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Enforcing Speed Limits in Michigan Condominium and Homeowners Associations

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The overwhelming majority of condominium and homeowners associations in Michigan are formed to govern residential developments. Accordingly, many community associations have concerns about residents or guests traveling at excessive speeds throughout the neighborhood. With the growing utilization of common interest communities, more and more associations are seeking to create and enforce their own speed limits within their respective developments. For example, some community associations may desire to lower the speed limit within their communities from the typical 25 mph limit in residential areas to 15 mph. Speed limit restrictions in residential areas provides increased safety for the residents of the community, particularly in heavily populated developments with a large number of children who frequently play outside.

Speed Limits in Michigan

In Michigan, speed limits are established and enforced by the State and the local municipality within which the roads are located. MCL 257.627(1), of the Michigan Vehicle Code, commonly referred to as the basic speed law, states in pertinent part as follows:

(1) A person operating a vehicle on a highway shall operate that vehicle at a careful and prudent speed not greater than nor less than is reasonable and proper, having due regard to the traffic, surface, and width of the highway and of any other condition existing at the time. A person shall not operate a vehicle upon a highway at a speed greater than that which will permit a stop within the assured, clear distance ahead. A violation of this subsection shall be known and may be referred to as a violation of the basic speed law or “VBSL”.

Accordingly, regardless of any posted speed limit, all drivers in Michigan are subject to the above statutory provision and violators are subject to citation. Depending on the circumstances, a driver could still be issued a citation for driving within the posted speed limit if the driver’s actual speed is unreasonable in light of the existing conditions. See, Mich. M Crim JI 16.19 Unreasonable Rate of Speed. For example, while driving through a heavy snowstorm, a driver could be ticketed for driving 50 mph on a highway with a posted speed limit of 55 mph if the circumstances make traveling at 50 mph unreasonable.

In 2002, House Bill 6274 of 2002 was introduced in the Michigan House of Representatives by Rep. Glenn S. Anderson. The proposed bill sought to amend MCL 257.627 to make it unlawful for any driver to drive at a speed exceeding 15 mph in the common area of a residential condominium development. The bill faced opposition from a number of groups and ultimately did not pass. A particular concern was raised regarding the bill’s impact on site condominiums in rural and sparsely populated townships where some or all of the borders of the condominium project consist of county roads—sometimes paved, but sometimes gravel or dirt—on which the speed limit is 55 mph.

Association Enforcement of Speed Restrictions

There is currently no case law in Michigan addressing the enforceability of a community association’s implementation or enforcement of a speed limit contained in a deed restriction. Without any case law on point to provide further clarity on this question, it is impossible to say for certain what types of restrictions an association could implement with respect to speed limits. In light of this, the extent to which an association has the ability to implement and enforce speed limit restrictions may depend on whether the association owns its own private roads or whether the roads are publicly maintained by a local municipality. While it is not uncommon for a community association to have public roads that are maintained by the local municipality, most associations own the roads within the development as common elements or common areas.

If a community association has private roads, the association should be able to erect speed limit signs within the community. Careful review of any easement agreements and local ordinances must be done prior to erecting any signs within a community. In doing so, these signs should be distinct from speed limit signs used by the local municipality so as not to cause confusion.

Governing Documents

Condominium or homeowners associations with a set speed limit in their Master Deed, Declaration, or Bylaws are scarce. This is understandable as an association with such a provision would lose flexibility, be unable to adapt to changing times, and could face difficulties obtaining the required approval from members to amend. As a result, associations that wish to enforce speed restrictions typically rely on broad provisions in their governing documents, such as provisions stating “No Co-owner shall use his Unit or the Common Elements in any manner inconsistent with the purposes of the Project or in any manner that interferes with or impairs the rights of any other Co-owner in the use and enjoyment of his Unit or the Common Elements” or provisions that prohibit any activity that could be considered a “nuisance or annoyance” to the other members of the community. While these provisions can certainly be relied upon in an enforcement action against someone who is speeding within the community, and would at the very least give the association a strong case, the broad nature of these provisions leaves associations susceptible to various defenses.

Rules and Regulations

In order to provide an association with the flexibility it needs to adapt, and the enforcement powers it needs to govern the community safely, the ideal method of implementing and enforcing speed limits is through reasonable rules and regulations. Condominium associations are empowered to implement rules and regulations in accordance with the Michigan Condominium Act, specifically MCL 559.165 and Michigan Administrative Rule R 559.510. As a result, nearly every condominium in Michigan has a provision in its Bylaws empowering the association to implement and enforce reasonable rules and regulations.

There is no explicit authorization for a homeowners association to implement rules and regulations as they are not governed by the Michigan Condominium Act. However, as long as the HOA’s Declaration and Bylaws permit reasonable rules and regulations to be implemented relating to the common areas of the subdivision, it is likewise possible for a homeowners association to implement and enforce speed limits. Although there is similarly no case law directly on point, there is a strong argument to be made that case law discussing analogous situations involving condominium associations should be applied to homeowners associations.

Before adopting a rule or regulation, all associations must be aware of the limitations on the authority of a board of directors to adopt rules, as well as the distinction between adopting a rule and amending the Bylaws. A rule may not amend the Bylaws as “…a rule or regulation is ‘a tool to implement or manage existing structural law,” while an amendment ‘presumptively changes existing structural law.’ See Black’s Law Dictionary (5th ed).” Meadow Bridge Condo Ass’n v Bosca, 167 Mich App 280, 282; 466 NW2d 303 (1990). The Michigan Court of Appeals has held that a homeowners association could not use its rule making authority to create rules that impose additional burdens that are not expressly stated in the Bylaws. Specifically, the Court held:

For instance, Paragraph 20 of the covenants and restrictions provides that the lot owners may keep “common household pets” unless “they become an annoyance or nuisance to the neighborhood.” The restriction does not define “common household pet” and does not define the conditions under which a common household pet will be deemed to be a nuisance. The Association could for that reason promulgate rules expressing its understanding of those terms and governing its procedure for enforcing that particular restriction. The Association could not, however, expand that restriction or impose a new burden on the lot owners with less than unanimous consent under the guise of interpreting the restriction. (emphasis added).

Conlin v Upton, 313 Mich App 243, 265–66; 881 NW2d 511, 524–25 (2015). Therefore, as long as your condominium or homeowners association has private roads and has a provision in its documents empowering the association to implement and enforce reasonable rules and regulations, your association should be able to set and enforce a speed limit within the community. For developments with public roads, the association could petition the local municipality for an ordinance implementing a lower speed limit within that particular project.

If a condominium association does not have an express provision in its governing documents authorizing the association to adopt rules or regulations, there is case law supporting the position that condominium associations have this right inherently. In this respect, the Michigan Court of Appeals has held:

MCL 559.153 provides, in pertinent part, that the “administration of a condominium project shall be governed by bylaws recorded as part of the master deed, or as provided in the master deed.” A condominium association has an implied power to adopt reasonable rules to govern the use of common property except as limited by statute or the condominium documents. See 2 Restatement Property (Servitudes), 3d, § 6.7(1), p 140.

Hunters Woods Site Condo Ass’n, Inc v Homes of Hunters Woods Condo Ass’n, Inc, unpublished opinion per curiam of the Court of Appeals, issued May 24, 2011 (Docket No. 296001), p 1. “The trial court correctly recognized the general principle that a condominium board ‘has a duty and the authority to manage the common elements of the traditional condominium project, including the recreational facilities …’” Id. Although subdivision or homeowners associations are not governed by MCL 559.153, the analysis provided by the Hunters Woods Court could provide persuasive authority for the position that a homeowners association has the same implied power to adopt rules and regulations as a condominium association.

The implementation of a rule or regulations is of course contingent upon the existence of an underlying provision in the Bylaws or Declaration that the rule or regulation is implementing. In many cases, the underlying provision would be the aforementioned broad restriction against any activity that could be considered a “nuisance or annoyance” to the other members of the community. The rule or regulation must also be reasonable as all deed restrictions must not violate public policy in order to be enforceable in Michigan. See Bloomfield Estates Improvement Ass’n, Inc v City of Birmingham, 479 Mich 206, 212; 737 NW2d 670, 674 (2007). Ideally, an association attempting to implement or enforce a speed limit should have a provision in its recorded governing documents providing the association with the right to adopt a speed limit by rule or regulation in an amount as determined by the board of directors from time to time.

