Cumulative Conveyances Exceeding 50 % of a Corporation’s Shares Trigger Uncapping under Michigan’s GPTA
Commentary on Resort Properties Co-operative v. Waterloo Township, Supreme Court of Michigan, 2 July 2025

1 | Introduction

Resort Properties Co-operative v. Waterloo Township presented the Michigan Supreme Court with a deceptively simple tax question that has long troubled assessors and closely-held entities owning real estate: when, exactly, does a series of transfers of stock or membership interests in a corporation, limited liability company (LLC), partnership or other legal entity amount to a “transfer of ownership” that uncaps a parcel’s taxable value under Proposal A and the General Property Tax Act (GPTA), MCL 211.1 et seq.?

The petitioner was a family cottage co-operative organised as a Michigan non-profit corporation; the respondent was the assessing township. In a single calendar year the Babbage family first bought 48 % of the shares from existing members, then sold 20 % to a mixture of new and existing members. The assessor, followed by the Board of Review, the Tax Tribunal and the Court of Appeals, treated the aggregate 68 % of shares conveyed during that year as exceeding the statutory 50 % threshold in MCL 211.27a(6)(h) and therefore uncapped the property. The Supreme Court, by order, affirmed; Justice Bernstein (joined by Justice Zahra) dissented.

2 | Summary of the Judgment

• The Court denied leave to appeal and affirmed the Court of Appeals, thereby adopting its reasoning.
• Key holding: MCL 211.27a(6)(h) requires assessors to cumulate all conveyances of interests in a corporation; once the total interests conveyed exceed 50 %, a “transfer of ownership” occurs and the property’s taxable value is uncapped—even if no single snapshot shows more than 50 % of ownership residing in new hands.
• The plain language of subsection (6)(h), read in context, compels addition of serial transfers except where the Legislature expressly says otherwise (e.g., certain summer-resort corporations under MCL 455.1-.24 or publicly traded stock under MCL 211.27a(7)(l)).
• The majority emphasised practical administrability and the avoidance of surplusage; the dissent argued the majority’s approach confuses “shares transferred” with “ownership interest conveyed” and yields mathematical impossibilities (>100 %).

3 | Analysis

3.1 Precedents Cited and Their Influence

• Mich Properties, LLC v. Meridian Twp, 491 Mich 518 (2012) – Confirmed de novo review of Tax Tribunal legal questions and provided background on Proposal A’s cap/uncap regime.
• Klooster v. City of Charlevoix, 488 Mich 289 (2011) – Explained Proposal A’s purpose and characterised MCL 211.27a(6) as a “non-exhaustive list” of transfers.
• Sun Valley Foods Co. v. Ward, 460 Mich 230 (1999) – Canon of giving effect to every word.
• State Farm Fire & Cas. Co. v. Old Republic Ins. Co., 466 Mich 142 (2022) – Reinforced the rule against surplusage.
• Bronner v. City of Detroit, 507 Mich 158 (2021) – Applied the expressio unius canon; relied on to infer that because the Legislature excluded cumulative counting in some situations, it intended counting elsewhere.
• Zenti v. City of Marquette, 329 Mich App 258 (2019) – Provided dictionary definition of “transfer.”
• Additional structural precedents on review standards, statutory interpretation, and property tax administration (e.g., Briggs Tax Serv., Wexford Med Group).

Collectively these cases steered the Court toward a literal, text-and-context methodology, prioritising statutory language and legislative intent over equitable or policy-based pleas by the taxpayer.

