Homeowners Association Law
Amending Bylaws, Covenants, Declarations and Deed Restrictions
A Michigan homeowners association’s articles of incorporation, bylaws, covenants, declarations and deed restrictions must be regularly reviewed and updated to ensure that they are compliant with changes in federal law and that the governing documents adequately address the needs of the owners. Common signs that a Michigan homeowners association’s governing documents 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 Homeowners Association to take action by voting outside to accommodate the busy lifestyles of owners in today’s society. We recommend reviewing your Homeowners Association’s Articles of Incorporation to determine if they are in need of updating. A copy of the Articles of Incorporation for a Michigan Homeowners Association can be found here.
- The Bylaws, Covenants, Declarations or Deed Restrictions were drafted by the Declarant’s Attorney. Subdivision developers often draft bylaws, covenants, declarations and deed restrictions to protect their own interests. A declarant’s goals are primarily to sell lots and complete the subdivision as quickly as possible. After control of a homeowners association’s board of directors is transferred from the declarant to the owners, it is wise for a homeowners association to amend their governing documents to ensure that the homeowners association can properly function.
- The Bylaws, Covenants, Declarations and Deed Restrictions do not address current issues. Bylaws, covenants, declarations and deed restrictions can become outdated based on changes in technology or the law. Given that the law evolves much slower than technology, homeowners 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 governing documents before they arise. Examples of common issues that are not addressed in many governing documents are as follows:
|Assessment Increases Drones Electronic Voting Flags/Signs HAM Radio Hoverboards Insurance Coverage Medical Marijuana Pets||Remote Meeting Participation Rental Caps Short-Term Rentals (Airbnb) Social Media Smart Phone Use Smoking Bans Solar Panels Website Use Wi-Fi Use|
- The Bylaws, Covenants, Declarations and Deed Restrictions contain conflicting provisions.
Many bylaws, covenants, declarations and deed restrictions that govern homeowners associations are extremely old and are very unsophisticated. Ambiguous drafting often leads to expensive litigation and homeowners associations documents that contain conflicts in the bylaws, covenants, declarations and deed restrictions should be amended immediately to avoid potential litigation.
- The Bylaws, Covenants, Declarations and Deed Restrictions do not contain adequate enforcement mechanisms.
One of the main issues that should be addressed in bylaws, covenants, declarations and deed restrictions is whether the homeowners association is voluntary or mandatory. It is extremely difficult for a homeowners association to operate if membership is voluntary and the governing documents lack appropriate enforcement mechanisms. All bylaws, covenants, declarations and deed restrictions should allow for a homeowners association to place a lien to recover sums owed to the association and recover attorney’s fees and costs. In addition, the governing documents should allow for the assessment of damages, attorney’s fees and costs back to an owner that has violated the governing documents. Additionally, not all bylaws, covenants, declarations and deed restrictions permit the homeowners association to impose fines for violations of the governing documents. Accordingly, governing documents that lack appropriate enforcement mechanisms should be penalized so that the financial burdens associated with bylaw violations are shouldered by the owner that has violated the governing documents and not the remaining members of the community.
- The Bylaws, Covenants, Declarations and Deed Restrictions are unclear.
At Hirzel, Law PLC, we believe that homeowners associations documents should be drafted in plain English. Many bylaws, covenants, declarations and deed restrictions are drafted by attorneys and for attorneys, which make them incomprehensible to homeowners associations, boards and owners. If a homeowners association is constantly having battles over the interpretation of language contained in governing documents, it may be time to amend the documents to clarify specific issues.
- The Covenants, Declarations or Deed Restrictions are difficult to amend. Many older restrictive covenants, declarations and deed restrictions contain onerous amendment provisions. In some instances, a simple vote will not suffice to amend the governing documents and the homeowners associations are required to collect signatures of numerous owners to record an amendment. Some older restrictive covenants, declarations and deed restrictions also contains finite time periods in which the covenants, declarations and deed restrictions can be amended. Specifically, it is not uncommon for older covenants, declarations and deed restrictions to automatically renew for 10 years and contain language that an amendment would not be effective until the end of the renewal period. Accordingly, homeowners associations with difficult amendment provisions should consider modernizing their documents to permit amendments to be effective based on a vote of the owners and to be effective immediately.