Arguably, if there is a speed limit already in place by the local municipality, the association may still be able to implement a speed limit that is more restrictive, i.e. a lower maximum speed, as long as the restriction is reasonable. An association however could not attempt to avoid the local municipality speed limit by adopting a rule purporting to increase the posted speed limit. See MCL 559.241(1) which states in relevant part “A condominium project shall comply with applicable local law, ordinances, and regulations.”

Enforcement Mechanisms

If an association does implement such a rule, enforcement of the restriction against repeat offenders becomes the next priority. Associations with speed limits should ensure that they have the ability to issue fines for violations. Alternative potential enforcement mechanisms include erecting stop signs or speed bumps to slow down drivers within the community, but the effectiveness of these options are limited and also come with many drawbacks.

If someone is continually driving at excessive speeds throughout the community, the association should document the violations carefully. In particular, the date and time of the offense, the location of the offense, the license plate, and the make and model of the car should all be documented to the extent possible. The association should then send violation letters and should consider fining for repeated violations after appropriate notice and an opportunity to defend have been provided. It is important to note that an association will likely not be able to enforce any type of speed limit restriction on a non-resident of the community.

If an association is forced to take enforcement action against a violator, it may have a difficult time proving the speed that a violator was traveling at. Observation by a lay witness will likely be the most common documentation of the violation and could at least provide the association with enough evidence to issue a violation letter. It would of course be more beneficial if an association had security cameras and a radar system to unequivocally establish the speed someone was traveling at, but the installation of these devices to enforce a speed limit restriction presents practical and legal complications. Even if an association has concerns about enforcing a speed limit restriction, the erection of speed limit signs may alone provide the necessary deterrence for many violators. If none of the above enforcement mechanisms are working, the association may be left with no other option than to pursue a court ordered injunction against the offender.

A more extreme option may exist for associations that wish to involve the local government to issue citations for speeders. An Attorney General Opinion from 2002 issued by former Michigan Attorney General Mike Cox discusses the ability of an owner of a private road to contract with the local police department to issue citations and enforce speed limits.

Section 951(2) provides that a person in charge of a private road may request that the local police enforce such an ordinance on that private road:

A city, township, or village, with the consent of, or at the request of, a person who is in charge of a private road or parking lot, whether or not that road or parking lot is open to the general public, may contract with that person for the city, township, or village to enforce provisions of the uniform traffic code or ordinance adopted under this section on that private road or parking lot. As used in this subsection, “person” means an individual, corporation, association, partnership, or other legal entity. [MCL 257.951(2).]

It is my opinion, therefore, that the provisions of the MVC applicable to private roads authorize a police agency to issue citations to motorists for certain civil infractions and criminal traffic violations that occur on private subdivision roads accessible to the public. Even if the road is not open to the general public, section 951 of the MVC, MCL 257.951, allows a person in charge of the road to contract with a city, township, or village to enforce provisions of the uniform traffic code or ordinance adopted under that section.

OAG, 2003, No. 7138, WL, 2003, No. 7138 (September 23, 2003). Importantly, the statute being discussed above, MCL 257.951(2), was amended in 2006 to state as follows:

A city, township, or village, with the consent of, or at the request of, a person who is in charge of a parking lot, whether or not that parking lot is open to the general public, may contract with that person for the city, township, or village to enforce provisions of the uniform traffic code or ordinance adopted under this section in that parking lot. A peace officer may enter upon a private road that is accessible to the general public to enforce provisions of an ordinance adopted under this section if signs meeting the requirements of the Michigan manual of uniform traffic control devices are posted on the private road. The owner or person in charge of the private road is responsible for the posting of signs under this subsection. Nothing in this subsection shall be considered to affect a contract entered into between a city, township, or village and the person in charge of a private road before the effective date of the amendatory act that added this sentence. As used in this subsection, “person” means an individual, corporation, association, partnership, or other legal entity.

The language “a person who is in charge of a private road or parking lot” was amended to state simply “a person who is in charge of a parking lot”. Therefore, it remains unclear whether the above Attorney General Opinion remains persuasive authority in light of the fact that the new statute removes private roads from its purview.

Conclusion

In short, although there are strong arguments to support a community association’s ability to implement and enforce speed limit restrictions, the extent to which associations can do so remains unsettled. Careful consideration should be taken with legal counsel prior to an association putting up signs or attempting to enforce restrictions that are inconsistent with local ordinances or state law. Although there are questions and limitations on what can be done, in many instances it may be possible for associations to implement and enforce speed limit restrictions within their communities.

Brandan A. Hallaq is an attorney in our Livonia, MI office where he focuses his practice in the areas of business and real estate law. He practices in state and federal courts handling a wide scope of real estate and business/commercial litigation matters. He also has experience preparing the necessary documents for business formation, purchases/sales of businesses, as well as negotiating and drafting contracts. Mr. Hallaq obtained his Juris Doctor degree cum laude from Wayne State University Law School and his B.A. degree cum laude in Political Science from Wayne State University. He can be reached at (734) 261-2400 or at bhallaq@cmda-law.com.

Should your Community Association have a Holiday Party?

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With Christmas just around the corner, many community associations are currently planning parties to celebrate the holiday season. Holiday parties are a great way to bring the community together and converse with your neighbors. These parties frequently involve the catering of food and alcohol as well as live entertainment which helps foster community participation.

While holiday parties are generally encouraged by all, there are a few concerns that community associations should be aware of beforehand. Among these concerns include the concern that the expenses of the party might be an improper use of association funds, potential liability to the association or individual board members, and properly addressing the concerns of members in the community who disapprove of having holiday parties.

Using Association Funds for Holiday Parties

Boards of directors must be cautious in using association funds for holiday parties as the determination of whether association funds can be used for a holiday party will depend on the specific language used in the association’s governing documents. For large associations, the costs of these parties can easily reach thousands of dollars and are often paid for with association funds. If the Master Deed and Condominium Bylaws for a particular condominium only permit the association to use funds for costs that are necessary for the operation of the condominium, it may be helpful to review the Articles of Incorporation. Often times, an association will have a provision in its Articles of Incorporation authorizing the association to “levy and collect assessments against and from the Members of the Association and to use the proceeds thereof for the purposes of the Association”. This broad authority could be used to justify an association’s use of funds for holiday parties.

For subdivision or homeowners associations, governing documents, and the provisions authorizing assessments, vary drastically from one development to the next. Accordingly, the documents will need to be reviewed on a case by case basis to determine whether association funds can be used to pay for these types of events. A sample provision authorizing assessments for a platted subdivision is as follows:

The assessments levied by the Association shall be used exclusively to promote the health and safety of the residents in the Subdivision and maintain the property values thereof.

An association with the above provision might have a difficult time demonstrating that a holiday party promotes the health or safety of the residents or maintains the property values within the subdivision. Contrast the above provision with the following alternative provision which could reasonably be used to support an association’s use of funds towards a holiday party:

The Assessments levied by the Association shall be used exclusively to promote the recreation, health, safety, welfare, common benefit and enjoyment of the Owners in the Subdivision.

In the latter case, the association could justify the holiday party expenses as promoting recreation or the enjoyment of the members. Similarly, a homeowners association could look to its Articles of Incorporation for additional authority to use assessments towards holiday party expenses. In short, as long as the governing documents authorize the use of association funds for such purposes, your community associations may have holiday parties.

How to Proceed if your Governing Documents do not Authorize the use of Association Funds for Parties?

If your governing documents do not permit the use of association funds for these purposes, you should not be discouraged from having the party. In these instances, invitations could still be sent out to all members and indicate that attendance is optional but in order to cover the expenses of the party, all attending guests will be asked to contribute a portion of the total cost. This way, your association can still have the party, but instead of using funds from the association’s bank account, the attendees of the party each make a small contribution to cover the expenses.