3.2 Court’s Legal Reasoning

1. Textual focus on “conveyance”. MCL 211.27a(6) defines transfer of ownership as a conveyance of a “present interest . . . substantially equal to the fee.” Subsection (6)(h) then treats as such a transfer “a conveyance of an ownership interest in a corporation . . . if the ownership interest conveyed is more than 50 %.” The majority read this to mean the tax assessor must:
   • Identify each conveyance of corporate ownership interests relating to the parcel, and
   • Add the percentage interests conveyed until the sum exceeds 50 %.
2. Express exception proves the rule. Because sub-para (h)(ii) expressly forbids cumulation for summer-resort corporations created under 1897 PA 230, the majority reasoned that cumulative counting is allowed—indeed required—for all other entities.
3. Administrative practicality. The Court declared the petitioner’s “snapshot” theory unworkable: assessors would have to track the identities of “original” owners and unravel multiple chains of title, whereas the statute only expects notification of each conveyance that itself crosses the 50 % cumulative line.
4. Harmony with Proposal A. Proposal A intended to cap taxes for continuing owners but to reset (uncap) value when the property, or in this context its beneficial ownership, changes hands. Allowing a majority of beneficial ownership to change without uncapping would undercut that policy.

3.3 Points from the Dissent

Justice Bernstein contended that “ownership interest” means net percentage held, not the aggregate of shares crossing the table; because at all times the original shareholders retained at least 52 %, no single >50 % ownership interest was conveyed. He described the majority’s approach as conflating “shares transferred” with “interest conveyed,” producing totals exceeding 100 % (logical impossibility). He also criticised reliance on IRS first-in-first-out guidance and argued the statute already supplies an administrable rule: look at actual shifts in the distribution of the 100 % pie.

3.4 Potential Impact

• Corporate & LLC-owned real estate – Family cottages, hunting cabins, legacy farmsteads and closely-held commercial property frequently reside in entities. Serial estate-planning transactions (buy-outs, gifts, intra-family reallocations) will now more readily trigger uncapping, accelerating tax burdens.
• Transaction structuring – Practitioners must track cumulative conveyances prospectively; tiered-entity or tenancy-in-common structures may be revisited to manage tax exposure.
• Assessing practice – Townships gained a clear, easier-to-administer bright-line test. They need not trace which share certificates were sold; they only aggregate conveyed percentages notified on Form L-4260A.
• Legislative response? – The dissent’s emphasis on perceived inequity could spur amendments clarifying intent, possibly adopting a “net-change” model or imposing multi-year windows.
• Litigation roadmap – Future disputes likely will shift to (a) whether conveyances were properly reported, (b) valuing fractional interests, and (c) constitutional challenges alleging disproportionate taxation of entity-owned housing versus individually owned homes.

4 | Complex Concepts Simplified

Proposal A (1994)

A constitutional amendment capping annual increases in taxable value (not true cash value) to inflation or 5 % until ownership transfers.

Uncapping

Resetting the property’s taxable value to its current market (true cash) value the tax year following a statutory transfer of ownership.

GPTA § 27a(6)(h)

Defines when transfers of >50 % of an entity’s ownership interests constitute a “transfer of ownership” for uncapping. Certain resort corporations are excepted from cumulative counting.

Cumulative Conveyance

Adding together multiple transfers of shares/interests to see if the total conveyed surpasses 50 %.

Expressio unius est exclusio alterius

Legal canon: stating one exception implies the exclusion of others. Used here to infer that because the Legislature carved out summer-resort corporations, all other entities are subject to cumulative counting.

5 | Conclusion

Resort Properties Co-operative cements a straightforward but far-reaching rule: any series of share transfers that, in the aggregate, exceeds 50 % of the ownership interests in an entity owning Michigan real estate triggers taxable-value uncapping, unless a statutory exception applies. The decision privileges text, administrative workability and the revenue-protective spirit of Proposal A over concerns about net ownership shifts or intra-family fairness. Assessors gain clarity; entity owners acquire a new compliance imperative; and the Legislature is placed on notice that, if a different balance is desired, it must speak more plainly. The dissent’s warnings about mathematical precision and equitable treatment of closely-held property signal that debate will continue, but until statutory change occurs, the Court’s cumulative-conveyance rule is now Michigan law.