Michigan Condo & HOA Law

I recently heard from a condominium board member whose association is undergoing a plethora of developer related problems with the construction at his association. The board member stated that the developer of his condominium association is attempting to divide and conquer the association by promising certain co-owners that he will fix their units. The developer is further attempting to scare the co-owners into thinking that they will expend a great deal of money in legal fees and will otherwise not be successful if they pursue him in a court of law as opposed to simply working out the differences with him face to face without lawyers.

Unfortunately, I have seen this effective tactic used by developers too many times. There are some unscrupulous developers out there that use scare tactics to intimidate co-owners who they recognize may be naïve, unsophisticated or intellectually challenged as it relates to tactics to be used in successfully pursuing a developer. This should underscore to co-owners that the developer is not operating in good faith and has something to hide or is otherwise culpable for problems which the association is experiencing.

In this case, the job of the board of directors is to convince the co-owners that good legal representation is necessary in order to adequately pursue the developer and make him or her responsible for their acts and/or omissions, and that they get only what they have paid for.

Posted by Robert Meisner at 9:38 AM | Permalink

I was recently asked by a condominium developer in Michigan if he needed to vacate his existing plat and submit a replat under the Michigan Condominium Act. My answer is that the administrative rules promulgated pursuant to the Condominium Act recognized that a proposed condominium development may overlap with a previously platted subdivision.

The Michigan Court of Appeals, in a very important decision, recently pointed out that the Condominium Act of Michigan specifically provides that the Land Division Act “shall not control divisions made for any condominium project.” The court stated that neither the statutes nor the regulations required the plat to be vacated pursuant to the Land Division act before a condominium project could be developed. It appears then that the developer may proceed with the planned condominium project, although he should, of course, obtain the appropriate local zoning approvals as well as a site plan approval.

Posted by Robert Meisner at 4:14 PM | Permalink

In light of the burgeoning residential and commercial condominium development in downtown Detroit, many individuals have expressed their concern in regard to buying a residential condominium in a mixed use development with retail. My answer to such concerns is that it simply all depends upon the construction of the condominium and the quality of the condominium documents prepared by the developer’s attorney.

Owning and living in a mixed residential/retail development can be a very rewarding experience or it can be a nightmare depending upon the efforts that are being undertaken by the developer to insure that the retail does not interfere with the useful enjoyment of the condominium premises in the residential structures. There should be appropriate allocation of expenses and clear definitions of who will have control of the condominium project between the retail and the residential. I have seen situations where developers have been sloppy in regard to the documents which they have created thereby causing problems for the residents of the residential area. Reviewing the documents in full before one makes a purchase in a mixed development condominium should be the first rule of thumb.

Downtown Detroit is especially making a comeback with new developments in both residential and business districts as well as mixed use condominiums. There is much to offer prospective tenants in the Downtown Detroit area in the way of businesses, shops, restaurants, and entertainment; however, one is best advised to look into the various issues of mixed development condominiums with a knowledgeable condominium lawyer and perhaps an engineering consultant prior to making a purchase.

Posted by Robert Meisner at 5:04 PM | Permalink

I was recently approached by an individual whose condominium association was enduring several defects due to the developer's refusal to address the issues. Instead of pursuing the developer in a court of law, the condominium association has chosen to attempt to remedy the situation by going through local government channels.

While it is true that the local, city or state governments may be able to assist an association to some limited degree in resolving disputes with the builder and/or contractor, being that the local building inspector had to sign off on the project, such government entities are generally not in a position to resolve all issues. Furthermore, if they are in the position to resolve the issue, they may not be able to do so in a timely fashion.

It would behoove the condominium association to consider pursuing the developer with the help of legal counsel as the association may have claims which cannot be addressed by local or state governments. It is imperative that the condominium association retain the services of a knowledgeable condominium attorney who not only knows who to pursue in legal action, but also one who knows which claims to be able to assert in order to maximize said claims against the developer, perhaps without the necessity of litigation.

Unfortunately, it sounds like the condominium association in question is looking to get something for nothing in the name of saving their community a few bucks. However, they could be doing their residents a huge disservice in the long run by not pursuing the developer to the full extent of the law. As we all know, there are no free lunches, and this board should be aware of that.

Posted by Robert Meisner at 12:35 PM | Permalink

Many of our clients have recently been approached by their local cable franchise with an agreement with exclusive rights for the cable company. We advise community associations to consult with legal counsel before signing any agreement with their local cable company.

Routinely, the cable company has offered to pay the association or apartment community a one time up front sum equal up to several hundred dollars per unit in exchange for the association’s or community’s agreement to (1) exclusively market the cable company’s services to its co-owners or residents and (2) grant the cable company an exclusive right to provide services to the condominium. Failure by the association or the community to fulfill these exclusive obligations would render it in default thereby triggering certain remedies such as the ability to terminate the agreement and seek the return of the lump sum payment or a prorata portion thereof.

Exclusive Marketing
The exclusive marketing agreement means that the association or community cannot market or advertise the services of another cable service provider or multiple television station provider for a number of years, being the term of the agreement. While at one time the term of the agreement averaged approximately seven (7) years, the agreements tend to be longer now averaging about fifteen (15) years. There is often an automatic renewal period for a number of years. We have successfully negotiated for shorter renewal terms since after fifteen (15) years, the association or community may no longer want to automatically be bound to such an agreement.

Exclusive Right
The second part of association’s or community’s agreement is more problematic. If the association or community grants the cable company an exclusive right to provide services to the condominium, it means the co-owners cannot contract with other cable and/or satellite dish providers. It is imperative that the cable agreement provide an exception for certain satellite dish or antenna systems that provide telecommunications service consistent with FCC rules and guidelines. Otherwise, the grant of an exclusive right would violate FCC rules and guidelines. It is typically our recommendation that the association or community grant the cable company a non-exclusive right to provide services to the condominium or community, thereby allowing the co-owners or residents to contract with other cable and/or satellite dish providers.

In summary, the community association should not blindly sign the cable franchise agreement presented to it without having experienced counsel review and negotiate the best terms for the association.

Posted by Robert Meisner at 2:34 PM | Permalink