Michigan Condo & HOA Law

Detroit's Book Cadillac Hotel is Vital to the Rebirth of the City

2008-08-24T01:12:04Z

After sitting vacant and dilapidated for nearly three decades, the Book Cadillac Hotel in down town Detroit, which was once a symbol of the city’s rich heritage and history, has been renovated and restored to original glory, and is a vital piece of the puzzle in Detroit’s renaissance. Even though the economy in Michigan has sunk to all-time lows, and the city of Detroit is in political upheaval, the Westin Book Cadillac has sold most, if not all, of its available units.

The Westin Book Cadillac offers a hotel/residential complex with the top eight floors made up of luxury condominium units. The prices range anywhere from $280,000 to $1.5 million depending on the unit size. Most are two bedroom units with square footage ranging from 1250 to 1500, but there are larger penthouse suites at 4500 sq. ft.

While the purpose of my writing is not to sell units for the complex, we have been approached by several interested parties in making a once-in-a-lifetime purchase at the Westin Book Cadillac. The revitalization of the city’s most prestigious hotel is certainly not a cure all for Detroit’s problems, and hence the problems of the region, but it is a step in the right direction. In addition to the city’s entertainment district, there must be affordable and high-end housing to support a solid business district, because once the political turmoil is resolved, experts are looking for increased economic development within the downtown area.

Be Wary of Foreclosure Rescue Scams

2008-07-07T22:43:43Z

While speaking at a seminar a few weeks ago, a real estate agent, who happens to be heavily involved in the foreclosure market, approached me during the break and we began to discuss the current housing crisis in the State of Michigan. She stated that based on the number of homes in default that were yet to enter the foreclosure market, the current housing conditions were only going to get worse due to the large amount of inventory. I know many real estate experts feel that Michigan has not seen the bottom of the foreclosure tumult. With this thought in mind, it is imperative that home owners and buyers be on the lookout for mortgage fraud.

The FBI reports that mortgage fraud remains a very real problem as new scams involving “foreclosure rescue” are being offered on a daily basis. While not all foreclosure rescue programs are scams, you can avoid becoming a victim by following the five tips below:

1. Be wary of unsolicited contacts and pressure sales techniques.
2. Be wary of what you are signing.
3. Check the licenses of the people involved, making sure they are qualified.
4. If it sounds too good to be true, it probably is.
5. See a real estate lawyer before you sign anything.

Are individual co-owners liable for accidents that occur with in the common elements?

2008-06-10T18:47:45Z

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.

Does our association have the authority to tow vehicles?

2008-06-02T22:05:44Z

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.

So you want to get rid of your dictator director.

2008-05-29T14:16:54Z

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.

Five Rules to Follow When Publishing an Association Newsletter

2008-05-13T15:32:33Z

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.

Do Association Boards have the Power to Prohibit Garage Sales?

2008-04-02T13:12:45Z

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.

What remedies do I have if the board will not enforce the bylaws?

2008-03-18T14:47:38Z

I recently heard from a co-owner who was complaining about a neighbor’s vicious pet and the board’s lack of concern with the problem. As a co-owner, she was wondering what her remedies to the problem might be.

Her first action needs to be a letter written to the board insisting that the board of directors enforce the condominium documents. The letter should also request that the board is insuring that the co-owner who has the pet has adequate homeowners insurance and is otherwise taking adequate measures to protect the residents and guests from the animal. She should point out to the board that if the bylaws allow the board to seek the removal of the animal, if it is in fact dangerous, that it has an obligation to seek to do so and the association may be vulnerable not only to persons damaged or hurt by the pet, but from the co-owners who have a right to pursue the board for failing to enforce reasonable condominium restrictions. Should the board refuse to act after receiving the letter, the co-owner should consult with an experienced condominium attorney in order to pursue legal action including a demand letter.

Should our association keep a defibrillator on hand?

2008-03-13T00:42:46Z

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.

Should we open our pool and clubhouse to the public?

2008-03-10T16:18:10Z

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.

What needs to be done in order to change our bylaws?

2008-02-05T15:35:57Z

I recently received a call from a co-owner whose condominium association has a bylaw restriction against dogs and she wanted to know what she could do to get the bylaw changed.

For any changes made to the bylaws, one must get a sufficient number of co-owners to approve the amendment. In this case the co-owner might argue that based upon a survey of the Americans' Awareness of First Amendment Freedoms developed by the McCormick Tribune Freedom Museum in Chicago, "one out of five Americans believe that the first amendment grants citizens the right to own and raise pets.” She might also indicate the real estate benefits to allowing pets in the condominium based upon the number of people that have or would like to have pets, assuming, of course, that the association has adequate restrictions to deal with them.

Are there benefits to surveillance cameras?

2008-02-03T17:18:09Z

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.

Be on the lookout for real estate fraud

2008-01-28T21:05:45Z

With the condition of the real estate market throughout the State of Michigan and the rate of foreclosures constantly rising, it is imperative that prospective buyers and sellers keep their eyes open for real estate fraud. There are three types of major fraud for which to be on the look-out. One such type of fraud is home equity/identity fraud. A forged deed is recorded to give the appearance that the perpetrator has acquired ownership of the property. The perpetrator uses the equity in the property as collateral to borrow money. No payments are made on the new loan(s) and the true owner could face foreclosure.

Another type of fraud involves home renovation and mortgage fraud. Contractors offer to do home improvement work or lenders offer a special "low interest financing" but do not deliver what was promised. Homeowners are left with partially completed substandard construction, or a mortgage payment that is higher than expected.

Finally, real estate investment foreclosure fraud involves investors being lured into buying property that is supposedly facing foreclosure for pennies on the dollar. Quit claim deeds and other documents are forged to give the appearance that a property is being sold in order to avoid foreclosure. Be on the look out for these types of fraudulent situations. It is best to contact a knowledgeable attorney before buying or selling your home.

Board Members should not Act Unilaterally

2008-01-11T12:46:30Z

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.

Does your association lack the basic financial protections?

2008-01-09T20:48:57Z

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.