Covenant/Declaration/Deed Restriction Enforcement
One of the most important jobs of a homeowners association board is to enforce the various regulations contained in the restrictive covenants, declaration or deed restrictions. The restrictive covenants, declaration or deed restrictions are in place to ensure the orderly operation of the homeowners association, preserve the aesthetics of the community, preserve property values and to protect the health, safety and welfare of the property owners. The boards of directors of a homeowners association has a duty to enforce the restrictive covenants, declaration or deed restrictions as written. It is important that a homeowners association board enforce the restrictive covenants in a uniform manner. In most cases, the restrictive covenants, declaration or deed restrictions allow for the homeowners association to recover its attorney’s fees and costs for having to take action to enforce the governing documents. The attorneys at Hirzel Law, PLC routinely assist Michigan Homeowners Associations with enforcing their restrictive covenants. Examples of restrictive covenants that we typically enforce are as follows:
|Aesthetic Restrictions Commercial Use Restrictions Damage to Common Areas Drone Restrictions Electric Vehicle Charing Station Restrictions Failure to Obtain Approval for Modifications Flag Restrictions Hoarding/Sanitary Restrictions Holiday Decoration Restrictions Illegal Drug Use Restrictions Landscaping Restrictions||Leasing Restrictions Mailbox Restrictions Nuisance/Noise Issues Parking Restrictions Pet Restrictions Residential Use Restrictions Sign Restrictions Smartphone Use Restrictions Smoking Restrictions Social Media/Website Restrictions Insurance Requirements Solar Panel Restrictions Wi-Fi Restrictions|
Michigan homeowners associations are heavily reliant on collecting assessments from owners in order to provide essential services and fund their operations. Each time that an owner fails to pay assessments, the rest of the owners are unfairly forced to shoulder the burden of the homeowners association’s operational costs. Michigan homeowners associations must be aggressive, proactive and diligent in pursuing delinquent owners to ensure that they can continue to provide essential services to all owners. Most restrictive covenants allow for a homeowners 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.
Michigan homeowners 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 a homeowners association. All of the association’s contracts should be in writing and all major contracts should be reviewed by an attorney in order to protect the interests of the homeowners association. If a vendor breaches its contract, the attorney’s at Hirzel Law, PLC can help resolve these issues as we frequently litigate breach of contract claims.
Properly run elections and meetings are a hallmark of a well-run homeowners 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 homeowners association clients with the following issues associated with meetings:
|Agendas Consent to Electronic Notice Counting Ballots Designation of Voting Representatives Drafting Meeting Notices Drafting Proxies Director Qualifications Electing Directors||Establishing Quorum Meeting Minutes Mortgagee Voting Officer Qualifications Remote Participation Robert’s Rules of Order Voter Eligibility Voting Outside of a Meeting|
Homeowners 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. 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.
Homeowners associations frequently require guidance with respect to the interpretation of their covenants, declarations and deed restrictions, state law or federal law. The attorneys at Hirzel Law, PLLC frequently provide opinion letters to homeowners associations relating to the following issues:
|Amending Governing Documents Board Authority Bylaw Enforcement Co-Owner Liability Declarant Liability Fair Housing Act Compliance||Insurance Claims Maintenance Responsibilities Michigan Land Division Act Compliance Michigan Nonprofit Corporation Act Compliance OTARD / FCC Antenna Rules Voting Requirements|
Rules and Regulations
Many homeowners associations are permitted to adopt reasonable rules and regulations to implement their covenants, declarations and deed restrictions. In most cases, the board of directors is permitted to adopt rules and regulations without a vote of the owners. Common rules and regulations that Hirzel Law, PLC drafts for homeowners associations are as follows:
|Architectural Control Procedures Bylaw Enforcement Policies Board of Directors Codes of Conduct Clubhouse/Pool Rules||Collection Policies Fair Housing Accommodation Policies Fine Procedures Satellite Dish / Antenna Rules|
Hirzel Law, PLC
37085 Grand River Ave., Ste 200
Farmington, MI 48335