Michigan Condo & HOA Law

I recently heard from an entire condo board who has had the same attorney for years and whose bylaws have not been amended in almost 30 years. This, to me, is a travesty! First, if your bylaws have not been amended within the past twelve months, much less thirty years, they should be amended immediately because of changes to the Michigan Non Profit Act this past February, which have a direct, profound effect upon condo bylaws such as the enhanced ability to communicate with members of the association and condo board members electronically. There have been numerous changes in the laws that directly affect condominium operation and your attorney should be aware of these changes. If your association finds itself in a position to amend its bylaws, you should contact an experienced condo association attorney immediately to deal with these issues.

Posted by Robert Meisner at 4:08 PM | Permalink

I recently heard of an incident where a section of fence area fell from a roof at a condominium injuring two persons who were on a public sidewalk in front of the condo unit. The injured persons are suing the Association and its Board of Directors for negligent failure to maintain the common elements including a roof top security fence. They are also claiming damages in excess of the amount of the insurance and are suing individual co-owners of the condominium. A co-owner recently asked me what liability I thought co-owners would have in such an instance.

The answer, of course, depends upon the state in which the association is located but in a case of first impression in New York, the Court held that the unit owners did not have statutory liability for safe maintenance of the building because the nature of the unit owners interest in the common elements is "materially dissimilar to the free hold interest" normally held by owners of multiple dwellings. The Court also indicated in that case that vicarious liability for unit owners was inappropriate because the common elements were solely under the control of the board of managers. It would appear, therefore, that the individuals may have some immunity from liability since it should be a corporate obligation, namely that of the Association.

Posted by Robert Meisner at 1:47 PM | Permalink

I recently heard from a condo association board which is considering a measure regarding towing vehicles. There are certain things that boards must consider before entertaining such a measure.

In most condominiums, an owner or lessor of private property must post a notice that meets the following requirements before authorizing the towing or removal of a vehicle from real property without the consent of the owner or other person who is legally entitled to possess a vehicle:

(a). The notice shall be prominently displayed at a point of entry for vehicular access to the real property. If the real property lacks curbs or access barriers, not less than one notice shall be posted for each 100 feel of road frontage.
(b). The notice must clearly indicate in letters not less than 2 inches high on a contrasting background that unauthorized vehicles will be towed at the owner’s expense.
(c). The notice must provide the name and telephone number of the towing service for towing or removing vehicles from that property.
(d). The notice must be permanently installed with the bottom of the notice located not less than 4 feet from the ground and is continuously maintained on the property for not less than 24 hours before a vehicle is towed or removed.

Even though an association meets the above conditions, caution should be taken by any association utilizing self help remedies in regard to removing a vehicle unless there is an emergency. The association should also consult with a knowledgeable community association attorney before taking such action.

Posted by Robert Meisner at 5:05 PM | Permalink

Recently I have been hearing from board members who are complaining about certain autocratic, Nazi-like directors who run the show and all the other directors are abdicating to them on whatever issues come before the Board. Several board members have resigned in the wake of this type of director, and those that remain are left to wonder what options they have.

I talk about this type of director in my book, Condo Living: A Guide to Buying, Owning & Selling a Condominium (Momentum Books, 2002), and the best way to deal with this director is to have him removed by the membership which usually requires fifty percent (50%) of the members. There should be political arguments as well as legal ones that can be made against the director and the members should ban together to get a petition to call a special meeting to remove the director. It is, of course, presumed that you have made efforts to talk reason to this type of individual but my experience has been that these people are so power hungry and head strong that they will not listen to reason, perhaps due to being in a position of power for the first time. If your association has such a director, it would behoove you to consult with a community association attorney to assist you in the removal process if that is indeed your option of choice.

Posted by Robert Meisner at 9:16 AM | Permalink

Board communication with co-owners is essential to operating a successful condominium or homeowners association. Establishing a community association newsletter to provide notice of meetings and to announce community events if a wonderful way for board members to communicate with the association members.

However, with that being said, one must recognize that when publishing a community association newsletter, it can lead to liability for the association. Here are five rules to help avoid liability when publishing a newsletter. (1) The Board of Directors must maintain control over what material gets published. Turning this decision making ability over to a “volunteer editor” could be legally hazardous to your health; (2) know which photos of members you can and cannot publish without permission. It would be a good idea to have co-owners sign a “permission slip” giving you the authority to post their picture; (3) print only verifiable facts. You do not want to publish rumors and/or hearsay, which will cause a divisive attitude to permeate the neighborhood; (4) do not print ads that violate fair housing laws; and (5) be especially careful when even considering publishing names of delinquent members. You should consult with your community association lawyer concerning the content of your newsletter and it may be appropriate for you to have him or her review it before it is being sent.

