to a yes or no 
answer.  Whether a condominium complex may prohibit the rental 
of condominium units through an amendment to its bylaws is 
dependent not only upon the condominium declaration and the 
condominium instruments1 but also upon the facts of the case.  
These qualifications may be explained as follows. 
¶34 First, Wis. Stat. § 703.10(3) (2007-08)2 permits a 
condominium's bylaws to contain "any restriction or requirement 
respecting the use . . . of the units."  However, Wis. Stat. 
§ 703.30(4) also makes clear that "any conflict" between the 
declaration and a provision in the bylaws, or "any conflict" 
between the condominium instruments and a provision in the 
bylaws, must be resolved in favor of the declaration or the 
condominium instruments.  (Emphasis added.)  There is a conflict 
in this case.  Thus, this case does not turn on general 
                                                 
1 "'Condominium instruments' mean the declaration, plats and 
plans of a condominium together with any attached exhibits or 
schedules."  Wis. Stat. § 703.02(5) (2007-08). 
2 All subsequent references to the Wisconsin Statutes are to 
the 2007-08 version unless otherwise indicated. 
No.  2007AP191.dtp 
 
 
 
2 
 
principles of condominium law.  It turns on the terms of the 
condominium declaration. 
¶35 Second, otherwise valid bylaws also must yield to 
conflicting statutory provisions.  This principle is illustrated 
in Bankers Trust Co. of California v. Bregant, 2003 WI App 86, 
261 Wis. 2d 855, 661 N.W.2d  498.  In Bankers Trust, the 
Woodlands Condominium Homeowner's Association tried to enforce 
the condominium's new owner-occupancy bylaw by blocking the sale 
of a foreclosed residential condominium unit to a buyer who did 
not intend to reside in the unit.  Id., ¶¶1-4, 11, 13.  The 
Association lost.  Id., ¶¶1, 20.  The court of appeals concluded 
that using a condominium bylaw to block a sheriff's sale would 
tend to make the title to the property unmarketable, contrary to 
statute.  Id., ¶¶18-20 (citing Wis. Stat. § 703.10(6)). 
¶36 Third, some condominium use restrictions are so 
fundamental that experts in the field prefer to see them placed 
in the declaration.  Jesse S. Ishikawa & Brian W. Mullins, 
Drafter's Guide to Wisconsin Condominium Documents § 3.66 (2d 
ed. 2007) (hereinafter Ishikawa & Mullins (2007)). 
¶37 In a 2004 publication, these two authors wrote that: 
We do not consider the association bylaws to be the 
appropriate place for putting the use restrictions.  
Bylaws 
should 
set 
out 
the 
rules 
for 
corporate 
governance rather than rules for the leasing of 
individual units or the maximum weight of pets.  
Moreover, for the reasons discussed . . . infra, use 
restrictions have been invalidated in part because of 
their placement within the bylaws. 
No.  2007AP191.dtp 
 
 
 
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Jesse S. Ishikawa & Brian W. Mullins, Drafter's Guide to 
Wisconsin 
Condominium 
Documents 
§ 3.65 
(2004) 
(hereinafter 
Ishikawa & Mullins (2004)). 
 
¶38 In their 2007 book, the authors appear to have 
modified their views, with the comment that "Use restrictions 
often appear in the declaration, but they can just as easily be 
placed in the association's bylaws or rules and regulations."  
Ishikawa & Mullins (2007), supra, at § 3.66.  However, they add 
that "some restrictions . . . are so fundamental to the function 
of the condominium that they are appropriately included in the 
declaration."  Id. 
¶39 In their discussion of "Restrictions on Leases of 
Units" in the chapter on "The Declaration," Ishikawa & Mullins 
write the following: 
[R]estrictions against the rental of units tend to be 
popular with unit buyers.  Declarants tend to resist 
such restrictions, fearing that if the real estate 
market goes into a slump before the condominium units 
are all sold, they could be stuck holding a non-
income-producing real estate asset for a long time.  
Finally, even those unit owners who don't want to see 
units rented recognize that there are situations in 
which rentals should be allowed——for example, when a 
unit 
owner 
is 
a 
professor 
taking 
a 
one-year 
sabbatical. 
 
. . . .  
[A] number of provisions should be inserted into the 
condominium documents for the protection of the 
association's and other unit owners' interests.  It is 
probably best to put these provisions into the 
declaration, which is a recorded document that would 
have priority over any lease and would provide record 
notice to any potential tenant. 
No.  2007AP191.dtp 
 
 
 
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. . . .  
 
The declarant, of course, may want to exempt its 
own units from these requirements. 
Id. at § 3.69 (emphasis added). 
 
