Michigan Condo & HOA Law

A situation presented itself the other day wherein a board member signed a contract against the property manager’s advice. The manager, while still being new to the property, felt that she was still proving herself and her worth to the board. She wondered if she should sit silently by and make nice with the new board or if she should bring the matter to the Association’s attention and risk alienating the board.

The professional manager should guide the board, but the best manager knows his or her role is an advisory one and the manager should never usurp the authority of the board. Some boards choose to ignore their manager’s advice and when a decision could put the association in peril, it puts the manager in an awkward position of following the board’s wishes or taking a firm but opposing stand. A manager should state his or her position and let the minutes reflect same. Sometimes managers usurp the role of the board to fill the vacuum of power which is not good either. Proper balance should be between the board’s decisions and that of the manager.

Posted by Robert Meisner at 5:52 PM | Permalink

A question was presented to me recently that asked if condominium and/or community association board members should present a plan regarding the care of their elderly members and if they have any responsibility in that area.

Certainly forward looking associations should consider how to accommodate their older residents and their need for long term medical and living assistance. Boards should consider expanding facilities, remodeling existing units to facilitate in-home care and/or collaborate with local service providers to the extent possible. The board should also take precautionary measures to assist in the event of an emergency for on site healthcare. Of course, to the extent that the board undertakes such responsibility, it may also incur potential liability if it does not follow through in the time of need. Associations are best advised to consult with a knowledgeable community association attorney in developing and implementing such a plan.

Posted by Robert Meisner at 12:26 PM | Permalink

I recently heard from a co-owner who was questioning a board member who tried to save the association a few bucks by having his brother bid on the landscaping services. The brother submitted a bid far below all of the others so that he in return received the contract. The co-owner was questioning if this arrangement represented a conflict of interest.

Familiarity with a service provider’s work is an important consideration in any bidding constitution. However, when the relationship between a board member and a service provider is a little too cozy, it creates a problem with both the association and the volunteer. A conflict of interest is generally defined as a situation in which an individual’s duty to one, leads to the disregard of a duty to another. The most common conflicts of interest arise when volunteers suggest a friend or relative for an association contract. In this case it was an example of blatant nepotism and probably a violation of the fiduciary duty of the board member. It also creates a problem if in fact the landscaping services are not done well which, in the event of litigation, may involve a suit against the brother of a board member. You are best advised to not ever hire any one who has any proprietary interest in the association.

Posted by Robert Meisner at 9:38 AM | Permalink

I recently heard from a co-owner who is having a number of problems with his developer who has not sold very many units and does not seem to respond to maintenance and warranty requests.

Unfortunately, the economy has put many developers in a bad financial position and many of them have begun to disregard their responsibilities in regard to warranty and other complaints or just walk away from the project. If you find yourself in this situation, you are best advised to get the association to pursue the developer for not following through on common element areas. Individual owners in the association should also ban together to deal with the developer in regard to problems which are similar to the individual co-owners with respect to their individual units. There may be a bank involved as a successor to the developer to shoulder some or all of the developer’s obligations. The sooner that you consult with a knowledgeable community association attorney, the better chances you are of recovering what you are entitled to receive.

Posted by Robert Meisner at 2:43 PM | Permalink

I recently heard from a board member who spends most of his winters in Florida, but he wants to participate in winter board meetings. He asked if it is legal for him to attend meetings and vote and/or participate via speaker phone. In fact, his situation is common among many Michigan board members.

Last year the Michigan Legislature amended the Non-Profit Corporation Act to include provisions authorizing certain actions by means of “electronic transmission” and/or “remote communication” if such actions are otherwise permitted by the Articles of Incorporation and/or Bylaws. As such, board members are permitted to vote by e-mail and participate in meetings via speaker phone if the governing condominium documents so provide. You should consult with an attorney who is knowledgeable in Community Association Law before undertaking any of these actions. Moreover, if your condominium documents do not provide for such participation, it would behoove your association to amend the documents forthwith.

Posted by Robert Meisner at 9:27 AM | Permalink

I thought it beneficial to go into more depth regarding NBC-CAM and some of their specific programs they offer for management companies. There are standards of professional conduct established by the NBC-CAM requiring applicants to adhere to a high standard of ethical conduct which include the following:

1) The manager should act in accordance with federal, state and local laws applicable to community association management and operations;
2) The manager should comply with the applicable governing documents, policies and procedures of the client association(s) to the extent permitted by that client;
3) A manager should not knowingly misrepresent facts, make inaccurate statements or act in any fraudulent manner while representing the client association(s) or acting as a CMCA;
4) The manager should not engage in the unlicensed practice of law;
5) The manager should disclose to client association(s) any actual or potential conflicts of interest the manager may have in dealings with any other party, including the association’s attorney;
6) The manager should refuse to accept any form of gratuity or other remuneration from individuals or companies that could be viewed as an improper inducement to influence the manager;
7) The manager should participate in continuing professional education.