Posted by Robert Meisner at 10:32 AM | Permalink

Do condominium or community association board members have the power to prohibit such things as garage sales? This question was posed to me by a co-owner of an association who has a board member attempting do to just this by imposing a fine upon any co-owner who holds a garage sale.

While board members may feel they are all-powerful, this is one power that they do not possess. I write about this very board member in my book, Condo Living: A Guide to Buying, Owning and Selling a Condominium (Momentum Books, 2005). “This outspoken person (I will call him a ‘dictator’) tends overtly, or covertly, to seize control of the board of directors. The dictator may believe that he or she is ‘destined’ to serve on the board for years to come. . . If the board harbors a dictator, and the dictator is able to cause the other directors to blindly follow his dictates or whims, be they altruistic or otherwise, the board is inevitably doomed to failure. On some occasions, the dictator is likely to lead the board astray or to impose his personal biases on the remainder of the members to the detriment of the association as a whole.”

Based upon a New York case with similar facts, the garage sale was not deemed to be a nuisance and the board did not have the authority to impose a fine. The Court said that the Board's powers were derived from State law and the association governing documents and neither banned garage sales. The only way the Board could consider the garage sale to be a prohibited nuisance was if they could prove that it substantially inconvenienced the other co-owners and caused them damage, and the Board could not prove either one of those things. So, contrary to the wishes of some board members, garage sales are still legal in condominium and community associations for the time being.

Posted by Robert Meisner at 8:12 AM | Permalink

I have recently read that some associations are considering buying defibrillators and training board members on how to use them in case of co-owners having heart attacks on common elements.

Although having a defibrillator on hand might seem like a good idea, it is fraught with liability risks and associations may incur additional liability. First, someone must be trained in the proper use of the defibrillator. If a person uses it wrong and injures or kills someone, the association could be sued for having inadequately trained the person. Also, someone must be responsible for maintaining the defibrillator and making sure it is in working order. If the equipment malfunctions, the association could be liable. The Association could also be liable if the person designated to respond to emergency calls for the defibrillator is late in arriving. While the idea is consistent with the caring and helpful nature of our society, it is laden with potential liability risk, and associations are best advised to consult with their attorney before venturing down such a road.

Posted by Robert Meisner at 7:42 PM | Permalink

I received a call not long ago from a board member whose association is considering letting members of the public pay to use their pool and clubhouse, and he was questioning the potential adverse circumstances that might arise.

Title III of the Americans with Disabilities Act of 1990 bans privately owned facilities that are open to the public from discriminating against people with disabilities and requires them to comply with accessibility standards. Most associations focus their discrimination training, if any, on avoiding violations of the Fair Housing Act, a law that applies directly to condominium associations. But if associations rent their community clubhouses for events and let members of the public pay to use their pool, both the clubhouse and pool become places of public accommodation and so must comply with Title III. Associations should take this into consideration before they move forward with such a decision.

Posted by Robert Meisner at 11:18 AM | Permalink

I recently talked with an association board who was considering having a surveillance camera placed on the premises and they wondered if I had any comments regarding the benefits of surveillance cameras.

It may well be a good idea based upon an incident in Florida where a board member was charged with aggravated assault with a firearm, carrying a concealed firearm, and impersonating a police officer when he became over zealous in enforcing a bylaw provision at the pool of the condominium. He denied pulling out a gun but a surveillance video clearly showed him pointing a gun at a resident and a guest. In that case, video surveillance was indeed beneficial. You should check with your association attorney concerning all the ramifications of it.

Posted by Robert Meisner at 12:18 PM | Permalink

Not long ago I heard from a treasurer of a condo association board who was frustrated because her association had never passed an operating budget before the beginning of the year. They finally adopted a proposed budget which did not include a retroactive collection of assessments for the current year. With the current year's budget, the president made a unilateral decision to advise owners that there would be a retroactive assessment. In complete frustration, the treasurer asked if one person could change the resolution of the board after it is passed.

The president alone, or any other board member for that matter, cannot make policy decisions for the association. Those decisions must be made by the board and the president only has authority to carry out the resolutions of the board. However, if the board members choose to allow the president to take these actions without their consent, they may be held accountable for the acts or omissions of the president. Board members must comply with the basic requirements of the condominium and corporate bylaws and if they require that a budget be established before the annual assessment is levied, then that must be done. In the case of our frustrated treasurer, the president was correct in recognizing that the bylaws require the board to adopt an annual budget so the late budget should cover the entire year.

Posted by Robert Meisner at 7:46 AM | Permalink

I recently heard from a co-owner who was concerned that her Association treasurer was not spending money wisely. The more she spoke I learned that the treasurer is the only officer to sign checks for the Association expenses, and furthermore, the owners do not receive statements as to how the money is being spent. She finished by asking if she should demand that the Board obtain a certified audit of the record books.

