Michigan Condo & HOA Law

I was recently asked by an association board to define defamation and for suggestions on how an association board might avoid defamation lawsuits regarding communications to the homeowners.

Defamation is a statement that makes a false claim, either expressly stated, or implied to be factual, that may harm the reputation of an individual. In a community association context, defamation lawsuits typically arise when an association distributes information on delinquent co-owners. While I am generally not in favor of delinquency lists, it is my belief that you can distribute names of members who are delinquent in their payments, but you should be extremely careful about how you do so and consider the ramifications if you do so.

Ultimately, there are two items that one must carefully observe: First, print only the facts that you can verify. For example, specify the date when the member became delinquent. If you simply state the member is delinquent and the member becomes current in his payment obligations by the time the community newsletter and meeting minutes are printed and disseminated, you will have published something factually untrue. Never specify the amount that is past due; if you are off by even a penny, you may have published an untruth. Secondly, do not publish delinquency lists under a headline that has a negative connotation; if you decide to publish delinquencies, which I am not generally in favor of, do so under a neutral title such as “delinquencies.” You are best advised to seek legal counsel prior to publishing the list.

Posted by Robert Meisner at 4:45 PM | Permalink

I recently heard from a homeowner who lives in a complex where all of the building has entirely stopped, and the developer has completely pulled out of the complex. The model home is finished, but there are still a number of other sites which are completed on the outside, but are in need of a lot of work on the inside. There are currently eleven buildings occupied, but only thirteen co-owner’s are paying their monthly assessments to the management company. The homeowners do not know who is running the association or to whom they should register their complaints.

Unfortunately, this is a sign of the times, as this association is suffering the same problem as many other homeowners and/or associations wherein the developer has bailed out. If you find yourself in a similar situation, you are best advised to get an experienced community association lawyer to advise you of your rights, and to assist in the continued operation of the association.

Posted by Robert Meisner at 3:29 PM | Permalink

I recently heard from board members of an association who are concerned that a committee chair has taken it upon herself to set up an interactive website using the association’s name on the home page. The website offers a calendar of association events and a downloadable architectural request form. Neighbors are having conversations on the website and the board members wish to have her take the site down because the association attorney is worried about the association’s potential liability for what residents might say. She has apparently refused to do so and the board asked if they could force her to remove the site.

My reply is that it depends on who owns the website and whether or not the association’s name is being used without its permission. I would suggest that if in fact the website purports to claim that it is an association website, that the association board may have a right to pursue the termination of the website as we have done in various instances on behalf of association clients. The association attorney should be consulted as to what actions he or she would recommend with regard to terminating the website.

Posted by Robert Meisner at 10:17 PM | Permalink

Recently there has been much discussion regarding condominium associations needing project-wide FHA certification in order for individual units to receive FHA loan consideration. This discussion stems directly from the impact of the new 2009 FHA eligibility requirements for condominium associations pursuant to the directives of the Housing and Economic Recovery Act of 2008.

The new FHA regulations have eliminated “spot loan approvals” for condominium units (i.e. unit by unit approval for lending). The new FHA regulations now require project wide approval before issuing any FHA insured loans in a condominium project. Moreover, as part of these new standards, each association will need to be re-certified every two years.

Board members must realize that FHA certification for the entire project is going to be necessary in order to keep the units as marketable as possible by meeting the requirements of mortgage lenders in general.

The process of FHA certification requires a review of several factors:
1. Association documents may need to be amended;
2. Percentage of overall non-co-owner occupancies;
3. Percentage of assessment arrearages over 30 days;
4. Pending special and/or additional assessments;
5. Pending litigation where the association is a named defendant;
6. Total number of units owned by each co-owner;
7. Overall percentage of FHA loans at the project; and
8. Minimum insurance requirements.

If associations wish to better market their units and communities they are best advised to speak to a knowledgeable condominium association attorney in regard to FHA certification.

Posted by Robert Meisner at 3:15 PM | Permalink

I heard from a homeowner not long ago whose neighbor has a tree located several feet from the border line; however, the tree’s root system is causing damage to the homeowner’s retaining wall running along the boundary line as well as the patio, sewer, water pipes and the foundation of their townhouse. They wondered if they had any basis to seek damages or other relief.
The simple answer is yes; the homeowner should seek an injunction against the neighbor. In effect, one would have a basis to pursue the neighbor under a nuisance liability whenever trees and plants can cause actual harm or pose an imminent danger of actual harm to adjoining property. I encourage you to strongly seek legal counsel if you find yourself in such a position.

Posted by Robert Meisner at 2:53 PM | Permalink