Dram-Shop Liability and Liquor Licensing Requirements

Finally, individual board members must be particularly cautious regarding the serving and consumption of alcohol at any association sponsored event. If alcohol is being served, proper precautions must be taken to ensure that all individuals consuming alcohol are required to present identification and that limits are set to avoid over-consumption of alcohol. Many of these concerns are diminished if the party is held at an outside venue since the venue will be responsible for checking IDs and monitoring alcohol consumption.

If your association plans on having a party in a clubhouse or other common area under association control, a temporary liquor license or other regulatory approval may be necessary. A review of the association’s insurance policies, including Director and Officer Insurance, should be conducted to determine coverage for potential liability if the association plans to have an on-site party with alcohol. It may also be prudent to obtain dram-shop insurance or associations and board members alike could face potential liability if minors are served alcohol or if individuals consume excessive amounts of alcohol and cause injury to themselves or others.

While many community associations in Michigan have authority to use association funds for holiday parties, a review of the governing documents must be conducted prior to doing so. Even if hamstrung with constrictive governing documents, associations can still have these parties by asking attendees to contribute to the expenses. A simple and effective method to avoid, or limit, much of the potential liability associated with alcohol consumption is to hold the party at an outside venue. If a party with alcohol is held on-site, it is critical for an association to obtain the required licensing and insurance. Finally, associations should also be sensitive of different religious beliefs and should avoid gearing holiday parties toward any particular religion.

Brandan A. Hallaq is an attorney with the law firm of Cummings, McClorey, Davis & Acho, P.L.C., in the firm’s Livonia, MI office where he focuses his practice in the areas of business and real estate law. He practices in state and federal courts handling a wide scope of real estate and business/commercial litigation matters. He also has experience preparing the necessary documents for business formation, purchases/sales of businesses, as well as negotiating and drafting contracts. Mr. Hallaq obtained his Juris Doctor degree cum laude from Wayne State University Law School and his B.A. degree cum laude in Political Science from Wayne State University. He may be reached at (734) 261-2400 or at bhallaq@cmda-law.com.

Michigan Senate Bill 663: Michigan cracks down on fake emotional support pets

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On November 28, 2017, Senator Peter MacGregor introduced Senate Bill 663, which would criminalize a fake request for an emotional support pet or service animal. Requests for emotional support pets and service animals continue to increase under the Federal Fair Housing Act and the Michigan Persons with Disabilities Civil Rights Act, MCL 37.1101 et seq. While a legitimate request for an emotional support pet or service animal may require a reasonable accommodation, stronger penalties are needed to prevent a fake request that is merely intended to avoid the plain language of condominium bylaws or restrictive covenants in Michigan.

Senate Bill 663 would amend the Michigan Collars, Harnesses, and Leashes on Dogs in Public Places Act, MCL 752.61 et seq., which would now provide as follows:

Sec. 1. As used in this act:

(a) “Emotional support animal” means an assistance animal that provides emotional support to a person with a disability who has a disability-related need for that support.

(b) “Health care provider” means 1 of the following:

(i) A health professional licensed or otherwise authorized to engage in the practice of medicine or the practice of osteopathic medicine and surgery under article 15 of the public health code, 1978 PA 368, MCL 333.16101 to 333.18838.

(ii) A health facility or agency licensed under article 17 of the public health code, 1978 PA 368, MCL 333.20101 to 333.22260.

(iii) A local health department as that term is defined in section 1105 of the public health code, 1978 PA 368, MCL 333.1105.

(c) (a) “Person with a disability” means a person who has a disability as defined in section 12102 of the Americans with disabilities act of 1990, 42 USC 12102 and 28 CFR 36.104.

(d) (b) As used in subdivision (a), (c), “person with a disability” includes a veteran who has been diagnosed with 1 or more of the following:

(i) Post-traumatic stress disorder.

(ii) Traumatic brain injury.

(iii) Other service-related disabilities.

(e) (c) “Service animal” means all of the following:

(i) That term as defined in 28 CFR 36.104.

(ii) A miniature horse that has been individually trained to do work or perform tasks as described in 28 CFR 36.104 for the benefit of a person with a disability.

(f) (d) “Veteran” means any of the following:

(i) A person who performed military service in the armed forces for a period of more than 90 days and separated from the armed forces in a manner other than a dishonorable discharge.

(ii) A person discharged or released from military service because of a service-related disability.

(iii) A member of a reserve branch of the armed forces at the time he or she was ordered to military service during a period of war, or in a campaign or expedition for which a campaign badge is authorized, and was released from military service in a manner other than a dishonorable discharge.

Sec. 2. (1) A person shall not falsely represent that he or she is in possession of an emotional support animal, a service animal, or a service animal in training, in any public place or to a current or prospective landlord or other housing provider.

(2) A person who certifies the need for a person with a disability to possess an emotional support animal or a service animal shall not falsely represent that need and shall satisfy all of the following:

(a) The person shall be a health care provider licensed in this state or in another state.

(b) The person shall maintain a physical office space where he or she regularly treats patients.

(c) The person shall document that he or she has treated the person with a disability for at least 6 months before the date on which a public or private entity requests documentation establishing the validity of the person with a disability’s alleged disability and the nexus between that disability and the need for the emotional support animal or service animal.

(d) The person shall, upon request, provide the person with a disability or a public or private entity requesting the documentation described in subdivision (c) with a notarized letter certifying that the person with a disability is disabled and that the emotional support animal or service animal is necessary to alleviate the effects of the disability that would otherwise prevent the disabled person from having the same opportunities to use a public place or residence as a nondisabled person.

(e) The person shall provide the documentation described in subdivision (d) on an annual basis, upon request.

Sec. 3. (1) A person who knowingly violates this act is guilty of a misdemeanor punishable by 1 or more of the following:

(a) Imprisonment for not more than 90 days.

(b) A fine of not more than $500.00.

(c) Community service for not more than 30 days.

(2) A landlord or other housing provider who rents housing to a person who knowingly violates this act shall evict that person as provided in section 5714(1)(c)(i) or 5775(2)(k) of the revised judicature act of 1961, 1961 PA 263, MCL 600.5714 and 600.5775.

Sec. 4. The department of civil rights shall use its existing telephone complaint hotline to receive reports of a person falsely representing that he or she is in possession of an emotional support animal, a service animal, or a service animal in training, or reports of a health care provider who is falsely certifying the need for an emotional support animal or a service animal. The department may refer an alleged violation of this act to the appropriate law enforcement agency for investigation.

While we have previously discussed providing reasonable accommodations under the Federal Fair Housing Act and the Michigan Persons with Disabilities Civil Rights Act, MCL 37.1101 et seq, Michigan condominium and homeowners associations should evaluate a request for an emotional support pet or service animal on a case-by-case basis. However, the term “housing provider” should be specifically defined or further clarified before the bill is passed to confirm that a community association would fall within the definition of a “housing provider,” although it likely would.

Kevin Hirzel is a Partner at Cummings, McClorey, Davis & Acho, P.L.C. and leads the Community Association Practice Group. Mr. Hirzel can be contacted at (734) 261-2400 or khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at http://micondolaw.com for additional resources on Michigan Community Association Law.

Kevin Hirzel Admitted to College of Community Association Lawyers

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Kevin Hirzel, a partner and Chair of the Firm’s Community Association Practice Group, has been granted membership in the College of Community Association Lawyers (CCAL)—one of fewer than 175 attorneys nationwide to be admitted to the prestigious organization. Fellows of the College are among the most respected community association attorneys in the country.

CCAL was established in 1993 by Community Associations Institute (“CAI”), with membership consisting of attorneys who have distinguished themselves through contributions to the evolution and practice of community association law. CCAL fellows are also recognized for committing themselves to the highest standards of professional and ethical conduct.