It is clear that her association lacks the basic financial protections. The Board has not complied with basic recording requirements. Condominium and community associations are best advised to have more than one person signing checks if the association does not have a professional management company. The expense of a certified audit is justified if the Board suspects that there has been unusual activity or that the Association funds or the size of the building requires a complete examination. Audits should be performed annually with a certified audit being performed at least once every five years.

Posted by Robert Meisner at 3:48 PM | Permalink

With the foreclosure climate as high as it is in the State of Michigan, many associations will be the highest bidder at its own sheriff=s sale; but board members and co-owners may be wondering what the next step is.

Normally, the co-owner whose unit as gone to a sheriff’s sale will have a six month redemption period to pay back all monies due and owing to the association together with interest as a result of the sheriff=s sale unless the unit is abandoned which results in a shorter redemption period. That, of course, depends upon the terms of the foreclosure sale and/or judgment obtained. After the redemption period expires, the Association has ownership of the units subject to any prior encumbrances on it but may have to seek a removal of the co-owner from the unit through court proceedings. One is best advised in general to consult with a condominium specialist in regard to one's best remedies.

Posted by Robert Meisner at 7:50 AM | Permalink

Robert M. Meisner and Meisner & Associates, P.C. are pleased to announce a significant victory for their condominium association client in a landmark court decision regarding the interpretation of the Michigan Condominium Act.

The Michigan Condominium Act requires that the first mortgage holder provide notice to a condominium association of an impending sheriff’s sale. In its first impression decision, Oakland County Circuit Court Judge Fred M. Mester held that due to the first mortgagee’s failure to notify the association of the impending sheriff’s sale as required by the Michigan Condominium Act, the first mortgagee took title to the unit subject to the condominium association’s lien for non-payment of assessments, inclusive of interest, late charges and attorney fees. The Michigan Condominium Act does not state the specific remedy that is available to the association when the mortgagee fails to give notice. This decision clarifies that remedy. This case was argued on behalf of the condominium association by Jennifer Cordon Thor of Meisner & Associates, P.C., and the decision allowed for the association to secure its lien upon the unit as well as to preserve its claim for interest, costs and attorney fees incurred in the collection of unpaid assessments as they are secured by the lien.

Condominium associations should be aware of any and all units that are delinquent in not only association dues, but also mortgage payments as this may affect units that may be delinquent in the condominium assessments.

Posted by Robert Meisner at 5:26 PM | Permalink

I recently spoke with an association whose management company strongly recommended a law firm for representation being that they have worked with this law firm on hundreds of projects. Once the association looked at the attorney’s fee agreement they discovered that the law firm would not pursue any claims against the management company, and this concerned the association in the event that such a dispute should occur.

While it is important and highly beneficial that the law firm and the management company have a good rapport, one must insure that the law firm is independent of the management company in such a way that it can resolve various disputes between the association and the management company should they occur including negotiating the management contract, which in my opinion is the most important contract that the association will sign. Some law firms are so dependent upon referrals from management companies that they will not get involved in any disputes with the management company which may undermine the ability of the association's counsel to effectively represent it in certain situations.

It is imperative that attorneys realize they serve and represent the condominium and/or community association rather than the management company. Associations are best advised to have an attorney who is independent enough from the management companies to be able to represent the association zealously without any interference from outside sources.

Posted by Robert Meisner at 11:09 AM | Permalink

I recently heard from a condominium association board who was interviewing an attorney for a construction defect case. They felt that the attorney himself had a great deal of experience, but they were concerned that he may not have been a leading attorney in court as it related to pursuing their claim. Their question to me was how can they be sure that the guy leading the team is the guy they want leading the team.

When an association is going through the attorney interview process, they should be bold enough to ask which attorney will be leading the case. Some law firms have persons who have experience in a particular area of law but who are not litigators or who will not appear in Court. Litigating is somewhat of an art; therefore, it is very important that the right attorney is handling the case as it pertains to in-court appearances. The flip side is that some law firms have litigation divisions which may have experience at dealing with judges and juries in the litigation process, but they may not have experience in the area of law of which you are desirous.

It is simply imperative that the proper questions must be asked when an association is going through the attorney hiring process. Do not be afraid to step on toes with your questioning – ultimately the association is the boss!

Posted by Robert Meisner at 1:00 PM | Permalink

I recently heard from a co-owner whose association is considering passing a rule prohibiting dogs in their condo. At present, there is no rule banning dogs and he was wondering if the association has the wherewithal to establish such a rule

Of course this is an impossible question to answer without looking directly at the associations bylaws. For the sake of argument let’s say the bylaws do not limit dogs at this time. Creating such a prohibition will most likely be a lightening rod as people will set up camp at the two extreme ends of either wanting dogs or not wanting them. The association could possibly consider a bylaw amendment, which may require two-thirds of the co-owners to approve it depending upon its jurisdiction; whereas a “rule” can be created by the board of directors and can generally be promulgated by the Board of Directors.