¶40 Although a good argument can be made that condominium 
law has evolved from what it was 30 years ago, this evolution 
does not alter the intent of a declaration that was drafted 30 
years ago.  That is the effect of the majority opinion.  Because 
I believe the majority is insufficiently attentive to the facts 
and the law that govern this case, I respectfully dissent. 
I. BACKGROUND 
¶41 Gloria and Steven MacHutta were the developers of the 
Apple Valley Gardens condominium.  Steven MacHutta was the 
declarant and the person who incorporated the Apple Valley 
Gardens Association in July 1979. 
¶42 Wisconsin repealed and recreated Chapter 703 of the 
Wisconsin 
Statutes, 
governing 
condominium 
ownership 
and 
regulation, in 1978.  See Chapter 407, Laws of 1977.  The 
applicable statutory law at the time Steven MacHutta filed the 
declaration in 1979 is virtually identical to the statutory law 
today.  The applicable statutes have not been amended since 1978 
in any way that reduces the declarant's rights in this case. 
¶43 Chapter 703 defines "declarant" and "declaration."  
"'Declarant' means any owner who subjects his or her property to 
a condominium declaration established under this chapter."  Wis. 
Stat. § 703.02(7).  "'Declaration' means the instrument by which 
a property becomes subject to this chapter, and that declaration 
No.  2007AP191.dtp 
 
 
 
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as amended from time to time."  Wis. Stat. § 703.02(8).  Among 
other key provisions in Chapter 703 are the following: 
703.04 
Status of the units.  A unit, together with 
its undivided interest in the common elements, for all 
purposes constitutes real property. 
 
. . . . 
703.09 
Declaration.  (1) A condominium declaration 
shall contain: 
 
. . . .  
 
(g) Statement of the purposes for which the 
building and each of the units are intended and 
restricted as to use. 
 
. . . .  
 
(j) Any further details in connection with the 
property which the person executing the declaration 
deems desirable to set forth consistent with this 
chapter . . . .  
 
. . . . 
703.10 
Bylaws.  (1) BYLAWS TO GOVERN ADMINISTRATION.  The 
administration of every condominium shall be governed 
by bylaws.  Every unit owner shall comply strictly 
with the bylaws and with the rules adopted under the 
bylaws, as the bylaws or rules are amended from time 
to time, and with the covenants, conditions and 
restrictions set forth in the declaration or in the 
deed to the unit.  Failure to comply with any of the 
bylaws, rules, covenants, conditions or restrictions 
is grounds for action to recover sums due, for damages 
or injunctive relief or both maintainable by the 
association or, in a proper case, by an aggrieved unit 
owner. 
 
. . . .  
 
(3) PERMISSIBLE ADDITIONAL PROVISIONS.  The bylaws also 
may 
contain 
any 
other 
provision 
regarding 
the 
management and operation of the condominium, including 
No.  2007AP191.dtp 
 
 
 
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any restriction on or requirement respecting the use 
and maintenance of the units and the common elements. 
 
. . . .  
 
(5) AMENDMENT.  The bylaws may be amended by the 
affirmative vote of unit owners having 67% or more of 
the votes. . . .  
 
. . . .  
703.24 
Remedies for violations by unit owner or 
tenant of a unit owner. . . .  
 
. . . . 
 
(3) LIABILITY FOR VIOLATION BY TENANT. 
 
. . . . 
703.30 
Rules of Construction. . . . 
 
. . . .  
 
(4) CONFLICTS 
IN 
PROVISIONS.  If there is any 
conflict between any provisions of a declaration and 
provisions of a condominium plat or any provisions of 
the bylaws, the provisions of the declaration shall 
control.  If there is any conflict between any 
provisions of any condominium instruments and any 
provisions of any bylaws, the provisions of the 
condominium instruments shall control.  If there is 
any conflict between any provisions of any condominium 
instruments or any provisions of any bylaws and any 
provisions of this chapter, the provisions of this 
chapter shall control. 
 
. . . . 
703.31 
Personal application. (1) All unit owners, 
tenants of the owners, employees of owners and tenants 
or any other persons that in any manner use property 
or any part thereof subject to this chapter shall be 
subject to this chapter and to the declaration and 
bylaws of the association adopted under this chapter. 
(Emphasis added.) 
No.  2007AP191.dtp 
 
 
 
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II. Analysis 
¶44 These condominium statutes must be applied to the 
facts of the case.  Steven MacHutta was the declarant who 
subjected his property to the declaration and to the provisions 
of Chapter 703.  He complied with Wis. Stat. § 703.09(1)(g) by 
drafting a declaration that contained a statement of the 
intended purposes of the buildings and the units, and it 
contained restrictions as to use of these properties.  The 
statement is contained in paragraph 8 of the declaration and 
reads as follows: 
 