Mr. Hirzel is a member of the CAI National Government and Public Affairs Committee that sets national policy for community associations. He also serves as a chairman of the Special Committee for Condominiums, PUDs, & Cooperatives of the State Bar of Michigan’s Real Property Law Section. Mr. Hirzel is a chairman of the Michigan CAI Legislative Action Committee and advocates on behalf of community associations regarding legislation that will impact Michigan community associations on a state and national level. He was named a Michigan “Rising Star” in real estate law by Super Lawyers Magazine from 2013-2017 and selected as a 2015 Up & Coming Lawyer by Michigan Lawyer’s Weekly. Mr. Hirzel represents community associations all over Michigan from CMDA’s offices in Clinton Township, Grand Rapids, Livonia and Traverse City.

As one of only three attorneys in the State of Michigan honored with this prestigious award, Mr. Hirzel has distinguished himself as one of the leading community association attorneys not only in Michigan, but across the country.  Congratulations to Kevin Hirzel on such a prestigious recognition!

Kevin Hirzel is a Partner at Cummings, McClorey, Davis & Acho, P.L.C. and leads the Community Association Practice Group. Mr. Hirzel can be contacted at (734) 261-2400 or khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at http://micondolaw.com for additional resources on Michigan Community Association Law.

Important Information for Business Entities: New E-Filing System Coming Soon

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Joe Wloszek_8x10@300The State of Michigan Department of Labor and Regulatory Affairs announced that, effective October 30, 2017, the current MICH-Elf filing system will be discontinued and will be replaced with the Corporations Online Filing System (COFS).  Benefits and features of COFS include online document submission, expanded search functionality, enhanced communication, email subscription notification service, and after hours system availability.

Clients need to be aware that there is a significant difference between how COFS works versus the MICH-Elf filing system, which will result in a major change in how e-filing will take place.  Under the MICH-Elf filing system, attorneys at CMDA could file documents on behalf of clients by using the Firm’s MICH-Elf filing number.  With COFS, each Company’s Resident Agent will be mailed a Customer Identification Number (CID) and PIN for all future filings.  This means that law firms, such as CMDA, will need to know every client’s CID and PIN numbers in order to submit documents on their behalf.

Beginning this week, business entities in Michigan will be receiving a letter notifying them of the new filing system.  The letter will include their new Entity Identification Number, Customer Identification Number (CID) and PIN.  The CID and PIN are the credentials needed to connect a business entity or law firm to the online filing system.

For additional information, please click on this letter from the Corporations Division and visit the FAQ webpage.

Joe Wloszek is an attorney with the law firm of Cummings, McClorey, Davis & Acho, P.L.C. where he focuses his practice on condominium law, commercial litigation, commercial real estate, large contractual disputes, and title litigation. Mr. Wloszek is a Certified Real Estate Continuing Education Instructor through the State of Michigan, the immediate past Chair of the Oakland County Bar Association Real Estate Committee and he has received numerous awards including being named a Rising Star by Michigan Super Lawyers, a Top Lawyer in commercial law by DBusiness Magazine, a Michigan Top Lawyer in real estate by Michigan Top Lawyers and the Pro Bono Volunteer Attorney of the Year by Michigan Community Resources.  He may be reached at (734) 261-2400 or jwloszek@cmda-law.com.

Prohibiting and Handling “Dangerous Animals” in an Association

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Joe Wloszek_8x10@300Pet restrictions are a perennial topic of interest in Michigan and consistently one of the most discussed, debated and reviewed provisions in the condominium bylaws.  For example, some condominium bylaws prohibit “dangerous animals” from being brought to the condominium or kept on the condominium premises.  A sample provision may look like this:

No dangerous animal shall be brought to or kept on the condominium premises.  Any Co-owner, invitee, tenant, or guest who causes any dangerous animal to be brought to or kept on the condominium premises shall indemnify and hold harmless the Association for any loss, damage or liability which the Association may sustain as the result of the presence of such animal on the premises regardless of whether the Association gave its permission previously.

Often, we are asked the following questions:

  1. What constitutes a “dangerous animal” and how is the Board to know?
  2. Are specific dog breeds considered dangerous animals?  i.e. Pit Bulls, Rottweilers, German Shepherds
  3. Can the size of a dog make it a dangerous animal?

The Michigan Dangerous Animals Statute, MCL 287.321

If the condominium bylaws do not define the term “dangerous animal,” we often look to the dictionary to define the term or whether the Michigan legislature has defined the term.  Under Michigan’s Dangerous Animals statute, specifically MCL 287.321, a “dangerous animal” is defined as:

(a) “Dangerous animal” means a dog or other animal that bites or attacks a person, or a dog that bites or attacks and causes serious injury or death to another dog while the other dog is on the property or under the control of its owner. However, a dangerous animal does not include any of the following:

(i) An animal that bites or attacks a person who is knowingly trespassing on the property of the animal’s owner.
(ii) An animal that bites or attacks a person who provokes or torments the animal.
(iii) An animal that is responding in a manner that an ordinary and reasonable person would conclude was designed to protect a person if that person is engaged in a lawful activity or is the subject of an assault.
(iv) Livestock.

(b) “Livestock” means animals used for human food and fiber or animals used for service to human beings. Livestock includes, but is not limited to, cattle, swine, sheep, llamas, goats, bison, equine, poultry, and rabbits. Livestock does not include animals that are human companions, such as dogs and cats.

Thus, when the condominium bylaws are silent as to what constitutes a “dangerous animal,” we look to a dictionary definition or how Michigan statute(s) define the term to offer guidance.  If the Board of Directors becomes aware of an issue, the Board will need to be aware of not only the definition of a dangerous animal if it is not defined in the condominium bylaws, but also the four exceptions above.

To be clear, the term “dangerous animal” (as defined by the Dangerous Animals statute above) does not refer to breeds of dogs in Michigan.  If an Association wants to outright ban specific types of animals or breeds of animals, an amendment to the condominium bylaws may be in order.  In addition, and also under the statute, the term “dangerous animal” does not apply to the size or weight of a dog.

Conclusion

Boards of Directors and Co-owners should be aware of Michigan’s Dangerous Animals statute and the potential impact it may have helping define what constitutes a dangerous animal.  If the definition above does not comport with your Association’s view of dangerous animals, you may wish to consider amending your condominium bylaws to more clearly articulate what your association considers a dangerous animal.

Joe Wloszek is an attorney in our Livonia office where he focuses his practice on condominium law, commercial litigation, commercial real estate, large contractual disputes, and title litigation.  He may be reached at (734) 261-2400 or jwloszek@cmda-law.com.

Electric Vehicle Charging Stations: Keep your Condominium Association Current!

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Kevin Hirzel_8x10@300Electric vehicles are increasing in popularity throughout the United States and create unique challenges for Michigan condominium associations, especially those that were created before electric vehicles were even contemplated. Experts project that by 2040, at least thirty-five percent of all new cars will have a plug. Accordingly, condominium associations will be forced to deal with issues relating to the charging of electric vehicles both now and well into the future. However, the vast majority of states, including Michigan, do not currently regulate the installation of electric vehicle charging stations. Accordingly, this article will provide information for Michigan condominium associations to consider when dealing with a request to install an electric vehicle charging station.

How are Electric Vehicles charged?

A. Level 1 Charging

Level 1 charging equipment provides electricity to the vehicle through a 120 volt alternating current plug. Level 1 charging is the easiest and most basic way to charge an electric vehicle as it allows for the vehicle to be charged by plugging a cord into an ordinary household electrical outlet. Level 1 charging equipment is standard on most electric vehicles. However, Level 1 charging is often inconvenient as it generally takes a much longer time to charge a vehicle. More specifically, Level 1 charging typically only provides 2-5 miles of driving range per hour of charging.

Permitting Level 1 charging is the easiest way for a condominium association to accommodate an individual co-owner’s request to charge an electric vehicle. In most instances, co-owners can simply plug their electric vehicles into their garages, as Level 1 charging typically only requires a 15 or 20-amp, single-pole breaker. As long as the unit is individually metered, and modifications do not need to be made to the common element electrical system, a condominium association will likely have minimal involvement with respect to Level 1 charging in a unit with an attached garage.

