Governing documents for Michigan community associations serve several functions. The foremost of these functions is to inform members and prospective members of the respective rights and obligations of membership in the association relative to the upkeep of the property and the operation of the community. Good documents serve these needs and enhance the marketability of the member’s property.
Updating to Reflect Current Laws
Most documents more than 20 years old are generally outdated and should be revised. Even newer documents will often suffer from several inadequacies due to changes in the laws that may govern your particular community association, such as the Michigan Condominium Act and the Michigan Nonprofit Corporation Act. These laws have undergone significant changes over the last decade and documents drafted before then do not address these changes, nor prepare the association for future issues that may arise.
An example of such a change, is that Section 57 of the Condominium Act now requires an annual audit or review by an independent CPA if the association’s annual revenues exceed $20,000.00. Outdated bylaws will often not require a CPA to be involved. The membership also has the right to opt out of this requirement, but older bylaws will be silent regarding this right.
Another issue that may arise with respect to older documents is the lack of provisions relating to or addressing the rights of disabled individuals under Section 47a of the Condominium Act to alter the common elements or community areas administered by your association. Older documents may not have proper language addressing the installation of antennas and satellite dishes in the community and may instead contain restrictions that violate the Federal Communications Commission’s Over-the-Air Reception Devices Rule. Because of these legal deficiencies, older governing documents do not serve the purpose of putting members and prospective members on proper notice of their respective rights and responsibilities.
Protecting Assessment Levels
Older documents can also contain language that can unnecessarily add significant unexpected costs to an association, or fail to protect the association from unnecessary expenses. For example, documents often specify that a member may not be responsible for damage or costs to the association unless the damages or costs resulted from the member’s negligence. This negligence requirement provides an unnecessary hurdle for an association to pass those damages and costs onto the member that is responsible in the first place. Negligence is difficult to prove in these situations and as a result, damages and costs resulting from a single member’s actions will be unfairly shared amongst all the members in that association. An association can help protect itself by simply removing the “negligence” requirement from its documents so that other members aren’t on the hook for the costs and damages incurred when a member causes damages to the association’s property.
On the other hand, an archaic set of restrictive covenants governing a subdivision association or bylaws guiding a condominium association may not specify that the costs of enforcing the restrictions contained within those documents will be automatically assessed to the member in violation. Oftentimes, these documents may omit any reference to the association recovering such fees or costs, or limit them by requiring that a Court make the determination on the fee and cost recovery. This would have the effect of requiring a lawsuit to be filed for the association to have any hope of being awarded its fees and costs for enforcing its restrictions. Documents with these omissions or limits on the association’s ability to recover its fees and costs constitute a hardship on their associations and lead to enforcement challenges.
For example, if a member installed an unapproved fence on the common elements in violation of the governing documents, the association would have a duty to see that the fence is removed. The association will likely incur fees and costs in obtaining that member’s compliance and the removal of the fence. If the language omits or limits the association’s ability to automatically assess those fees and costs to the offending member, the entire membership will share those costs. This creates an inequitable result for those rule-abiding members that make up the majority of the association.
Unnecessary Litigation Approval Hurdles
Another concern is documents may contain language that makes it difficult to file an action to enforce its restrictions against a member. There are provisions in some governing documents that would require the affirmative vote of a majority or super-majority of the members before a lawsuit may be filed by the association against a member not in compliance with the restrictions. Obtaining this majority or super-majority approval is often difficult because of, among other things, a lack of member participation, and can effectively prevent an association from being able to take action to enforce its valued restrictions. Updating the governing documents to eliminate this type of impediment to the association’s ability to enforce its restrictions is highly recommended.
Looking ahead, there are objects of modern technology and burgeoning lifestyle changes older documents may not properly address. Consequently, your association may be in the dark on how to handle requests or disputes that may arise in the future. Some examples include solar panel restrictions, electric vehicle charging station installation or the use of drones in your community. If your condominium association intends to allow modifications to common elements to allow for the installation of solar panels or “EV” charging stations, it would be best to have updated language in your bylaws requiring not only that co-owners submit proper plans and specifications for review and approval first, but that the Co-owners are required to execute recordable modification agreements with the association. This will help ensure that future co-owners are on notice of their obligations regarding those particular modifications.
With respect to a subdivision association, perhaps your existing documents prohibit the installation of solar panels solely on the basis of the materials used, or the documents do not grant the association any say on whether these panels may be installed upon a lot. Updating your documents to properly address these types of concerns would be of substantial benefit to your association in addressing these and other newer disputes as they arise.
While there exists some Federal and State regulation regarding the use of drones, they may not factor in the ability of an association to control drones within its community. Michigan subdivision associations do not usually enjoy the statutory rule-making authority afforded to Michigan condo associations. If there is indeed any rule-making authority in these older subdivision documents, it generally is limited to common areas where the usage of drones may not actually present a problem in the community. Updating an association’s governing documents to provide it with rule-making authority over the entire subdivision (including lots) will allow boards greater flexibility to address both newer and future concerns.
Michigan community associations are empowered by their governing documents. The older the documents are, the more likely they are to prevent the association from achieving its goals. Therefore, it is important that association boards ensure that their association’s governing documents are updated. If your Michigan condominium association or HOA board has any questions regarding updating your governing documents or any other topic addressed in this article, one of the experienced attorneys at Makower Abbate Guerra Wegner Vollmer will be more than happy to assist.