There is much to consider when deciding between creating a “rule” and passing a bylaw amendment. Associations are best advised to consult with an attorney knowledgeable about condominium law before proceeding.

Posted by Robert Meisner at 9:38 AM | Permalink

I recently heard from board members from a condominium association who were inquiring about how various law firms bill out their services. Their experience was that one law firm charged the same hourly rates for all of its attorneys while another law firm had different rates for their attorneys and they were seeking my opinion on these billing methods.

I truly believe that appropriate charges should depend upon the experience, expertise and reputation of the attorneys. If one law firm is charging the same rate for all their attorneys, the question to ask is are all their attorneys equally experienced in the particular area of law needed? More than likely that is not the case and one may be better off hiring a law firm that has varying rates depending upon the experience and length of service of the attorney, even if the hourly rates for some of the attorneys may be higher than the hourly rate charged by the firm who charged the same rate for all of its attorneys. Remember the old adage, he who charges least knows best what he/she is worth.

Posted by Robert Meisner at 5:17 PM | Permalink

I recently heard from a co-owner whose association has several extra parking spaces which the co-owners have been using. The condominium association board of directors has adopted a rule stating that these unassigned parking spaces are for guest parking only. The co-owner wondered if the board could adopt such a rule that eliminates owner’s use of these extra parking spaces.

What the board has to be concerned about in this case is that the rules and regulations are consistent with the Master Deed and Condominium Bylaws. Because the co-owners have easement rights to parking areas designated for vehicle use, a more reasonable rule would be for the Board to designate the area for residents and guests unless there is a specific provision in the bylaws authorizing the Board to make this guest parking. If the future use results in a shortage of owner or guest parking, the directors can modify the rule under its authority to administer the condominium documents. The Board is best advised to get a legal opinion from counsel.

Posted by Robert Meisner at 3:36 PM | Permalink

I recently received an email from a condominium board member whose association is dealing with an issue of what information should be allowed on bulletin boards.
Obviously, many communities have bulletin boards in their lobbies or common areas. Typically, Associations use the boards to post meeting agendas, reminders about upcoming events, units for sale, renovations and other worthy information for members. But letting members post on bulletin boards can cause problems and it is important for the Association to pass community bulletin board rules to prevent bulletin board problems.

These rules should include banning material that may violate Fair Housing laws, banning postings related to illegal or illegitimate activity, banning profane and pornographic material, requiring postings to be approved by the Board of Directors, limiting the size of postings, as well as only allowing the manager to place and remove postings. I would advise any association board to consult with a knowledgeable community association attorney with respect to any rules to be published, especially in relation to making sure Fair Housing Laws are followed.

Posted by Robert Meisner at 4:30 PM | Permalink

I recently heard from a new lawyer embarking on representing community associations who was concerned about the fact that a perspective condominium association client had several Board members who had been antagonistic towards him. He was concerned about how he would handle such a group as clients.

I recently wrote an article for Common Ground Magazine entitled “Advice and Dissent” (click here to read the full article). In that article I spoke about the fact that the attorney actually works for the association as opposed to the board of directors. While it is the board that does the hiring (and firing) of the association attorney, it is vitally important that the attorney realize he or she has a direct responsibility to the association as a corporate entity and not certain individuals within the association or neighborhood community.

In my book entitled Condo Living: A Guide to Buying, Owning, and Selling a Condominium, I talk about the "cast of characters" that one finds on the Board of Directors. Unfortunately sometimes you find Directors who have a great distaste for lawyers and/or do not match up personality-wise with the association’s attorney.

Sometimes some of the best clients are the ones that you choose not to represent just like some of the best real estate deals are the ones that are not made. If one has a “bad” group of Board members to begin with, things could only get worse, unless, of course, the Board changes in composition. It is a business decision that every attorney has to make, but one may be best advised to beg off and let someone else have the hassle.

Posted by Robert Meisner at 5:21 PM | Permalink

I recently spoke with a co-owner who was complaining because her board of directors continually chooses the cheapest contractors who tend to not do a very good job. She was looking for some advice on how to approach her board to not be afraid to spend a little bit of money for a job well done.

My reply is simple. While the Board has a certain amount of discretion in regard to whom they contract and when to make the repairs, that discretion can not be abused when the community is left in a state of disrepair. Co-owners who feel that their association board is being penny wise and pound foolish should contact the Association Board and point out their fiduciary responsibilities in operating the Association in the physically sound manner which results in an improvement of the capitol structure including adequate maintenance and capitol improvements, if necessary.

Absent their favorable response, I would retain an experienced community association lawyer and threaten them with legal action and, if necessary, take such legal action. By trying to save a few dollars by skimping on work being performed, the association board may very well be hurting the longevity and overall well being of the community association. This also applies, of course, to legal and accounting professionals.