However, in situations where a co-owner plans to employ Level 1 charging in a general common element parking space, a condominium association will likely need to amend its governing documents or create rules and regulations concerning Level 1 charging of electric vehicles as will be discussed in more detail below.

B. Level 2 Charging

Level 2 charging equipment provides electricity to an electric vehicle through a 240 volt or 208 volt electrical service and is typically hardwired to the existing electrical systems. Level 2 charging can easily be installed in a garage or on a common element parking area, but it will typically require a co-owner to enter into a modification agreement to install. A Level 2 charging system requires the installation of charging equipment and a dedicated 20 to 80 amp circuit, even though it uses the same connector to attach to an electrical vehicle as a Level 1 charging system. A Level 2 charging system charges much faster than a Level 1 charging system and typically provides 10-20 miles of driving range per hour of charging.

In most instances, condominium associations can accommodate a co-owner request to install a Level 2 charging station in the co-owner’s unit. However, this typically requires the co-owner to submit detailed plans to the association for approval and having an engineer or electrician review the plans to ensure that the condominium association’s system can handle the Level 2 charging system. Many municipal codes encourage garages to be constructed with a 240 volt outlet on a dedicated circuit to accommodate Level 2 Charging. See Auburn Hills, Michigan, Zoning Ordinance, Section 1834.

C. Level 3 Charging/DC Charging

Level 3 charging equipment, commonly known as a DC Charging System, charges an electric vehicle through a 480 volt direct current (DC) plug. Unlike a Level 1 or Level 2 charging system, Level 3 charging systems are typically designed for outdoor use as they are commonly found in public fueling stations. A level 3 charging station is the fastest way to charge an electric vehicle and it can provide 180-240 miles of driving range per hour of charging.

Adding a Level 3 charging station is typically difficult and undesirable for a condominium association to accommodate. First, a Level 3 charging system may be undesirable because not all electric vehicles offer a Level 3 charging port. Second, owning and maintaining a Level 3 charging system is expensive and can sometimes cost upwards of $50,000 or more. Third, the existing electrical system has to be designed to handle a significantly higher electric load capacity. Accordingly, most Level 3 charging stations are located along interstate highways or in designated public charging areas. However, a Level 3 charging system could be effective if installed on a common parking lot to accommodate the charging of multiple electric vehicles in the same condominium association.

What should condominium associations consider when dealing with a request to install an electric vehicle charging station?

The Michigan Condominium Act, specifically, MCL 559.147(1) provides as follows:

(1) Subject to the prohibitions and restrictions in the condominium documents, a co-owner may make improvements or alterations within a condominium unit that do not impair the structural integrity of a structure or otherwise lessen the support of a portion of the condominium project. Except as provided in section 47a, a co-owner shall not do anything which would change the exterior appearance of a condominium unit or of any other portion of the condominium project except to the extent and subject to the conditions as the condominium documents may specify.

Accordingly, unless a co-owner is engaging in Level 1 Charging within their own unit, via an existing outlet, it is likely that a co-owner will need to obtain permission from the condominium association to alter the common elements and/or their unit to install a charging system. In determining whether to grant permission, condominium associations should consider the following:

How will the vehicle be charged?

Similar to other common element modifications, Michigan condominium associations should require an owner to submit proposed plans relating to the modification. Determining whether the proposed charging station is going to be a Level 1, Level 2 or Level 3 charging station is important. Level 1 charging already exists and is readily accessible for many co-owners. Issues relating to Level 1 charging stations that are located outside of a unit will typically relate to defining the responsibilities related to the use of the station, as installation is typically quite easy. Level 2 charging station requests will likely be most common due to the stark difference in charging times between Level 1 and Level 2 charging stations. In some instances, new multi-family homes may already include wiring that would support a Level 2 charging station. By way of example, the Auburn Hills, MI ordinance that is discussed above encourages, although it does not currently require, that all new one-family and multiple family homes with garages be constructed to provide a 220-240 volt / 40 amp outlet on a dedicated circuit to accommodate potential future hardwire installation of a Level 2 electric vehicle charging station as “retrofitting a home for electric vehicle charging is considerably more expensive than the cost of including the capacity at the time of construction.” See Auburn Hills, Michigan, Zoning Ordinance, Section 1834. Level 3 charging station requests will likely be the least common, as they are the most expensive and most difficult to install. Accordingly, after the association determines the proposed charging method, and a proposed set of plans is submitted for review, the next step is to engage an expert. However, prior to engaging an expert, the association should also evaluate the aesthetic impact on the condominium. Level 1 and Level 2 charging stations will likely have minimal aesthetic impact if they are merely attached to an existing wall. However, if erection of new structures or significant modifications to existing structures would be required, a condominium association should also determine the best location to place the electric vehicle charging station.

Has the condominium association hired sufficient experts to determine whether installation of an electric vehicle charging station will work with existing infrastructure?

Similar to other decisions made by the board of directors, in determining whether to permit or deny a request to install an electric vehicle charging station, the board of directors should consults experts. By way of example, in Michigan, the Michigan Nonprofit Corporation Act, specifically MCL 450.2541(1), requires a director to act in good faith and with the care of an ordinarily prudent person in a like position under the circumstances. In discharging their fiduciary duties, directors are entitled to rely on information, opinions, reports or statements prepared by a professional if it is within their expert competence. See e.g. MCL 450.2541(2). However, a director is not entitled to rely on such information if they have knowledge concerning the matter that makes reliance unwarranted. See e.g. MCL 450.2541(3).

In the context of a request to install an electric vehicle charging station, a board that is discharging its duty of good faith will consult with an attorney to determine the applicable requirements, whether they be statutory, a municipal ordinance, or imposed by the governing documents. Insurance agents should be consulted to determine what is covered under the association’s existing policy and what will be covered under a co-owner’s insurance policy. Additionally, most board members will not be electrical experts, therefore a licensed electrician, electrical engineer and/or the utility company should be consulted to review any plans. This is important to determine whether the condominium association’s existing infrastructure can accommodate the request without endangering the safety of the co-owners and whether the other co-owners will be required to pay increased costs.

How will responsibilities for the charging station be allocated?

After the board has obtained expert advice relating to the installation of an electric vehicle charging station, the board of directors should enter into a written modification agreement with the co-owner who will be using the charging station. The modification agreement should define the parameters relating to the installation and use of the charging station. Common issues that need to be addressed in a modification agreement are as follows:

  1. Who will pay for the costs of electricity?

One of the most common problems encountered in these types of situations is how to calculate whether the co-owner is paying for their fair share of electricity. If possible, condominium associations should require the installation of a separate meter for the electric vehicle charging station if at all possible. If a single co-owner will be using the charging station, that co-owner can simply pay the cost of electricity. If multiple co-owners are using the charging station, the bill should be equitably split between those co-owners, unless the charging station is a general common element that can be used by all co-owners.

Adding a separate meter not only avoids disputes as to responsibility for cost, but may also reduce the co-owner’s electricity costs. For example, DTE Energy has a special PEV Rate for Level 2 Charging. After DTE installs a special PEV Meter, pricing plans are available that allow for flat fees or significantly reduced charges for off-peak use. Accordingly, having a separate meter installed for an electric vehicle may resolve issues related to cost allocation and may reduce the overall price of electricity.

2. Who is responsible for the maintenance and repair of the charging station?

In the vast majority of condominium association governing documents, the responsibility for maintaining and repairing the general common elements belongs to the association. Conversely, the responsibility for maintaining limited common elements and individual units typically belongs to the co-owner. However, if an electric vehicle charging station is not identified as a limited common element, a typical catch all provision in governing documents may indicate that it is a general common element. Accordingly, assuming that the governing documents allow for modification to the general common elements, an association should ensure that it is not taking on additional maintenance and repair responsibilities unless the charging station is available for use by all of the co-owners.