8. 
PURPOSE – RESTRICTION ON USE.  The buildings 
and each of the units are intended for the purpose of 
single family residential use only and are restricted 
to that use.  Any lease or oral or written rental 
agreement 
shall 
not 
relieve 
an 
owner 
from 
his 
obligation to pay common expenses or any other 
obligations 
imposed 
upon 
unit 
owners 
by 
this 
Declaration. 
¶45 This paragraph states the overriding purpose of the 
buildings and the units: "single family residential use only."  
Conflicting uses are restricted.  See Wis. Stat. § 703.30(4).  
The rental of condominium units is normally consistent with this 
stated purpose of the declaration.  The lease and rental of 
units 
for 
"single 
family 
residential 
use" 
are 
clearly 
contemplated by virtue of the next sentence: "Any lease 
or . . . rental agreement shall not relieve an owner from his 
obligation to pay common expenses or any other obligations 
imposed upon unit owners by this Declaration."  (Emphasis 
added.) 
No.  2007AP191.dtp 
 
 
 
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¶46 The language in paragraph 8 of the Apple Valley 
declaration contrasts with the language in the original bylaws 
drafted by the declarant of the Minooka Park Homes condominiums 
in Le Febvre v. Osterndorf, 87 Wis. 2d 525, 525, 275 N.W.2d 154 
(Ct. App. 1979), a decision issued approximately six months 
before Steven MacHutta's declaration was filed.  The original 
bylaws in that case read as follows: 
 
In 
order 
to 
preserve 
high 
standards 
of 
maintenance and care and the other benefits from a low 
turnover of occupants, no unit may be rented without 
the prior written consent of the Board of Directors.  
The Board of Directors shall have the obligation to 
answer any written request by a unit owner accompanied 
by such information concerning the proposed tenant and 
the terms of the proposed lease as the Board of 
Directors uniformly requires, within 10 days after 
such 
request 
and 
failure 
to 
do 
so 
within 
the 
stipulated time shall constitute a consent by the 
Board of Directors to the proposed leasing. 
Id. at 528 (emphasis added). 
¶47 In Le Febvre, every person acquiring or using a 
condominium unit at Minooka Park Homes was put on notice from 
the beginning that "no unit may be rented without the prior 
written consent of the Board of Directors."  Id. at 528, 534-35. 
¶48 That is not the case here.  More than 20 years after 
Apple Valley was established, the Association membership amended 
the bylaws to require that all units be owner-occupied.  The 
2002 amendment added: "No residential unit owner shall rent, 
lease or otherwise so devise any residential unit or any part 
therein."  This amendment significantly altered a unit owner's 
rights to the use of his or her property.  Inasmuch as most 
No.  2007AP191.dtp 
 
 
 
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owners of multiple units cannot afford to occupy more than one 
unit in the same condominium complex, they are effectively 
forced to sell some of their property. 
¶49 The majority opinion recognizes the need to address 
the issue of conflict between the revised bylaws and the 
declaration.  See Majority op. ¶¶20-26.  It resolves the issue 
by determining that there is no conflict.  Id., ¶26.  To support 
this proposition, the majority observes that "No provision of 
the declaration expressly permits renting units."  Id., ¶25.  
This observation misses a larger point.   
¶50 Wisconsin Stat. § 703.04 provides that a condominium 
unit "for all purposes constitutes real property."  (Emphasis 
added.)  This section is cited in Le Febvre, 87 Wis. 2d at 533 
n.7, where the court notes that, "The established law of real 
property is . . . applicable to condominium units," id. at 533.  
If the established law of real property is applicable to 
condominium units, then there is no need for the declaration to 
set out express permission for a unit owner to rent his 
property.  The right to rent is inherent in the "exclusive 
ownership" of a unit.  See Wis. Stat. § 703.05. 
¶51 The understanding that a unit owner has a right to 
rent is confirmed, as it is today, by the statutes in place in 
1979.  Wisconsin Stat. §§ 703.24 and 703.31 refer explicitly to 
the tenants of unit owners. 
¶52 This, 
admittedly, 
does 
not 
settle 
the 
issue.  
Condominium law is different from basic property law in that 
No.  2007AP191.dtp 
 
 
 
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condominium property owners have shared responsibilities and are 
often subject to restrictions that traditional property owners 
are not.  Nonetheless, restrictions on the use of property "are 
not favored in the law," McKinnon v. Benedict, 38 Wis. 2d 607, 
619, 157 N.W.2d 665 (1968) (quoting Mueller v. Schier, 189 
Wis. 70, 82, 205 N.W. 912 (1926)) (internal quotations omitted), 
and where doubt exists about a restriction, that doubt should be 
resolved "in favor of the free use of property," id. (citing 
Stein v. Endres Home Builders, Inc., 228 Wis. 620, 629, 280 N.W. 
316 (1938)). 
¶53 Certainly, there is doubt here.  Section 8 of the 
declaration confirms the inherent right to lease or rent for 
single family residential use when it refers to "[a]ny lease or 
oral or written rental agreement."  There would be no need to 
specify a unit owner's continuing obligation to pay common 
expenses if the owner could not lease or rent the unit to a 
tenant under the declaration.   
¶54 Section 8 of the declaration complies with Wis. Stat. 
§ 703.09(1)(g) by stating a purpose and stating a restriction 
(namely, the restriction on unit use for a purpose other than 
"single family residential use").  Thus, it cannot be said that 
the declarant here did not know how to place a fundamental 
restriction in the declaration.  Clearly, the declarant did not 
desire or intend to place a restriction on leasing or renting in 
the declaration. 
No.  2007AP191.dtp 
 
