Michigan Condo & HOA Law

I recently received a question for a co-owner regarding a modification request to the exterior of his unit to accommodate his sister-in-law who visits frequently and who is also in a wheelchair. He has asked the association for permission but the managing agent, it appears on his own, has denied his request.

The Michigan Condominium Act as well as the Michigan Handicappers Act and federal law clearly provide that you are entitled to reasonable access to your unit if you are handicapped. Moreover, the Michigan Condominium Act provides that if a person who regularly visits your unit is disabled, then you have a right to seek approval from the association to make modifications to provide access to that disabled person. The association is under an obligation to allow you to make the modification assuming it is reasonable although it will be at your cost. Moreover, if the managing agent is unilaterally denying you such approval, that matter should be brought to the attention of the board of directors as it is not the management company’s responsibility to unilaterally make such a decision which, in my judgment, would be a basis for that management company being terminated.

Posted by Robert Meisner at 2:20 PM | Permalink

I recently heard from a prospective client who stated that her realtor says that she does not need an attorney to draft her Purchase Agreement because it is a simple real estate transaction and her agent has experience in drafting such agreements. Plus, the agent is being paid a commission as a buyer’s agent. However, the individual was wondering just how prudent this would be.

Obviously, it may appear to sound self-serving, but I believe that you need a lawyer in any real estate transaction to protect your interests. Typically, your Purchase Agreement will also provide disclaimers and/or indemnification for the real estate firm, and realtors are not attorneys, and should be deferring to an attorney to review the Purchase Agreement. However, many realtors feel that lawyers by definition tend to try to kill the deal even though their intent is to protect the interests of their client. You are best advised to get an experienced real estate attorney to review any Purchase Agreement for real estate before you sign as it is extremely difficult to deal with the situation after the fact.

Posted by Robert Meisner at 10:04 AM | Permalink

I received a question recently from a condominium owner attempting to rent her property. The real estate agent is offering her a three (3) year lease but wants a double commission as opposed to one (1) month’s rent, i.e. two (2) months’ rent because of that.

My reply to this is that it depends upon her listing agreement with the real estate agent. But I do not believe that the real estate agent should be attempting to collect more than one month’s rent regardless of the length of the lease unless the condo owner is willing, as a matter of gratuity, to pay same. Basically the terms of the listing agreement will apply but I have seen that several real estate agents are attempting to collect additional commissions even though they may not be strictly entitled to it under the listing agreement. It then becomes a matter of negotiations with her and the real estate agent should she wish to pay any more of a commission.

Posted by Robert Meisner at 8:09 AM | Permalink

I recently heard form a co-owner who is concerned about the fact that they may have waived a deed restriction in regard to building a pool cabana next to a swimming pool. Now another co-owner wants to build a shed which needs their permission.

In a case based on similar facts, the Michigan Court of Appeals held that it is hard for a deed restriction to be considered waived. “The violations of the restriction must be that the original purpose of the restriction has been defeated,” and it went on to say that even “A relatively large number of violations do not necessarily establish waiver.” If your association is empowered to exercise architectural control, you may well have a basis to pursue it but you should, of course, get an opinion from a knowledgeable Community Association lawyer.

Posted by Robert Meisner at 12:36 PM | Permalink

I recently heard from a member of a homeowners association whose house is in foreclosure. This individual has been contacted by a so-called foreclosure consultant who is making them an offer to relieve their distress and they wondered about the legality of such an arrangement.

In this economic environment, the appearance of so-called foreclosure consultants, who track foreclosure notices and contact borrowers in distress, has proliferated. These individuals persuade the homeowner in foreclosure to sign a contract whereby, for a fee, the foreclosure consultant agrees to provide services such as saving the financially distressed individual’s home and contacting lenders and other third parties on the homeowner’s behalf in order to delay, postpone or even cancel the foreclosure. Unfortunately, foreclosure consultant contracts often require the homeowner to deed the property to the consultant in exchange for the consultant’s promise to make all delinquent and future mortgage payments to help restore the homeowner’s credit and to grant the homeowner the right to stay in the home as a tenant at a stipulated rental rate, often combined with an option to repurchase.