As an association board member, it would behoove you to check with your managing agent to determine if the above steps are being followed.

Posted by Robert Meisner at 3:36 PM | Permalink

I recently consulted with an association which is in the process of retaining a property manager and the association was wondering what designation NBCCAM means on management company letterhead. Many of you may be wondering yourself about management company credentials, so I though it beneficial to post the information here.

NBC-CAM refers to the National Board of Certification for Community Association Managers. NBC-CAM has a program that provides community association mangers training and expertise in the community association field. Indeed, I am advised that many state legislatures are considering incorporating credentialing licensing programs that would utilize the program as a measurement of assurance that community managers are qualified and capable in all major knowledge areas of community association management. Michigan is a state that does not currently have a licensing process for community association managers, and, obviously, there is a need for professionalism in community association management, and this organization hopes to achieve that.

Posted by Robert Meisner at 10:13 AM | Permalink

I was recently asked by an association board if I had any suggestions as to how they might be able to prevent discrimination complaints under the Fair Housing Act as an Association. I’m sure many condominium and homeowner associations are wondering this very thing as associations can be saddled with discrimination complaints at any time from current members or perspective members who wish to buy in the community.

While discrimination complaints can rise from any association action that members or perspective members perceive as discriminatory, some of the most common discrimination complaints involve the refusal to fulfill a disabled persons parking request. There are three common pitfalls in the arena of discrimination as it relates to the Fair Housing Act: 1) inadequately fulfilled parking space request; 2) receiving discriminatory context such as raising fees during a sale and; 3) design and construction violations. Associations are best advised to consult with a condominium/community association attorney concerning ways to avoid these problems.

Posted by Robert Meisner at 2:15 PM | Permalink

I was recently asked by a board member if I thought her association should be allowed to approve or disapprove tenants on the basis of criminal checks.

Most condominium documents do not allow the association to approve or disapprove tenants, and for good reason; the association would present itself with two problems if it allowed or disallowed residents: 1) By disapproving a tenant, the association could very well subject themselves to suits alleging discrimination under the Fair Housing Act, 2) Criminal background checks do not catch all persons with criminal tendencies; therefore, by approving a tenant a situation could be present where the board approves a tenant who turns out to be a serial rapist or cat burglar, and who reeks havoc in the community following board approval of his residency. In short, I recommend to our community association clients that the associations not get involved in approving or disapproving tenants even if they have that authority in their documents.

Posted by Robert Meisner at 12:25 PM | Permalink

We have a current president who has made a recent decision that all board meetings be closed, except for its annual meeting. All communications with the board must go through the president and he then relays it to the board. A number of association members are upset with this and wish to address the board; however, they have been barred access to do so. Are there any laws that we can cite that the board may be breaking? Our bylaws do not address this issue.

While it is important for board members to maintain communications with their co-owners and to allow the co-owners to express their concerns, there is no open meetings act in Michigan with respect to the board’s actions and/or meetings. It may be different in other states. You are best advised to write to the board of directors and express your concerns about the fact that they should at least open the meetings for a short period of time to hear co-owners’ concerns and/or complaints. You may also wish to consider amending your bylaws.

Posted by Robert Meisner at 8:10 PM | Permalink

I have written in depth lately about cable contracts with condominium associations, and was approached recently by another association being contacted by a cable contractor to negotiate a contract.

There are generally four key terms of a cable contract. Depending upon your documents, you want to be sure, among other things, that 1) you give a license and not an easement if possible, 2) set service standards, 3) avoid a long term contract with automatic renewal terms, 4) arrange for a revenue sharing if at all possible, and 5) don't preclude other providers. In any event, make sure that you have a qualified community association attorney review and/or negotiate your contract before you sign it. Otherwise, you are at a distinct disadvantage.

Posted by Robert Meisner at 5:48 PM | Permalink

Many homeowner associations may find themselves in a situation where they are unable to perform needed work due to extremely low association dues. I recently heard from a board member of a homeowners association which needs their documents revised as they are over thirty (30) years old. Unfortunately, the association only collects $25 a year in assessments per unit.

Hopefully the association’s documents allow the Board to increase the assessment. With such a low annual assessment, the association is not in the position to deal with bylaw enforcement or collection matters, should they arise. The association must be properly funded and associations may need to amend their documents to give the board additional latitude with respect to collecting monies to protect the integrity of the community. One should engage in an attorney familiar with community association law to assist in redrafting documents, including the ability to increase the revenue for the association.

Posted by Robert Meisner at 2:13 PM | Permalink