The Michigan Condominium Act: Time for a Change
The Michigan Condominium Act was enacted in 1978 and is now over thirty-five years old. While significant amendments were made to the Michigan Condominium Act in 2001 and 2002, the Michigan Condominium Act does not currently meet the needs of various stakeholders as it is outdated and disorganized. In 2015 and 2016, the Michigan Legislature introduced five (5) bills that either amended or would amend the Michigan Condominium Act. However, as discussed in my recent article in the Michigan Real Property Review, The Michigan Condominium Act: Time for a Change a complete overhaul of the Michigan Condominium Act is likely necessary.
While the issues with the current version of the Michigan Condominium Act are too numerous to be addressed in a single article, my article will identify a variety of problems with the current Michigan Condominium Act and to discuss how the adoption of a modified version of the Uniform Condominium Act (“UCA”) would resolve these issues. Topics that are discussed in the article are as follows:
- Creating consistent definitions and organizing the Michigan Condominium Act into the following sections: Article I – General Provisions, Article II – Creation, Alteration and Termination of Condominiums, Article III – Management of Condominium and Article IV – Protection of Condominium Purchasers.
- Resolving the taxable status of units that later remain in the condominium as common elements pursuant to MCL 559.167 by not taxing units until a certificate of occupancy is obtained.
- Creating a mechanism to resolve internal conflicts between the articles of incorporation, master deed, condominium subdivision plan, condominium bylaws and the condominium rules.
- Making all structures and common elements as “must be built” by default if they are not labeled as “need not be built” as required by MCL 559.166.
- Providing more flexibility with respect to the expansion of condominiums pursuant to MCL 559.132.
- Providing a single mechanism to withdraw land from a condominium instead of having the differing statutory provisions contained in MCL 559.133 and MCL 559.167.
- Creating a statutory mechanism that would allow a court to reform obvious drafting errors contained in a master deed, condominium subdivision plan or condominium bylaws.
- Creating a set of standards that governs master associations such as setting a transitional control date under MCL 559.152, requiring an audit or review under MCL 559.157 and requiring a vote to amend a master declaration under MCL 559.190. Additionally, creating a mechanism to establish priority between liens of a master association and a condominium association.
- Creating greater flexibility for merging separate condominiums under MCL 559.132.
- Specifically defining the responsibilities of a developer in connection with the turnover of control of the condominium association to the co-owners under MCL 559.152.
- Clarifying the rights and responsibilities of successor developers under MCL 559.235.
- Creating standards related to technological changes such as electric vehicles and solar panels.
- Creating a reasonable default requirement to obtain a quorum to make it easier for condominium associations to transact ordinary business.
- Creating mandatory minimum insurance requirements for condominium associations that currently do not exist under Mich Admin Code, R. 559.508.
- Incentivizing reserve fund studies instead of arbitrarily requiring a minimum reserve fund equal to 10% of the association’s current annual budget on a noncumulative basis pursuant to MCL 559.205 and Mich Admin Code, R 559.511.
- Reducing the paperwork involved in condominium purchases by eliminating the Michigan Condominium Buyer’s Handbook under MCL 559.184a or alternatively allowing for documentation to be provided electronically.
- Requiring disclosures in condominium re-sales instead of only requiring disclosures in the sale of new condominium units pursuant to MCL 559.184a.
- Simplifying the escrow and/or bond requirements to complete the “must be built” portions of a condominium under MCL 559.203b.
A complete overhaul of the Michigan Condominium Act will not be a small task, as it will require some level of compromise by numerous stakeholders. Past piecemeal fixes to the current Act have been akin to plugging holes in a dam that will eventually burst and have made the Michigan Condominium Act more confusing and unintelligible over the years. I hope that this article will serve as a starting point for discussion for a much needed overhaul of the Michigan Condominium Act.
Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2018, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel was named an Up & Coming Lawyer by Michigan Lawyer’s Weekly in 2015, an award given to only 30 attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or [email protected].