3. Who is responsible for insurance?

A condominium association is responsible for providing insurance on the common elements. In situations where an electric vehicle charging station is a general common element, that is available for use by all co-owners, it makes sense that the association should incur responsibility for insuring the risks associated with the charging station. However, if the charging station is only going to be utilized by a single co-owner, or a few co-owners, those co-owners should be required to pay the costs of insurance. With respect to installing the charging station, the Association should require the co-owner to hire a contractor that has a general commercial liability policy and appropriate worker’s compensation coverage. With respect to insuring the electric vehicle charging station after it is installed, a co-owner should be required to add coverage under their homeowner’s insurance policy and add the condominium association as a named insured on that policy.

4. Who is liable for damage caused by a charging station?

While condominium associations may have an interest in going “green” and keeping co-owners happy by accommodating reasonable requests to install electric vehicle charging stations, the condominium association should not be forced to bear the burden of the potential additional liability associated with an individual co-owner’s use of an electric vehicle charging station. A San Francisco based electric vehicle charging station manufacturer was recently named in a class action lawsuit involving claims that the manufacturer’s charging stations were overheating and melting during use. Given that electric vehicle charging stations can potentially cause damage to persons or property, condominium associations should ensure that the co-owner is required to defend, indemnify and hold harmless the condominium association from any potential liability.

CONCLUSION

Electric vehicle use is on the rise throughout the United States and most condominium associations will be forced to deal with issues related to electric vehicle charging stations in the near future, if they have not done so already. In states such as Michigan that do not have statutes regulating electric vehicle charging stations in condominium associations, failure to appropriately handle requests related to electric vehicle charging stations may lead to lawsuits and/or decrease property values as a result of bad publicity.

In conclusion, the following tips will be useful for condominium associations when dealing with requests to install charging stations:

1. Know the law. Determine if any local ordinances apply.

2. Be proactive instead of reactive. All condominium associations are likely to deal with this issue at some point and governing documents and rules and regulations should be evaluated prior to receiving a modification request to ensure that appropriate procedures are in place.

3. Consult with experts. Electric vehicles and electric vehicle charging stations are a relatively new technology. Most board members will not be experts in this area, and guidance from experts is necessary to ensure the safety.

Kevin Hirzel is a Partner at Cummings, McClorey, Davis & Acho, P.L.C. and leads the Community Association Practice Group. Mr. Hirzel can be contacted at (734) 261-2400 or　khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at　http://micondolaw.com　for additional resources on Michigan Community Association Law.

Hallaq Wins First Motion for Summary Disposition

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brandan-hallaq-profile-photoCongratulations to Brandan Hallaq, Esq. for winning his first Motion for Summary Disposition before the Honorable Archie Brown in the Washtenaw County Circuit Court. Mr. Hallaq successfully drafted and argued the motion on behalf of a condominium association against a co-owner for numerous bylaw infractions and violations of the Michigan Condominium Act. In addition to obtaining an order compelling the co-owner to comply with the condominium documents, the Court granted an award of attorneys fees in the association’s favor.

Mr. Hallaq graduated with his Juris Doctor, cum laude, from Wayne State University Law School in May 2016 before joining our Livonia office.  Mr. Hallaq focuses his practice in the areas of community association, business, and real estate law.  He may be reached at (734) 261-2400 or bhallaq@cmda-law.com.

Congratulations Brandan!

Autonomous Vehicles: Coming to a Condominium or HOA Near You!

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autonomous-vehicle-1200-x-796An autonomous vehicle, also known as a driverless car, self-driving car, or robotic car is a vehicle that senses its environment and operates without human input. On December 9, 2016, Governor Rick Snyder signed 2016 PA 332 into law and amended the Michigan Motor Vehicle Code to make Michigan the first state that allows for autonomous vehicles to be operated on a public street or highway. Michigan Senate Bill 995 amended MCL 257.2b(2) and now defines an automated motor vehicle as follows under Michigan law:

(2) “Automated motor vehicle” means a motor vehicle on which an automated driving system has been installed, either by a manufacturer of automated driving systems or an upfitter that enables the motor vehicle to be operated without any control or monitoring by a human operator. Automated motor vehicle does not include a motor vehicle enabled with 1 or more active safety systems or operator assistance systems, including, but not limited to, a system to provide electronic blind spot assistance, crash avoidance, emergency braking, parking assistance, adaptive cruise control, lane-keeping assistance, lane departure warning, or traffic jam and queuing assistance, unless 1 or more of these technologies alone or in combination with other systems enable the vehicle on which any active safety systems or operator assistance systems are installed to operate without any control or monitoring by an operator.

Similarly, on March 20, 2017, Senator Gary Peters announced that he was working on federal legislation to regulate autonomous vehicles, which are anticipated to become ubiquitous in the not so distant future, as many automakers have announced plans to introduce driverless cars to the market. By way of example, the Audi A8, which will be released later this year, will feature driverless technology. Ford intends to have a driverless car on the market no later than 2021. General Motors anticipates having an autonomous vehicle by 2020 or sooner as well. It is estimated that there will be ten (10) million self-driving automobiles on roadways by 2020 (referring to vehicles with features allowing them to accelerate, brake, and steer with limited or no driver input, categorized as fully or semi-autonomous). Accordingly, condominium and homeowner associations will have to deal with the benefits and detriments associated with autonomous vehicles in the near future and should be proactive about dealing with this technological advancement. The purpose of this article is to discuss the issues that autonomous vehicles may pose for condominium and homeowner associations in the next few years.

Can condominium associations and homeowners associations preclude co-owners from using autonomous vehicles on private roads?

MCL 257.74 of the Michigan Vehicle Code defines a street or highway that is subject to the Michigan Vehicle Code as follows: ” ‘Street or highway’ means the entire width between boundary lines of every way publicly maintained when any part thereof is open to the use of the public for purposes of vehicular travel.” Accordingly, a road that is privately maintained by a condominium association or homeowners association is not required to allow autonomous vehicle traffic. However, community associations that desire to exclude autonomous vehicle traffic on private roads would need to amend the condominium bylaws or declaration of restrictions to prohibit the use of autonomous vehicles, as most governing documents would permit the use of any type of vehicle on private roads. Accordingly, condominium and homeowner associations should review their governing documents to determine whether autonomous vehicles would be allowed on private roads, as the drafters or the documents likely did not contemplate the existence of such technology.

Should condominium associations or homeowners associations preclude co-owners from using autonomous vehicles on private roads?

Proponents of autonomous vehicles claim that they are safer and reduce human error that may cause accidents. Unlike a human driver, an autonomous vehicle would not drink and drive, text and drive or fall asleep at the wheel. Additionally, elderly co-owners that are not physically capable of driving would have increased mobility. Accordingly, there are many potential benefits to autonomous vehicles.

However, autonomous vehicles are not fool proof. One of the biggest concerns about autonomous vehicles is that ability of the vehicle to make moral choices. If a child kicked a ball into the street, would the vehicle decide to crash the car into a tree or run into the child if it was unable to stop? Moreover, an autonomous vehicle could have a software error or it is possible that the owner of an autonomous vehicle could attempt to modify the operating system in a manner that could cause it to malfunction. In fact, Michigan Senate Bill 998 amended MCL 600.2949b and specifically exempted a manufacturer and subcomponent system producer from civil liability if any of the equipment used in the vehicle for automatic mode had been modified. Accordingly, given that autonomous vehicles are a developing technology, it would be reasonable for a condominium or homeowner association to preclude use of autonomous vehicles until this technology is more fully developed.

For community associations that desire to allow autonomous vehicles, associations should take proper precautionary measures. First, associations should require that owners of autonomous maintain adequate insurance. In Michigan, the minimum required insurance policy only covers $20,000 for injuries or death to an individual, up to $40,000 per accident if multiple parties are injured and up to $10,000 in property damage. Accordingly, given the unknown risks involved with autonomous vehicles, community associations that allow autonomous vehicle traffic may want to amend their bylaws or create rules that requiring higher insurance coverage in the event that damage to person or property occurs on common elements and also require co-owners to provide proof of insurance. Second, while not currently required, the association may also want to mandate regular safety inspections as a condition of autonomous vehicle use. Finally, associations should review their current bylaws to ensure that appropriate indemnification provisions are in place in the event that a co-owner’s autonomous vehicles causes damage to the common elements.