 
 
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¶55 The evidence for this is the fact that, after the 
declaration was filed, the declarant rented condominium units.  
The Association acknowledges that, in 1988, almost a decade 
after the declaration was filed, Gloria and Steven MacHutta 
owned 15 units that they rented to tenants.   
¶56 To sum up, the declaration itself does not impair a 
unit owner's property right to lease or rent a condominium unit.  
By its language, the declaration recognizes that right.  The 
statutes also recognize that right.  The declarant's unbroken 
practice since the filing of the declaration was to rent some of 
the condominium units.  In short, the amended bylaws appear to 
conflict 
with 
the 
declaration 
as 
it 
was 
intended 
and 
consistently interpreted. 
¶57 The Association argues that the rule of construction 
set forth in Wis. Stat. § 703.30(5) requires condominium 
documents to be construed together in an attempt to "avoid legal 
technicalities that create conflict."  It is not possible, 
however, to harmonize provisions that permit and prohibit owners 
to rent their condominium units.  The fact that the 2002 amended 
bylaws allowed unit owners to continue renting to existing 
tenants 
underscores 
the 
lawfulness 
of 
renting 
under 
the 
declaration.   
¶58 Given 
a 
unit 
owner's 
right 
to 
rent 
under 
the 
declaration, it is very significant that the declarant took 
pains to provide himself with a veto power over amendments to 
No.  2007AP191.dtp 
 
 
 
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the declaration.3  Section 24 of the declaration reads as 
follows: 
24. Amendment.  Prior to the first meeting of 
the Association, this Declaration may be amended by 
the Declarant.  Thereafter, his [sic] Declaration may 
be amended by an affirmative vote of not less than 
two-thirds of all votes entitled to be cast by unit 
owners at a meeting called for that purpose; provided, 
however, that so long as the Declarant is the owner of 
any unit, which has not initially been sold, no 
amendment shall be effective without the consent of 
the Declarant. 
(Emphasis added.) 
¶59 By this provision, Steven MacHutta did his best to 
protect his and Gloria's right to rent.  This bargained-for 
provision ostensibly firmed up the MacHuttas' right to rent for 
as long as they owned any unsold unit within the Association. 
¶60 Arguably, the veto provision prevents any amendment to 
the declaration over the opposition of the declarant, so long as 
the declarant is the owner of any unsold unit within the 
Association.  Whether a bona fide amendment to the declaration 
would prevail over such a restriction is an interesting question 
that would have come to the fore if the Association had tried to 
amend the declaration.  In any event, it is difficult to see how 
a declarant who tried explicitly to assure his veto power over a 
disfavored amendment to the declaration nonetheless intended to 
permit an amendment to the bylaws that would undo the economic 
                                                 
3 See Wis. Stat. § 703.09(1)(j) (allowing the declaration to 
include "[a]ny further details in connection with the property 
which 
the 
[declarant] 
deems 
desirable . . . except 
those 
provisions which are required to be included in the bylaws"). 
No.  2007AP191.dtp 
 
 
 
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interest in renting that he was trying to protect by his veto 
power. 
¶61 This brings us to Wis. Stat. § 703.30(4), which is 
central to this litigation.  It reads: "If there is any conflict 
between any provisions of a declaration and . . . any provisions 
of the bylaws, the provisions of the declaration shall control."  
Wis. Stat. § 703.30(4) (emphasis added).  To contend that there 
is no conflict between any provision in the declaration and any 
provision in the amended bylaws simply ignores reality.  Yet, to 
concede "any conflict" decides the case for the MacHuttas. 
¶62 When a unit owner's right to rent is abrogated by an 
amendment to the condominium bylaws, the owner's investment and 
the owner's ability to relocate temporarily for employment or 
family can be seriously affected.  The abrogation can also 
adversely 
affect 
the 
rights 
of 
third 
parties, 
such 
as 
mortgagees.  Chapter 703 permits these rights and interests to 
be 
adversely 
affected 
but 
only 
in 
accordance 
with 
the 
declaration and the statutes.  Because that did not happen here, 
I must respectfully dissent. 
No.  2007AP191.dtp 
 
 
 
 
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