Steve Guerra has been named as the Board President of the Community Association Institute – Michigan Chapter (CAI) for the 2018-2019, and Steve began his term on June 1, 2018. More information on the Community Association Institute – Michigan Chapter can be found on the CAI Michigan Chapter's website.
In a recent case from the Michigan Court of Appeals, the court considered whether an Association properly ratified a circuit court bylaw violation lawsuit. The Association's Bylaws required a majority vote of co-owners prior to instituting litigation for a bylaw violation. The Bylaws specifically state the votes must be cast "in person or by proxy...at a given meeting of the members of the Association duly called and held." Although a majority of co-owners did ultimately vote to ratify the lawsuit, the Court of Appeals reversed the trial court's determination that this was a proper ratification. Specifically, there was no provision in the Bylaws allowing for such action without a meeting, even by consent vote to waive the meeting. The Board of Director's consent resolution which was circulated to collect votes stated the co-owners were agreeing to waive a formal meeting and notice of meeting for purposes of the vote. The court held that when a formality is required (here, votes to be placed at a meeting), this formality cannot be waived, even by co-owner consent. The fact that this vote lacked a required formality caused it to fail to ratify the litigation. The broader provisions contained in the Michigan Non-Profit Corporation Act (specifically, MCL 450.2407(3)) did not change this result because the more limiting requirement in the Condominium Bylaws was held to be controlling. Sawgrass Ridge Condominium Association v. Alarie, Unpublished, Case No. 335144, January 9, 2018.
Mark Makower, Steve Guerra, Jeff Vollmer and Doug Alexander were recommended by their peers and named as Leading Lawyers in real estate law for 2018 by Leading Lawyer’s Magazine. The designation as a Leading Lawyer is given to less than five percent of all lawyers licensed in each State. More information on Leading Lawyers can be found on the Leading Lawyer's website.
Jeff Vollmer, along with fellow attorneys Greg Gamalski and Mary Ann O'Neil, are featured in a seminar now available on the Institute of Continuing Legal Education (ICLE) website. This presentation covers a wide range of issues affecting community associations and is available as a learning tool for other attorneys throughout Michigan.
As of March 21, 2017, amending Subdivision Declarations will be slightly easier and more affordable because Governor Snyder signed into law Public Act 355 of 2016. This law adds new Section 5a to the Uniform Electronic Transactions Act ("UETA"). The new Section provides that in single developments containing more than 250 lots or parcels, owners may consent to an amendment of the governing documents by an electronic signature. This ability is only permitted when the owners are otherwise legally able to amend the documents. The UETA defines an electronic signature as an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. Although the language is broad and provides that a signature can be shown as that of the entitled person in any manner, Subdivision and Homeowner Associations should consider having a system in place which can be used to verify the signature is genuine by using a third-party web service or by having verified email addresses on record.
A recent unpublished case from the Michigan Court of Appeals has particular relevance for condominium associations operating in Michigan. First, the Court ruled that decisions of the Board will be evaluated under the "business judgment rule", meaning that if the Board acts in good faith and within the scope of its authority under the purposes of the corporation, the court will not substitute its judgment for that exercised by the Board. Second, the Court supported expenditures made by the Board for replacing existing Common Elements under the framework found in many communities throughout Michigan. In this case, the Association performed work related to the gutters and downspouts and installed an open fire gas fireplace in place of an existing electric fireplace. The Plaintiff argued that this work was an addition to the Common Elements and the expenditures required approval of the community. The Board argued it had the right to spend money to replace these items without approval of the Co-owners. The Court determined that replacements "do not have to be of the same specific character" or functionality." It was held "the new fireplace assume[d] the function and was a substitute for the prior fireplace." The fact that an electric fireplace was replaced with a gas one was not found to be an "addition." Second, adding gutters and downspouts was not found to be an "addition" requiring a special assessment approval but rather is part of "maintenance" permitting the Board of Directors to assess via its normal budget (specifically, gutters "serve the vital role of diverting rain water away from buildings and structures, which acts to keep the property in good condition", and are therefore considered "maintenance of the common elements under the bylaws" Finally, the court addressed whether money collected via an unapproved special assessment project could be utilized for other authorized items. Here, the Association's annual budget had included a special assessment for installation of a service elevator. When the special assessment was not approved by the requisite number of co-owners, the Board used the money collected for other authorized projects. This expenditure was held to be in compliance with the Bylaws since nothing was spent on constructing an elevator. MJ Development Company, Inc. v Inn at Bay Harbor Association, 330496 (unpublished, February 23, 2017).