What impact will autonomous vehicles have on parking in community associations?

One of the touted benefits of autonomous vehicles is that it will reduce the need for parking in urban areas, where parking is often a premium. In short, co-owners will no longer need to be within walking distance of a car if the car is capable of parking itself and later picking up the co-owner. It is estimated that the need for parking space should decline more than 5.7 billion square meters as a result of driverless cars by 2035. Experts speculate that individual car ownership will eventually become a thing of the past, and that individuals will purchase a subscription service or buy into a “cardominium” where an autonomous vehicle, that no longer needs to be parked on-site, will arrive and take an individual to their desired destination.

For condominiums that are located in densely populated urban areas, on-site parking spaces are currently sold between co-owners at premium rates. In most cases, on-site parking spaces are limited common elements that are associated with an individual unit. The Michigan Condominium Act, specifically MCL 559.139, allows for limited common element parking spaces to be transferred as follows:

(1) Assignments and reassignments of limited common elements shall be reflected by the original master deed or an amendment to the master deed. A limited common element shall not be assigned or reassigned except in accordance with this act and the condominium documents.

(2) Unless expressly prohibited by the condominium documents, a limited common element may be reassigned upon written application of the co-owners concerned to the principal officer of the association of co-owners or to other persons as the condominium documents may specify. The officer or persons to whom the application is duly made shall promptly prepare and execute an amendment to the master deed reassigning all rights and obligations with respect to the limited common element involved. The amendment shall be delivered to the co-owners of the condominium units concerned upon payment by them of all reasonable costs for the preparation and recording of the amendment to the master deed.

(3) A common element not previously assigned as a limited common element shall be so assigned only in pursuance of the provisions of the condominium documents and of this act. The amendment to the master deed making the assignment shall be prepared and executed by the principal officer of the association of co-owners or by other persons as the condominium documents specify.

While autonomous vehicles will likely decrease the value of on-site limited common element parking spaces, autonomous vehicles may also help solve parking problems for condominium associations that do not have sufficient parking. By way of example, MCL 559.136 allows for common elements to be added to a condominium as follows:

The master deed may provide that undivided interests in land may be added to the condominium project as common elements in which land the co-owners may be tenants in common, joint tenants, or life tenants with other persons. A condominium unit shall not be situated on the lands. The master deed, or any amendment to master deed under which the land is submitted to the condominium project shall include a legal description thereof and shall describe the nature of the co-owners’ estate therein.

Accordingly, if a condominium association that had insufficient parking desired to purchase a vacant lot that was 10 miles away and add the land to the condominium as general common elements, or add limited common element parking spaces on the land, it may be able to do so in order to alleviate a parking problem. Accordingly, autonomous vehicles may revolutionize the manner in which condominium associations think about parking.

Conclusion

The technological advancements in autonomous vehicles will likely create new issues related to liability, insurance and parking for condominium and homeowner associations to consider. As with any new technology, the law is typically slow to evolve and the regulation of autonomous vehicles in community associations will largely be dependent on the governing documents. Given that an ounce of prevention is worth a pound of cure, condominium and homeowner associations should be proactive in amending their governing documents and making decisions about whether to allow autonomous vehicles and what conditions to impose on autonomous vehicle use before problems arise in the next couple of years. Additionally, community associations that have parking issues may want to consider the possibility of acquiring additional land or planning to re-develop unused parking spaces in the future.

Kevin Hirzel is a Partner at Cummings, McClorey, Davis & Acho, P.L.C. and leads the Community Association Practice Group. Mr. Hirzel can be contacted at (734) 261-2400 or　khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at　http://micondolaw.com　for additional resources on Michigan Community Association Law.

Michigan Court Rules in Favor of Condominium Association in Interpreting Newly-Amended MCL 559.167 (SB 610)

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Kevin Hirzel_8x10@300Kevin Hirzel recently scored an important victory for a Michigan condominium associations.  The Oakland County Circuit Court held that the  MCL 559.167, as amended by 2016 PA 233, does not recreate “need not be built” units that were eliminated under the prior version of MCL 559.167.  The ruling will have an impact on any condominium projects that contain unconstructed “need not be built” units and also meet one of the following two (2) requirements:

 1.Construction of the condominium was commenced prior to September 21, 2006; or

2. An amendment to the master deed that expanded the condominium, contracted the condominium or exercised a right of convertibility was recorded prior to September 21, 2010.

As the court held in Cove Creek, if a condominium meets these requirements, a developer or successor developer automatically lost the right to construct the “need not be built” units and the land on which the units were located will remain as common elements owned by the co-owners. If a condominium does not meet the above requirements, it will be subject to the new “reversion” requirements contained in the 2016 amendment to MCL 559.167, and the “need not be built” units will remain in the condominium until the “reversion” requirements are satisfied.

History of MCL 559.167

As previously discussed in Senate Bill 610 Passes: Is the amendment to MCL 559.167 of the Michigan Condominium Act constitutional?, MCL 559.167 was enacted in 2001 in order to provide an end date for the development of condominiums. MCL 559.167(3) required that a developer, its successors or assigns either complete any units identified as “need not be built” on the condominium subdivision plan within ten (10) years of the date of commencement of construction or within six (6) years of exercising a right of conversion, expansion or contraction.  If the developer, its successors or assigns did not complete the “need not be built” units with the statutory time periods, the right to construct the units would automatically terminate and the undeveloped land would remain as common elements if it was not withdrawn from the condominium.

In contrast, the 2016 amendments to MCL 559.167, which became effective on September 21, 2016, created a new “reversion” process to eliminate “need not be built” units after the expiration of the six (6) year or ten (10) year statutory time periods. Newly created MCL 559.167(4) now requires 2/3 of the co-owners that are in good standing to vote to approve a “reversion” of “need not be built” units to common elements by adopting a declaration that will be recorded in the register of deeds after the expiration of the statutory time periods. If 2/3 co-owner approval is obtained, the condominium association must then send the declaration to a developer or successor developer at its last known address.  The developer or successor developer may withdraw the land on which the units were to be located or amend the master deed to make the units “must be built” within the sixty (60) day time period.   If the developer or successor developer fails to withdraw the land or amend the master deed within sixty (60) days, the condominium association may record the declaration, which becomes effective upon recording and the right to construct the “need not be built” units will be eliminated.

Cove Creek Condominium Association v Vistal Land & Home Development, L.L.C., et al.

One of the most important questions surrounding the 2016 amendment to MCL 559.167 was whether 2016 PA 233 would be applied retroactively or only prospectively. Specifically, newly created MCL 559.167(5) states, “A reversion under subsection (4), whether occurring before or after the date of the 2016 amendatory act that added this subsection, is not effective unless the election, notice, and recording requirements of subsection (4) have been met.” In Cove Creek Condominium Association v Vistal Land & Home Development, L.L.C., et al., Oakland County Circuit Court Case No. 16-155706-CH (Order Granting Summary Disposition, Dated February 10, 2017) the court held that MCL 559.167, as amended by 2016 PA 233, did not retroactively recreate “need not be built” units that had previously been eliminated from the Cove Creek Condominium (the “Condominium”). The court held that the co-owners’ vested ownership interest in the common elements that was acquired under MCL 559.167, as amended by 2002 PA 283, remained intact.

Facts

The Condominium was established by the recording of the Master Deed in the Oakland County Register of Deeds on April 21, 1989. Lifestyle Homes, a co-partnership, was the developer of the Condominium, which was originally to be composed of 31 units.  On May 11, 1989 Lifestyle Homes recorded the First Amended to the Master Deed indicating that Cove Creek Limited Partnership (“Cove Creek, LP”) was now the developer. On May 17, 1989, Lifestyle executed a deed transferring all of its interest in the Condominium to Cove Creek, LP.  Units 1-14 have never been constructed and were identified as “need not be built” on the condominium subdivision plan.  Units 15-31 were constructed and sold to non-developer co-owners.  Construction of the condominium commenced prior to October 27, 1989, as this was the date that the first constructed unit was conveyed to a non-developer co-owner.