Sadly, some foreclosure consultants take advantage of homeowners. The homeowners soon find that the promised services have not been provided even though the homeowner paid full compensation for such services, and the homeowners could eventually lose their homes. Although reputable foreclosure consultants can perform valuable services, there have been a number of recent negative publicity situations resulting in the enactment of several state statutes regulating foreclosure consultants’ activities as well as an increase in case law finding certain practices by foreclosure consultants unenforceable and void. Many states have dealt with the statutory relief, but as yet, Michigan has not joined the group. Homeowners are advised to tread cautiously in such cases.

Posted by Robert Meisner at 9:14 AM | Permalink

I recently heard from a condo board member asking if it is legal or ethical for a community association attorney to pay a management company a referral fee for sending him or her business. He continued to state that their managing agent seems to be sending all of his business to one law firm without giving a real reason.

It is a violation of the Michigan Rules of Professional Conduct for a lawyer to share a fee with a non-lawyer unless the non-lawyer is a qualified not-for-profit referral service that is registered with the State Bar of Michigan. Even lawyers referring matters to another lawyer may only do so if the client is so advised, the client does not object, and the total fee is reasonable.

Posted by Robert Meisner at 2:01 PM | Permalink

I was recently contacted by a co-owner whose developer has walked away from the project and left them with only a mortgage company to assist in the operation of the Association. The mortgage company doesn’t want to assume any of the back responsibilities of the Developer and says that it has no such responsibility.

In answer to the concerns of the co-owner, it of course depends upon the facts of each case including the manner in which the mortgage company took over from developer. The mortgage company may well be a “successor developer” and may well have liability for many, if not all, of developer’s responsibilities depending upon the nature of the arrangement between the mortgage company and the developer and the number of units that the mortgagee took over from the developer. You are best advised to consult with an experienced and aggressive community association attorney who will have the ability to negotiate vigorously with the mortgage company. Frequently they have the power and willingness to play hardball with community associations who they presume are underfunded.

Posted by Robert Meisner at 12:42 PM | Permalink

With the snowfall quickly to come in this wonderful Michigan climate of ours, I recently heard from a co-owner complaining that her condominium association refuses to clear off the snow from her driveway even though it is their responsibility. They indicate that they don’t have the funds and that she and the other co-owners should be prepared to get their own person to clear their driveways. She is obviously concerned about the potential liability.

Her condominium association is obviously shirking its responsibilities. When condominium associations say they “don’t have the money,” what they are really saying is that they choose not to have the money because they generally have the authority to levy assessments to meet the needs of their association.

What many condominium board members fail to realize is that their responsibility is to make the condominium a better place to live as opposed to keeping association costs down at the expense of skimping on services, which could lead to potential liability for the association. If you find yourself in this situation, you are best advised to retain an attorney to write a letter to the board advising them of their legal and fiduciary responsibilities and demand that they assume same.

Posted by Robert Meisner at 9:12 AM | Permalink

Welcome to 2010 where the future must remain bright through our own choices and decisions. I recently read a newspaper column wherein the author was lamenting her recent condo purchase. While she bought the foreclosed unit from the bank at a 30% discount, she discovered that her “discounted” property value had fallen $10,000 to $15,000 in the year that she has owned the unit. Here complaint continued with the notion that the price will probably continue to free fall for quite some time to come. Nobody knows where the bottom is going to hit.
The lesson to learn here is not that buying foreclosed condominiums in these tough times are a bad investment. No, the lesson here is that nobody is alone in this economic downturn. We are all affected by the real estate tumult as well as the rough ride on Wall Street. While the possibility exists that our “great deals” might lose value, they will eventually gain value again . . . it’s just a matter of how much and when.

Posted by Robert Meisner at 10:02 AM | Permalink