Amending the Master Deed and Condominium Bylaws
A Michigan Condominium Association’s Articles of Incorporation, Master Deed and Bylaws must be regularly reviewed and updated to ensure that they are compliant with changes in federal law, state law and that the governing documents adequately address the needs of the co-owners. Common signs that a Michigan Condominium Association’s Articles of Incorporation, Master Deed and Bylaws need to be updated are as follows:
1. The Articles of Incorporation are Dated Prior to January 15, 2015. In 2015 and 2018, major revisions were made to the Michigan Nonprofit Corporation Act, MCL 450.2101, et. seq., Act 162 of 1982. A few examples of the changes include, 1) participation in meetings by electronic means, 2) voting by electronic means, 3) additional limitations on director and officer liability, 4) new requirements for the inspection of association records and 5) the ability to create nonexecutive committees. The Articles of Incorporation should also permit a Michigan Condominium Association to take action by voting outside to accommodate the busy lifestyles of co-owners in today’s society. We recommend reviewing your Condominium Association’s Articles of Incorporation to determine if they are in need of updating. A copy of your Michigan Condominium Association’s Articles of Incorporation can be found here.
- The Master Deed and Bylaws have not been updated in at least 15 years. The Michigan Condominium Act, MCL 559.101, et. seq. was enacted in 1978. Any Master Deed or Bylaws drafted prior to 1978 should be immediately reviewed and amended to reflect numerous changes in Michigan and Federal law. Moreover, in 2001 and 2002, significant amendments were made to the Michigan Condominium Act. If a condominium association’s master deed and bylaws were not amended to reflect the changes made by the 2001 and 2002 amendments, there is a strong likelihood that the Master Deed and Bylaws need to be updated.
- The Master Deed and Bylaws were Written by the Developer’s Attorney
Condominium developers often draft a Master Deed and Condominium Bylaws to protect the interests of Developer. A Condominium Developer’s goals are primarily to sell units and complete the project as the Developer is often not concerned about long range planning and operations of a condominium association. After control of a condominium association’s board of directors is transferred from the developer to the co-owners, it is wise for a condominium association to amend their governing documents. The amendments not only make the documents more user friendly by removing obsolete provisions, but also ensure that a successor developer will not attempt to take advantage of certain developer rights later on the life cycle of a project. Developers also commonly include “anti-lawsuit” provisions in condominium bylaws to prevent themselves from being sued. In some cases, these provisions are so broad that they later prevent condominium associations from enforcing the condominium bylaws or collecting assessments without co-owner approval, which is often difficult to obtain for practical reasons. Additionally, at the completion of the condominium project, many developers fail to record a consolidating master deed and leave the condominium project with numerous amendments. Co-owners and condominium association board members often become frustrated searching through the various amendments in search of answers to simple questions. Accordingly, many condominium associations will file a restated Master Deed and Condominium Bylaws that combines numerous amendments into a single document for ease of use.
- The Master Deed and Bylaws Do Not Address Current Issues.
Master Deeds and Condominium Bylaws can become outdated based on changes in technology or the law. Times are changing and so should your condominium documents. Given that the law evolves much slower than technology and various other trends, condominium associations should take a proactive approach to anticipating potential issues. A reactive approach will often result in litigation if potential problems are not addressed in the condominium bylaws before they arise. Examples of common issues that are not addressed in many condominium bylaws are as follows:
Electronic Vehicle Charging Stations
Remote Meeting Participation
Short-Term Rentals (Airbnb)
Smart Phone Use
- The Master Deed, Bylaws or Condominium Subdivision Plan contain conflicting provisions.
Human error in drafting condominium documents can result in the condominium documents containing conflicting provisions. Ambiguous drafting often leads to expensive litigation and condominium documents that contain conflicts in the Master Deed, Condominium Bylaws or Condominium Subdivision Plan should be amended immediately to avoid potential litigation.
- The Condominium Bylaws do not contain adequate enforcement mechanisms.
All condominium bylaws should allow for the condominium association to recover attorney’s fees and costs as allowed by MCL 559.206 of the Michigan Condominium Act. In addition, condominium bylaws should allow for the assessments of damages, including attorney’s fees and costs, back to a co-owner that has violated the condominium documents. Additionally, not all condominium bylaws permit the condominium association to impose fines for violations of the condominium documents. Condominium associations should amend their documents to ensure that they have adequate enforcement provisions.
- The Master Deed, Bylaws or Condominium Subdivision Plan are unclear.
At Hirzel, Law PLC, we believe that condominium documents should be drafted in plain English to the extent possible. Many condominium documents are drafted by attorneys and for attorneys, which make them incomprehensible to condominium associations boards and co-owners. If a condominium association is constantly having battles over the interpretation of language contained in condominium documents, it may be time to amend the documents to clarify specific issues.