On September 15, 2004, Cove Creek, LP executed a deed attempting to convey units 1-14 to Vistal Cothery, LLC. On November 6, 2006, Vistal Cothery, LLC attempted to deed units 1-14 to Vistal Land & Home Development, LLC (“VLHD, LLC”).  On October 31, 2016, VLDH, LLC attempted to deed units 1-14 to the America and Maria Cervi Living Trust (the “Trust”).  On November 3, 2016, the Trust advised the Cove Creek Condominium Association that it had withdrawn “need not be built” units 1-14 from the Condominium pursuant to MCL 559.167, as amended by 2016 PA 233.

Interpretation of the Plain Language of MCL 559.167

The defendants argued that MCL 559.167, as amended by 2016 PA 233, repealed and replaced all prior versions of MCL 559.167 on September 21, 2016.  The Court held that defendants’ argument failed for several reasons.  First, the court held that MCL 559.167, as amended by 2002 PA 283, eliminated any rights to construct units 1-14.  The court held that the time period to construct or withdraw units 1-14 ended no later than October 27, 1999.  The court held that even if the ten (10) year period did not begin to run until 2002, when 2002 PA 283 was enacted, that the time period to construct units 1-14 expired no later 2012.  Accordingly, the court held that the enactment of 2016 PA 233 did not change the fact that the right to construct units 1-14 ceased to exist no later than 2012.

The court also held that the plain language of MCL 559.167, as amended by 2016 PA 233, evidenced the legislature’s intent that 2016 PA 233 is not retroactive.  The court recognized that the term “reversion” was not contained in any prior version of MCL 559.167, and that a “reversion”, i.e. the 2/3 co-owner vote and recording of a declaration, could not have occurred prior to September 21, 2016, the date that 2016 PA 233 became effective.  Rather, the court acknowledged that the co-owners acquired vested rights under MCL 559.167(3), as amended by 2002 PA 283, no later than 2012.  Given that the co-owners acquired their rights under 2002 PA 283, newly created MCL 559.167(5) was inapplicable as it only applied to “A reversion under subsection (4)”.

The court also held that even if a “reversion” could have occurred prior to September 21, 2016, the plain language of MCL 559.167(5) indicates that it would not undo a completed “reversion”.  The court held that defendants’ interpretation attempted to substitute the word “occurred”, which is a past participle, for the word “occurring”, which is a present participle, in MCL 559.167(5).  The court held that the use of the word “occurring”, a present participle, meant that 2016 PA 233 only applied to condominiums in which the statutory time periods were running, but had not yet been completed.  However, if the 6 or 10 year statutory time periods had already expired, any “reversion” would have already occurred, i.e. been completed, and 2016 PA 233 would not apply.

Constitutionality of retroactive application of MCL 559.167, as amended by 2016 PA 233

The court also ruled that defendants’ interpretation of MCL 559.167, as amended by 2016 PA 233, would render MCL 559.167 unconstitutional and that Michigan courts have an obligation to interpret a statute to be constitutional if possible.  Specifically, the court relied on Gorte v Dept of Transp, 202 Mich App 161, 164; 507 NW2d 797, 799 (1993). In Gorte, the plaintiff filed a complaint for adverse possession against the state on March 3, 1988 claiming that he held title to land via adverse possession from the state. Id. at 164.  MCL 600.5821 was amended to preclude adverse possession claims against the state and became effective on March 1, 1988, prior to the filing of the lawsuit. Id.  The trial court held that since 1966, plaintiff and his predecessors had adversely possessed the disputed acreage and that the amendment to MCL 600.5821 did not bar plaintiff’s adverse possession claim because he had a vested property right before March 1, 1988. Id.  In affirming the trial court, the Court of Appeals held:

…a statute may not be applied retroactively if it abrogates or impairs vested rights. In re Certified Questions, 416 Mich. 558, 572, 331 N.W.2d 456 (1982)…where a period of limitation has expired, the rights afforded by that statute are vested and the action in question is barred. Russo, supra, 439 Mich. at 594–595, 487 N.W.2d 698. Thus, § 5821, as amended, cannot be applied to plaintiffs if it would abrogate or impair a vested right.

Defendant argues that, in amending § 5821, the Legislature intended to void not only causes of action accruing after the effective date of the statute, but also causes of action for adverse possession against the state that could have been asserted before March 1, 1988, but were not….We are constrained, however, to follow the rules of statutory construction that dictate that a statute of limitations may not be applied retroactively to take away vested rights. We therefore interpret § 5821, as amended, to preclude the running of the period of limitation against the state for purposes of adverse possession after the effective date of the statute. We further interpret § 5821 as inapplicable where applying the statute would abrogate or impair vested rights.

Because the statute cannot be applied if it would abrogate or impair a vested right, it is necessary to determine when a claim of title to property by adverse possession vests. Generally, the expiration of a period of limitation vests the rights of the claimant. Russo, supra….Defendant argues the contrary view, that plaintiffs’ possession of the property merely gave plaintiffs the ability, before the amendment of § 5821, to raise the expiration of the period of limitation as a defense to defendant’s assertion of title. Contrary to defendant’s arguments, however, Michigan courts have followed the general rule that the expiration of the period of limitation terminates the title of those who slept on their rights and vests title in the party claiming adverse possession….Thus, assuming all other elements have been established, one gains title by adverse possession when the period of limitation expires, not when an action regarding the title to the property is brought.

Id. at 167-169 (emphasis added).

The court held that similar to the adverse possession statute, Gorte makes clear that the vested rights of the co-owners cannot be constitutionally abrogated under MCL 559.167, as amended by 2016 PA 233.

MCL 559.167, as amended by 2002 PA 283, eliminates “need not be built” units by operation of law

Finally, the court rejected the defendants’ argument that some form of recording or a replat is required to eliminate the right to construct units under MCL 557.167, as amended by 2002 PA 283. The court relied on the plain language of the statute as well as the statute of frauds, MCL 566.106.  Specifically, the court held that the right to construct “need not be built” units is eliminated by operation of law and that a property interest created by operation of law is not subject to the statute of frauds.  As such, the court granted summary disposition in favor of the Cove Creek Condominium Association and held that the “need not be built” units ceased to exist and that the defendants could not withdraw the undeveloped land from the condominium in 2016.

Conclusion

            While Cove Creek Condominium Association v Vistal Land & Home Development, L.L.C., et al., Oakland County Circuit Court Case No. 16-155706-CH (Order Granting Summary Disposition, Dated February 10, 2017) is only a circuit court opinion, it certainly provides a significant amount of guidance in interpreting MCL 559.167.  Until there is a published court of appeals opinion that interprets MCL 559.167, attorneys, co-owners, condominium associations, developers, successor developers and title companies should be aware of the following takeaways from the Cove Creek case:

  1. MCL 559.167, as amended by 2002 PA 283, applies to ALL condominiums that existed at the time the statute was enacted, not just condominiums that were created on or after the effective date of 2002 PA 283.
  2. “Need not be built” condominium units are automatically eliminated by operation of law under MCL 559.167, as amended by 2002 PA 283, and a replat or recording of any additional documents is not necessary.
  3. Vested rights in the common elements acquired by the co-owners under MCL 559.167, as amended by 2002 PA 283, cannot constitutionally be eliminated by 2016 PA 233.
  4. The co-owner voting “reversion” process, and the additional 60 day time period for a developer to withdraw “need not be built” units that was created by 2016 PA 233 only applies to condominiums in which the six (6) or ten (10) year statutory periods had not expired prior to September 21, 2016 or to condominiums created after September 21, 2016.

Kevin Hirzel is a Partner in our Livonia and Clinton Township offices and leads the Community Association Practice Group. He frequently represents Builders, Community Associations, Condominium Associations, Cooperatives, Co-Owners, Developers, Homeowner Associations, Investors, Property Owners and Property Managers throughout the State of Michigan. Mr. Hirzel can be contacted at (734) 261-2400 or khirzel@cmda-law.com. Please view The Michigan Community Association Law Blog at http://micondolaw.com for additional resources on Michigan Community Association Law.

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