Court of Appeals Holds Lease Violating Rental Ordinance Is Void Ab Initio
Daniel Skidmore v Hideo Hayashi, Makie Hayashi, and Julie Skidmore (Consolidated with Hideo Hayashi and Makie Hayashi v Daniel Skidmore and Julie Skidmore)
COA Opinion Published: October 21, 2026 (Murray, P.J., and Boonstra and Riordan)
COA Docket Nos. 371345 & 371349
Oakland County Circuit Court
Holding: A residential lease entered into in violation of a local ordinance requiring a rental certificate of compliance is void ab initio, even though the ordinance itself creates no private cause of action. The Court of Appeals reversed summary disposition for the landlords on their breach-of-contract claim and reinstated the tenant’s disgorgement and unjust-enrichment claims. The Court also held that only a current occupant may sue under the Housing Law of Michigan and reversed a sanction imposed without an opportunity to be heard. Finally, the Court held that the current language of MCR 2.603(D)(1) does not specifically require an affidavit to set aside a default and that a verified motion containing a statement of facts showing a meritorious defense meets its requirements.
Facts: Daniel and Julie Skidmore rented an Oakland County condominium unit from Hideo and Makie Hayashi under a lease that, as extended, ran from June 2017 through June 2021. In May 2020, Daniel notified the Hayashis that he was canceling the lease because of “constant roof leaks and mold,” and he vacated the unit in November 2020. The Hayashis admitted that they never obtained the rental certificate of compliance required by West Bloomfield Township ordinance for the period Daniel lived there.
The Hayashis sued for $25,034.88 in unpaid rent and late fees, Daniel filed a separate 18-count lawsuit and the cases were consolidated. Relying on McMillan v Douglas, 322 Mich App 354; 913 NW2d 336 (2017), the trial court held that the lease was enforceable because the ordinance gave Daniel no private cause of action. It dismissed all of Daniel’s claims, granted summary disposition to the Hayashis on their breach-of-contract claim, set aside a default entered against the Hayashis, and sanctioned Daniel $500. Daniel appealed.
Key Appellate Holdings:
A lease formed in violation of a local ordinance requiring a rental certificate of compliance is void ab initio, regardless of whether the ordinance creates a private cause of action.
The trial court treated Daniel’s illegality argument as a request for a “remedy” for the ordinance violation and, under McMillan, rejected it. The Court of Appeals disagreed. McMillan addressed only whether a rental-permit ordinance gave a tenant a private right of action to recoup rent. However, Daniel did not sue under the ordinance. Rather, he sought a declaration that the lease was void under the general rule that a contract made in violation of law is void. Int’l Harvester Co of America v Eaton Cir Judge, 163 Mich 55, 61; 127 NW 695 (1910). That principle “exists independently of the remedies provided for the violation of a statute or ordinance itself,” and “courts should not recognize illegal contracts regardless of who has a right to enforce the underlying law.”
Because renting and occupying the unit was “central to the parties’ agreement,” the entire lease was void. Stokes v Millen Roofing Co, 466 Mich 660, 666; 649 NW2d 371 (2002). The Hayashis’ breach-of-contract claim is subject to dismissal on remand along with Daniel’s own breach-of-contract claim. Because unjust enrichment does not depend on a valid contract, Wright v Genesee Co, 504 Mich 410, 419-420; 934 NW2d 805 (2019), Daniel’s disgorgement and unjust-enrichment claims were reinstated, as was his conversion claim for personal property other than the security deposit. The void lease also defeated Daniel’s Truth in Renting Act claim, because he was never “a party to a rental agreement,” MCL 554.636(7). His anti-lockout claim was barred by the one-year limitations period in MCL 600.2918(8).
Only a current occupant may bring an action against an owner under the Housing Law of Michigan, MCL 125.536(1).
MCL 125.536(1) gives “any occupant” an action against an owner who allows unsafe, unsanitary, or unhealthful conditions to exist unabated after notice. Noting that no case had interpreted “occupant” in the context of the Housing Law of Michigan (HLM), the Court applied the term’s plain meaning: “[s]omeone who has possessory rights in, or control over, certain property or premises.” Black’s Law Dictionary (12th ed). Those rights must exist when the action is brought. The Court rejected Daniel’s reliance on MCL 125.402’s rule that “[w]ords used in the present tense include the future,” because “occupant” is a noun and “cannot adopt a present or future tense.”
Other HLM provisions confirm that reading, including MCL 125.534(5), which permits a court to authorize a complaining occupant to correct a violation and deduct the cost from rent, and MCL 125.478, which requires occupants of private and two-family dwellings to provide garbage bins, a duty the Court said it “would be absurd” to impose on former residents “in perpetuity.” Because Daniel had moved out before he sued, he was not an “occupant.”
Sanctions under MCR 1.109(E)(6) may not be imposed without reasonable notice and a meaningful opportunity to be heard.
After Daniel moved to have a guardian appointed for the Hayashis—relief the trial court found only the probate court could grant—the Hayashis requested sanctions in their response brief. The trial court, which had dispensed with oral argument, imposed a $500 sanction five days later. Although MCR 1.109(E)(6) prescribes no particular procedure, “a party must receive some type of reasonable notice and an opportunity to be heard before the imposition of sanctions.” Vittiglio v Vittiglio, 297 Mich App 391, 405; 824 NW2d 591 (2012). Because MCR 2.119(A)(2)(b) bars reply briefs without leave of court, Daniel, a pro se litigant, had no realistic opportunity to respond.
The due-process violation was an abuse of discretion, and it was not harmless. The Hayashis never specified an amount, and the trial court imposed $500 payable to their attorney without explaining how it reached that figure. The sanction was reversed.
Under the current MCR 2.603(D)(1), a motion to set aside a default requires a statement of facts showing a meritorious defense verified under MCR 1.109(D)(3), not an affidavit complying with MCR 2.119(B)(1).
Daniel relied on Miller v Rondeau, 174 Mich App 483, 487; 436 NW2d 393 (1988), to argue that the Hayashis needed an affidavit satisfying MCR 2.119(B)(1). But Miller applied an earlier version of the rule that expressly required “an affidavit of facts showing a meritorious defense.” The current rule requires only “a statement of facts showing a meritorious defense, verified in the manner prescribed by MCR 1.109(D)(3),” and the Hayashis’ verified motion “plainly complies” with that requirement.
The Court also found good cause. The Hayashis, an elderly couple with limited English, were confused by the proceedings after their attorney withdrew, and they moved to set aside the default the same month their new attorney appeared. Confusion over the litigation process and a change of counsel can establish good cause where there is no evidence of intentional delay and no prejudice. Bednarsh v Winshall, 364 Mich 113, 114; 110 NW2d 729 (1961); Reed v Walsh, 170 Mich App 61, 64-66; 427 NW2d 588 (1988). Daniel, however, is entitled to costs under MCR 2.625(D)(1).