One of the most important jobs of a condominium association board is to enforce the various regulations contained in the condominium bylaws. The condominium bylaws are in place to ensure the orderly operation of the condominium association, preserve the aesthetics of the community, preserve property values and to protect the health, safety and welfare of the co-owners. The boards of directors of a condominium association has a duty to enforce the condominium bylaws as written. It is important that a condominium association board enforce the bylaws in a uniform manner. In most cases, the condominium bylaws allow for the condominium association to recover its attorney’s fees and costs for having to take action to enforce the condominium bylaws. The attorneys at Hirzel Law, PLC routinely assist Michigan Condominium Associations with enforcing their condominium bylaws. Examples of condominium bylaws that that we typically enforce are as follows:
Commercial Use Restrictions
Co-Owner Damage to Common Elements
Electric Vehicle Charing Station Restrictions
Failure to Obtain Approval for Modifications
Holiday Decoration Restrictions
Illegal Drug Use Restrictions
Residential Use Restrictions
Smartphone Use Restrictions
Social Media/Website Restrictions
Solar Panel Restrictions
As nonprofit corporations, Michigan Condominium Associations are heavily reliant on collecting assessments from co-owners in order to provide essential services and fund their operations. Each time that a co-owner fails to pay assessments, the rest of the co-owners are unfairly forced to shoulder the burden of the condominium association’s operational costs. Michigan Condominium Associations must be aggressive, proactive and diligent in pursuing delinquent co-owners to ensure that they can continue to provide essential services to all co-owners. The Michigan Condominium Act and most condominium bylaws allow for a condominium association to recover the attorney’s fees and costs that are incurred in pursuing collections. Hirzel Law, PLC handles all aspects of collection activities that range from the initial demand letter, recording a lien for unpaid assessments, foreclosing by advertisement, judicial foreclosure, filing a complaint for a money judgment, bankruptcy issues and lien priority issues.
Common Element Modification Agreements
It is not uncommon for co-owners to request permission to make modifications to common elements or units. If condominium association boards approve such modifications, it is best practice to enter into a written modification agreement that sets forth the terms and conditions of the approval that can be recorded in the register of deeds. From the perspective of a co-owner, this is important in order to avoid a new board coming along many years later and attempting to pursue a co-owner for a bylaw violation. From the perspective of the condominium association’s board of directors, this is important as the condominium association does not want to take on any additional responsibility or risk that results from the modification. The condominium association will want to make clear that the co-owner is responsible for the cost of construction, hiring a licensed contractor, maintaining the modification, repairing the modification, insuring the modification and indemnifying the condominium association if it causes damage.
Condominium associations routinely enter into contracts for construction, internet service, landscaping, maintenance, professional property management, repair and snow plowing, along with various other services that are essential to operating condominium association. All condominium contracts should be in writing and all major contracts should be reviewed by an attorney in order to protect the interests of the condominium association. If a vendor breaches its contract with a condominium association, the attorney’s at Hirzel Law, PLC can help resolve these issues as we frequently litigate breach of contract claims in court.
The transition from a condominium association being developer controlled to co-owner controlled is the most critical phase in the life cycle of a condominium. Unfortunately, many co-owners and new board members have little experience in determining whether a developer has fulfilled its obligations under the Michigan Condominium Act and condominium documents. The attorneys at Hirzel Law, PLC frequently represent condominium associations in issues that arise out of the transition control from the developer to the co-owners and issues that arise involving successor developers that later step into the shoes of the developer or attempt to re-develop a failed or incomplete condominium project. Common issues that we assist Michigan Condominium Associations with related to developers and successor developers are as follows:
|Calling the First Annual Meeting
Construction Defect Litigation
Electing Co-Owner Directors
Failing to pay assessments/expenses
|Illegal Contraction of a Condominium
Illegal Expansion of a Condominium
Elimination of “need not be built” units
Properly run elections and meetings are a hallmark of a well-run condominium association. The attorneys at Hirzel Law, PLC are well versed in the proper procedures involved with running a board meeting, annual meeting or special meeting. We frequently attend association meetings and our roles range from issue specific presentations to running the meeting from start to finish. We assist our condominium association clients with the following issues associated with meetings:
Consent to Electronic Notice
Drafting Meeting Notices
Designation of Voting Representatives
Robert’s Rules of Order
Voting Outside of a Meeting
FHA and VA Certification of a condominium creates a larger pool of potential purchasers will results in higher property value in condominiums. The Fair Housing Administration and the Department of Veterans Affairs each of have rigorous and distinct requirements for certifying a condominium project so that a potential purchase can obtain a FHA or VA mortgage to purchase a condominium unit. The attorneys at Hirzel Law, PLC assist Michigan condominium associations in obtaining FHA and VA certification.
Condominium Associations have various insurance policies that typically cover fire, vandalism, general liability, workmen’s compensation, fidelity bond coverage and/or directors’ and officers’ insurance. It is not uncommon for insurance carriers to deny claims and/or to have disputes arise as to what type of repairs are required or covered under an insurance policy or the condominium documents. Similarly, if the repair and insurance policies are not aligned in the condominium bylaws, disputes often arise between the insurance carrier for a co-owner’s HO-6 policy and the insurance carrier for the condominium association. The attorneys at Hirzel Law, PLC have experience in guiding condominium associations through the insurance claims process and filing actions for declaratory relief or breach of contracts when insurance claims have been wrongfully denied.
Condominium associations frequently require guidance with respect to the interpretation of their master deed, condominium bylaws, state law or federal law. The attorneys at Hirzel Law, PLLC frequently provide opinion letters to condominium associations relating to the following issues:
|Amending Condominium Documents
Fair Housing Act Compliance
Michigan Condominium Act Compliance
Nonprofit Corporation Act Compliance
OTARD / FCC Antenna Rules
Rules and Regulations
Condominium associations are permitted to adopt reasonable rules and regulations to implement the condominium bylaws. In most cases, the board of directors is permitted to adopt rules and regulations without a vote of the co-owners. Common rules and regulations that Hirzel Law, PLC drafts for condominium associations are as follows:
|Architectural Control Procedures
Bylaw Enforcement Policies
Board of Directors Codes of Conduct
Fair Housing Accommodation Policies
Modification Request Procedures
Recreational Facilities Usage Policies
Satellite Dish / Antenna Rules
Hirzel Law, PLC
37085 Grand River Ave., Ste 200
Farmington, MI 48335