Posted by Robert Meisner at 3:35 PM | Permalink

I recently heard from a condominium association board that was beside itself because the condominium association attorney would not return phone calls. A phone call can seem like such a little thing, but when they go unreturned, they can become a huge albatross around one’s neck. A series of unheeded phone calls can paint several pictures in the mind of clients: a picture of indifference – this guy is not returning our calls because he just does not care about our situation or need; a picture of incompetence – maybe he is not calling us back because he does not know how to handle the situation; or a picture of irresponsibility – our phone calls go unheeded because Mr. Lawyer spends too much time on the golf course, or he has too many clients, and not enough time to work on our case.

No matter the picture that is being painted due to unreturned phone calls, it is never a good one. It is simply considered a professional courtesy to return phone calls within a 24 hour period unless one is out of town. According to officials from the State Bar of California, the vast majority of complaints against attorneys are due to inattentiveness to clients and a lack of returned phone calls.

So what should you do when your attorney will not return calls? Well, the short answer is to fire him or her as the case may be. However, there are other ways of getting your attorneys attention. Simply acknowledging in a letter to your attorney, as well as the head lawyer of the firm, that you are aware that your messages are going unreturned can be enough to set your attorney back on the right track. However you choose to get your attorney’s attention, it must be done. The needs of community associations cannot go unheeded.

Posted by Robert Meisner at 3:21 PM | Permalink

Business as Usual
The third detail to which the association must pay special attention is maintaining the business of the association after a disaster. Community association boards should look into the possibility of contracting with vendors ahead of time, as every clean up crew in the county will be busy in the days and weeks following major disasters. Associations should also duplicate important records and keep them offsite. Such planning is very prudent as the association will be able to maintain a continuity of business if records are not destroyed.

In the weeks and months following September 11th, as well as the hurricanes which destroyed the Gulf Coast, we learned of the importance of disaster planning and how simple preparation can save a life. In light of what we now know, association boards should not take disaster planning nonchalantly. The better prepared and informed a community is, the better its chances of rising above the fray during unexpected disasters and perhaps saving its members time, frustration, and even lives.

Posted by Robert Meisner at 7:00 PM | Permalink

Safety First
Once the association has completed the time-consuming task of identifying risks, the board of directors must now focus on the safety of its residents by communicating the acknowledged risks to all co-owners. Co-owners should also be made aware that during major disasters they should be prepared for 72 hours without emergency aid or relief. They should stock food, water, and certain first aid supplies. A complete list of items that individuals should stock pile and how citizens can properly prepare for disasters can be found on the Department of Homeland Security’s website: www.dhs.gov/xcitizens.

During and following the aftermath of a disaster, community associations can run through a checklist of five things that will aid in maintaining the safety of their residents. The checklist includes the following: 1) Accounting for all residents. This can be a daunting task, especially in larger communities. The planning committee should establish a “grape vine” to check on individuals. If power lines are down, there should be a cul-de-sac “point man” that checks on his or her immediate neighbors. 2) Attend to the injured. Again, this can be a formidable assignment. A plan should be in place that allows for individuals to contact emergency organizations immediately. 3) Secure the community from vandalism and looting. 4) Remove storm debris. 5) Brace and support building structures to limit further damage.

If the residents are thoroughly informed on matters of safety, the chances are greater that more co-owners will be able to endure disasters without personal injury when the disasters occur.

Posted by Robert Meisner at 8:40 AM | Permalink

The Difference is in the Details
Once a planning committee has been created at your condominium association, their major task is to work through the various details of arranging a disaster relief plan for their community. There are three major details that every community association should consider. The first detail that must be well-thought-out is making a risk assessment. What are the major dangers your community may be at risk of experiencing? While it is true, there are not too many communities in Michigan which are located on a fault line, we have several communities which may very well be located in a flood area - Michigan has many lakes and a plethora of wetlands. The bottom line is to locate the obvious risk factors first no matter where you live.

There may be other risk factors which are not as noticeable as the nuclear power plant next door; fortunately, there is help for that too. In Michigan, one can gather information on assessing the not-so-noticeable risks by contacting www.michigan.gov/emd. From this point, one will be able to access the proper county or municipal emergency service agencies.

Many local county and municipal governments have established Local Emergency Planning Committees (LEPC). These organizations are in place to assist residents in developing their own plans and preparations in disaster anticipation. Also, community associations should contact their local police and fire departments to seek assistance in creating risk assessments and evacuation plans if necessary. Once the risk assessment has been completed, associations should contact their insurance agent to determine if they have the proper insurance in place. This should also include an assessment of the necessity of terrorism insurance.

