Does our Board have rulemaking authority?
In Michigan, a condominium association Board has the implicit authority to enact reasonable rules and regulations regarding the condominium. Generally speaking, this authority is quite broad and unless otherwise specified in the bylaws, does not require the approval of the individual co-owners within the condominium. Subdivision associations, however, are another matter altogether. Unlike condominiums, there is no statute addressing a subdivision Board’s ability to adopt rules and regulations. Unless rulemaking powers are specifically granted by the subdivision documents, the subdivision association cannot generally adopt rules—no matter how appealing, reasonable or necessary they may be.
In community associations where rulemaking is permitted, there are legal boundaries for association rules. Rules are intended to clarify and provide specificity to the broad restrictions and grants of authority and discretion that are given to the Board in the Master Deed or Declaration. Simply put, no rule may significantly change, restrict, or overrule existing provisions within a Master Deed or Declaration. For example, if the bylaws impose a limitation of two domestic pets per residence, the Board cannot adopt a rule disallowing two dogs or requiring one cat.
When rules are adopted, they must be reasonable. Michigan Courts have found that association rules are reasonable if (1) they are non-discriminatory, (2) they do not violate any law or ordinance, and (3) they are rationally related to the protection of the health, safety, welfare or the aesthetic or monetary value of the community. Note that community associations may have bylaws that specifically prohibit the Board from enacting rules without owner approval. Consult with our office if you are unsure about the status of your association’s rule making authority. We can assist your Board with drafting and adopting appropriate rules for the effective and efficient management of your community.
__11 Rules the Board should consider adopting. __
- Records Inspection. The Michigan Nonprofit Corporation Act provides that a member of an association may, for a proper purpose, inspect the records of the association. Under the law, owners may inspect the association’s books and records, but only if the owner submits a written demand describing with reasonable particularity the purpose of the inspection and the records the owner desires to inspect, and the records sought are directly connected with the proper purpose. These inspections can be limited to prevent the inspection of privileged or private information (such as individual owner records), but only if the Board has adopted an appropriate resolution or rule prohibiting inspection of these types of records. Accordingly, if your association does not already have an appropriate records inspection resolution or rule in place, we recommend that the Board adopt one.
- Cameras. Fast-paced advancements in technology have led to high quality video security systems that are readily available and even enable owners to monitor their properties remotely from a smart phone app anywhere in the world. This futuristic technology is not without its flaws or the potential for serious abuse. Indeed, these cameras can often see and record what the naked eye cannot. Accordingly, Boards should consider what rights and obligations may exist under applicable law and under the association’s governing documents. Michigan law prohibits a person from installing, placing or using any device in any private place that observes, records, transmits, photographs or eavesdrops without the consent of the person(s) that have a right and expectation of privacy in that place. That doorbell camera is permissible on your front porch where the general door-knocking public does not have a reasonable expectation of privacy. But, that same doorbell camera focused on a nearby neighbor’s window represents a potential invasion of privacy. If cameras are permitted on the premises, a specific rule that addresses the location, uses, approval and maintenance requirements should be adopted.
- Modifications. Typically, community associations will require the Board to review and approve proposed modifications to common elements or changes to architectural features, such as color scheme. The adoption of a modification rule can help streamline this process and create a framework for the Board’s review and approval of owner modification requests. Boards cannot adopt rules permitting a certain modification if the proposed modification is expressly prohibited by the governing documents. However, if the proposed modification is not prohibited, the Board may adopt reasonable rules concerning what specific modifications it would or would not approve.
- Exterior Maintenance. Boards are tasked with preserving the architectural aesthetic of their communities. We recommend consideration of rules relating to the exterior items that owners may be responsible for maintaining, repairing and replacing. Depending on the association, these items routinely include windows, doorwalls, garage doors, air conditioning units, patios and decks. Indeed, easy to follow guidelines governing the color, type, and style of replacement windows and doors and uniform rules regarding the size and material approved for use on replacement patios and decks will help maintain a uniform appearance of the community and will help ensure consistent application of association aesthetic standards.
- Assessment Payment and Collection Procedures. Uniform enforcement and collection of assessments should be a top priority for a well-run community association. Implementation of uniform rules regarding assessment payment options, late fees and collection procedures are essential.
- Pets. For many community associations, a pet rule is also essential. We strongly encourage adoption of a pet rule governing the registration procedure for pets, the approved locations for pets to relieve themselves, and policies regarding prompt waste clean up.
- Leasing. Renter non-compliance with association bylaws is a major concern for many community associations. Indeed, many tenants enter into lease agreements without knowing what association bylaws will be enforced. Boards are therefore advised to consider rules governing leasing procedures, including Board approval of lease terms, standard addendums adopting and incorporating the association rules directly into leases, and the implementation of any administrative fees.
- Vehicles. For many community associations, the number of vehicles on the premises often rivals, or even exceeds, the number of actual residents living in the community. Communities are often designed to accommodate fewer vehicles than are routinely parked or stored within the community. Accordingly, rules governing vehicle parking, towing, commercial and recreational vehicles, and excessive noise are strongly recommended.
- Drones. The popularity of remote-controlled aerial vehicles (drones) has increased rapidly over the past few years with significant improvements in the technology and with pricing falling out of the stratosphere. These days, drones are routinely featured in top 10 Christmas gift suggestions. Community associations are encouraged to regulate drones due to safety and privacy concerns.
- Flags. In Michigan, the Condominium Act provides that an association must allow a co-owner to display a single United States flag (not greater than 3ft x 5ft) on the exterior of their condominium unit. Although a single United States flag is permitted, rules regarding location, other flags, sizes, and conditions may be considered by the Board.
- Signs. The bylaws of the association often prohibit all signs unless otherwise approved by the Board. In these instances, Boards should consider adopting a rule prohibiting or limiting signs including notices, advertisements or pennants, including “for sale” and “open house” signs that are visible from the exterior of a Unit. In addition, Boards may limit or require prior approval for “Garage Sale” signs, “For Sale” signs on automobiles or “For Rent” signs on properties.
The bottom line. It can be challenging for associations and their volunteer Boards to stay ahead of the curve on all of the recent developments in these ever-changing areas. That is why appropriate rulemaking is so important. By adoption of rules, the Board can easily and quickly address specific issues without the need to amend the association’s governing documents. Board members should consider sitting down with legal counsel to review their rulemaking authority under their governing documents and to draft appropriate and comprehensive rules to address these and other concerns.