Posted by Robert Meisner at 2:20 PM | Permalink

For years, disaster planning has become a way of life for individuals and communities located in the coastal states. From blazing wild fires to hurricane floods, acts of nature have taken disaster planning to another level. Due to Michigan’s lack of “news-worthy” disasters, many individuals may not see the benefit in spending time to prepare for disasters if and when they should occur. While Michigan does not see its share of wild fires or ferocious hurricanes, we have experienced some severe winter storms with power outages lasting for days. Even without major acts of nature, simply living in the shadow of September 11th, disaster planning should be a way of life, especially for the community association.

A Novel Idea
Many associations have beautification committees, finance committees, marketing committees, and any other committee a board member can create. However, how many associations have a planning committee whose sole responsibility is to develop a disaster relief plan? Such an idea should be taken very seriously with the committee being made up of management staff, board members and residents. Community associations should be proactive in this area as opposed to assuming that their management company has already thought out such details.

Posted by Robert Meisner at 8:16 AM | 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

The importance that the management company plays in the successful operation of a condominium or homeowners association cannot be overstated. We strongly recommend that community associations seriously entertain the retention of a management company to assist the board of directors in the day-to-day management of the association. However, in so doing, we must emphasize that not all management companies are created equally and sometimes vary widely in both the quality and quantity of services provided.

When looking for a management company, associations must ask several questions. For example, how large is the complex? Does a difference in structure mandate a difference in management companies? Some management companies are better suited to handle certain structures over others. Does a difference in population mandate a difference in management companies? Some management companies may not have the people power to handle larger, more populated and/or mature communities.

Does a difference in location mandate a difference in management companies? Some management companies may serve rural communities better than they serve urban communities and vice versa. Downtown high-rise developments certainly have their differences from suburban townhouse communities. While both developments would require general management skills, the management company of the rural community may need to know more about landscaping and ground maintenance, whereas the management company of the downtown high-rise might need to have extensive knowledge regarding elevator maintenance and a complex HVAC system.

Does the type of association come into play? Can one management company handle the likes of a condominium association, homeowners association as well as a cooperative? Should the association look to hire an on-site manager, or a portfolio manager who is also responsible for other properties?

There are several questions and concerns which must be considered before an association of any style and type chooses a manager or management company to represent their needs and interests. We strongly suggest that the condominium or homeowner association consult with legal counsel who is not beholden to a specific management company in order to make an informed decision.

Posted by Robert Meisner at 2:33 PM | Permalink

I met with an individual the other day who is concerned about latent problems stemming from her cooperative's position of right of first refusal in regard to potential buyers. My thoughts on such issues are that community associations should tread very lightly when going down such a path.

Cooperatives, condominium and community associations have to be very careful that issues such as discrimination do not crop up when the association attempts to excerise this right of first refusal. Associations must be absolutely certain that the decision with respect to the right of first refusal is based upon economics and/or an unwillingness to abide by the association documents rather than race, creed, sex, etc.

Indeed, many secondary mortgage providers do not allow a right of first refusal in community association documents on which they lend money because of the possibility for discriminatory usage. Associations are best advised to get an opinion for legal counsel in regard to this very sensitive issue.

Posted by Robert Meisner at 11:33 AM | Permalink

I recently heard from a condominium co-owner who asked if it was necessary for his condominium association to conduct a certified audit every year. His situation is that his board of directors had not conducted an audit in five (5) years because of “other pressing issues.” After several co-owners complained, the board finally decided to conduct the audit, but it is not a certified audit.

The Condominium Act and most condominium bylaws require that the condominium association have an audit done by an independent accountant but the audit need not be certified, and the accountant need not be a certified public accountant (CPA). Although a certified audit is more expensive than a non-certified audit, it is our recommendation that associations have a certified audit performed on a yearly basis as well as a financial statement provided to the co-owners on a yearly basis as the later is required by the Condominium Act. Even though the auditor need not be a CPA, he or she should be condominium wise as it relates to the ins and outs of condominium accounting and governance.

Posted by Robert Meisner at 2:21 PM | Permalink

With the circumstance of economic conditions being what they are in the State of Michigan, many condominium and community associations are concerned about their ability to collect monthly or periodic assessments. Bankruptcies and foreclosures are at an all time high in the state of Michigan with Chapter 7 and Chapter 13 filings growing at an annual rate of 10%(1) , and the State rating third in the nation in foreclosures(2). Even though economic times are tough, condominium and community associations, like any other corporation, must maintain their cash flow, which is accomplished by collecting monthly assessments from their co-owners. The most effective way of doing this is through a methodical, and sometimes, an aggressive assessment collection policy.

Many condominium and community association board members are reluctant to pursue an aggressive collection policy with their neighbors when they know their neighbors may be experiencing an economic crunch. While our firm can certainly understand their angst in making bad situations worse for their neighbors, the bottom line is that the board of directors has a fiduciary duty to make sure the “corporation” is able to continue operations, and if the board does not pursue a methodical, aggressive collection policy they may be creating a bad situation for all of their neighbors.

It is our firm’s advice to condominium and community associations to seek counsel from a knowledgeable condominium and community association lawyer who can guide them through the murky waters of assessment collection during economically troubled times.

Continue reading "Collecting Assessments in Economically Troubled Times" »

Posted by Robert Meisner at 11:46 AM | Permalink

A condominium director asked me the other day if I thought one of their co-owners had a legal argument in withholding his association dues. The co-owner is refusing to pay his monthly assessment because he claims that the board of directors did not have enough members when the budget was established, and, therefore, he is arguing that all assessments and fees are null and void.

There was a similar case out of Connecticut wherein the court ruled that even though the association’s bylaws required four (4) board members, the fact that only three (3) people were seated on the board at the time the budget was adopted was irrelevant to the budget’s validity. The court said that it is common for boards to have temporary vacancies, and that as long as a quorum was present at the meeting at which time the budget was adopted, the budget is valid.

In Michigan, the Condominium Act clearly states that co-owners may not withhold their association assessments even though the condominium association and/or its management company may not be providing adequate services in the eyes of the co-owners.

Ultimately, it appears to me that the co-owner’s argument of withholding assessments is specious, but associations are best advised to consult with a knowledgeable community association attorney if confronted with such an issue.

Posted by Robert Meisner at 9:56 AM | Permalink

I had an interesting conversation with a board member the other day. His association is considering assessing an additional assessment on certain co-owners who have moved into the association within the last three years. My first question to him was “Why?” It appears that the association wanted to build up their reserve account and thought that this was one way of doing it.

My reply is simply this: unless there is a specific reason as to why certain co-owners should be specially assessed over others, (such as improvements specifically benefiting their units only and not the other units within the community) I do not see how an association can arbitrarily assess co-owners because they were late comers in order to build up reserve accounts. The real issue here is why the association has not been building reserves over the years and waiting until now to make up for lost time, but we will save that argument for another day. The bottom line is that associations are best advised to consult with a community association lawyer and obtain a written opinion before making any such move which is at best questionable.

Posted by Robert Meisner at 12:15 PM | Permalink

I had a recent conversation with a new incoming board member who stated that the former boards of his association had not enforced the rules consistently and effectively. He wondered if the new board could immediately begin enforcing overlooked rules or must they let members who have been violating such rules for years continue to get away with impunity.

Though it may be difficult and can even lead to lawsuits with members, incoming association boards should enforce previously overlooked rules and take charge to do so. The longer the board waits to enforce these rules, the more difficult it will be in the long run. One of my long standing maxims has been, “The more things change on the board of directors, the worse they get!” However, in this situation, this maxim does not hold true.

In this case, the newly elected board should definitely give the membership notice of the fact that they intend to enforce these rules, and they should most certainly consult with their attorney as to the best way to let co-owners know that they will be held responsible for these overlooked rules that have not been enforced in the past. The new board will most likely find that the majority of the association members will be glad to hear of the decision and will respect them for it.

Posted by Robert Meisner at 10:01 AM | Permalink

I was recently interviewed by a local news reporter who asked if condominium associations have legal standing to evict renters within their association. The laws in Michigan are very clear on this issue. First, according to MCL 559.212, a co-owner who desires to rent his or her unit must notify the association in writing at least ten (10) days before leasing the unit, as well as provide the association with the exact lease so that it can be determined to be in compliance with all condominium documents.

Tenant in Default
The tenant occupying the unit, while not a co-owner, must nonetheless comply with all of the conditions of the condominium documents. If the association determines that the tenant is not complying with the documents, the association can take the following actions: 1) Notify the co-owner of the alleged violations by the tenant. The co-owner then has fifteen (15) days after receipt of the notice in which to either correct the alleged violations or advise the association that no violation has occurred; 2) If after fifteen (15) days, the association deems that the alleged violation has not been cured or that it may be repeated, the association may proceed with an eviction against the tenant as well as money damages against the tenant and co-owner for breach of the conditions of the condominium documents.

Co-owner Delinquent in Assessments
Furthermore, if a co-owner who is renting his or her unit is found to be in arrearage for assessments, the association may give written notice to the tenant that they are deducting the assessment amount due the association from the tenant’s lease payment to the co-owner. If the tenant then refuses to remit payment to the association, the association can proceed with the process of evicting the tenant and procuring money damages from the tenant and co-owner.

The laws in Michigan are very clear on this matter that associations do indeed have the legal authority to evict tenants residing within their community. However, I strongly urge your association to consult with experienced community association legal counsel before proceeding down such a path.

Posted by Robert Meisner at 12:36 PM | Permalink

With economic times being as tough as they are, many condominium and community associations are concerned about their ability to borrow money, and what complications may arise in so doing. There are many banks and lending institutions that are now providing loans to community associations; however, associations are advised to proceed with caution as the loan terms may require substantial collateral, including the right to take over the collection procedures from the association. Moreover, the loan documents may be, in some cases, onerous and not necessarily even handed.

Lenders strongly recommend that the association retain counsel from the onset to review the community association documents to determine what requirements will be necessary to effectuate the loan; particularly since the lender will want a legal opinion from counsel for the association indicating the authority of the association to borrow money. The association’s attorney may be in the position to assist in negotiating more favorable terms for the loan with a lending institution. It has been my experience in this area that the association proceed with caution while considering all options for raising the necessary funds.

Posted by Robert Meisner at 10:03 AM | Permalink

I recently heard from a condominium board member who stated that their declaration of covenants and conditions could only be amended every ten years, but the association was 30 years old and they where having trouble collecting assessments because of the archaic way in which the documents were established and written.

If homeowner associations have in their declaration a provision which only allows for an amendment every ten years or so, these associations should seriously consider passing an amendment to their documents to eliminate that requirement. It is simply a bad provision to have in the documents since federal, state and local laws affecting community associations could change long before the ten years cycle comes full term.

An upgrade and/or amendment to the association documents would provide the association and the co-owners with all the protections to which they are entitled. Associations in these predicaments should consult with an experienced community association attorney to assist them in the endeavor of amending their documents.

Posted by Robert Meisner at 11:24 AM | Permalink

I recently had a conversation with a co-owner who has a second condo in Arizona wherein the association is contemplating amending the bylaws to state that ownership is to be limited to senior citizens only. My first thought is one of concern based upon a recent decision from the Arizona Court of Appeals which held that a homeowners association could not amend its bylaws to limit residency to people 55 or over even though the amendment complied with the Federal Fair Housing laws.

In the case at hand, the Court held that the association’s compliance with the Housing for Older Persons Act clearly established that it would not act illegally by enforcing an age restriction, but that such compliance did not mean that it had contractual authority or right to impose that requirement on its members in the first instance. The Court, in that particular case, felt that the rules and regulations governing the property in accordance with the bylaws did not authorize the implementation of an age based occupancy restriction. The Court further held that although the language of the declaration did allocate certain powers to the association and its board, “these powers are largely limited to constructing, managing, and maintaining the common areas, which we assume it owns, in enforcing the other rights and restrictions contained in the declaration.”

While this is somewhat of an anomaly, associations should be careful in terms of implementing such proposed restrictions, and should, of course, consult with counsel regarding state and local laws.

Posted by Robert Meisner at 4:45 PM | Permalink

I recently had a question posed to me from a condominium board member regarding the association’s duty to repair a crack in the sidewalk. She stated that a co-owner had tripped and fallen over a crack in the sidewalk in front of her unit. The co-owner is now threatening to sue the association for negligence, claiming that the association is responsible for repairing the crack. The association is taking the stand that the crack is a trivial defect, and; therefore, the association is not responsible.

As a board of director member or simply a co-owner, you may be wondering what liability your association has in regard to trivial defects such as cracks in sidewalks and/or driveways. Based upon a recent California Court ruling, a crack that is not more than 1½ inches high, and does not have other conditions that make it dangerous, is deemed trivial. The court stated that examples of other conditions that could make the crack dangerous included broken pieces or jagged edges of pavement as well as things that concealed the crack, such as debris, grease or water.

If no such conditions existed in that instance, the Court said the defect was trivial and not dangerous and that the association had no duty to repair it. This court ruling does not mean however that the association should not consider taking care of cracks to the extent that it deems it appropriate to do so. Moreover, the association should check with its legal counsel for its own state’s law on the subject.

Posted by Robert Meisner at 5:10 PM | Permalink

On November 7, 2006, a Jefferson County District Court judge in Colorado upheld a homeowners association order barring a couple from smoking in their townhouse. The case was initiated as a result of the condo association amending its bylaws to prohibit smoking. The co-owners argued that it was unreasonable for the association to ban smoking in their home, on their patio, or anywhere on the condominium grounds.

The condo association responded to complaints from other co-owners who said that cigarette smoke was seeping into their units, creating a smoke smell that was quite strong at times. They argued that, as with loud music, the rights of the community trump the rights of an individual resident.

Jefferson County District Court Judge Lily Oeffler agreed with the condominium association when she ruled that the association could ban smoking inside co-owner’s home units because “smoke and/or smoke smell” is not contained to one area and the smell “constitutes a nuisance.” This may be the first of many cases involving this issue; therefore, it would behoove all co-owners to be aware of their condominium and/or homeowner association documents as well as the bylaw amendments that are being passed in their associations.

Reference:
Lawyers USA. (2006). Couple forbidden from smoking in their home. December 4, 2006.

Posted by Joe at 11:17 AM | Permalink