MCL 450.835a: Electronic Signatures can now be used to amend Restrictive Covenants

MCL 450.835a was enacted into law on March 21, 2017, and provides as follows:

450.835a Amending, reaffirming, or repealing restrictive covenant by electronic signature.

Sec. 5a.

If restrictive covenants apply to more than 250 lots or parcels of real property in a single development and the law of this state allows the owners of the real property to amend, reaffirm, or repeal the restrictive covenants, the owner of a lot or parcel that is subject to the restrictive covenants may consent to amend, reaffirm, or repeal the restrictive covenants, in whole or in part, by an electronic signature.

The legislative history of MCL 450.835a demonstrates that Michigan House Bill 5591 (2016) was originally introduced to deal with an extremely large Michigan Homeowners Association that was having difficultly amending its documents.  The Lakes of North Association in  Northern Michigan that had approximately 4,700 members and was composed of 8,028 lots.  The restrictive covenants required 2/3 of the owners to physically sign an amendment to a restrictive covenant in order for it to be effective.  Given the practical problems in gathering physical signatures of owners of more than 5,351 lots, the legislature agreed to allow electronic signatures to be attached to an amendment as part of the Uniform Electronic Transactions Act, MCL 450.831, et seq..  After input was provided by the Michigan Chapter of the Community Association Institute, the lot number requirement was reduced to 250 lots so that MCL 450.835a could be used to amend restrictive covenants in other large Michigan Homeowners Associations.  Accordingly, Homeowners Associations that were previously intimated by having to gather a large number of signatures to effectuate an amendment to a declaration or restrictive covenant can now simplify the process pursuant to MCL 450.835a.  It is important to note that this provision does not apply to condominium associations, as MCL 559.190 and MCL 559.190a still govern amendments to Michigan condominium documents.

Kevin Hirzel is a Michigan Community Association attorney that concentrates his practice on commercial litigation, community association law, condominium law, construction law and real estate law. Mr. Hirzel has been a Super Lawyer’s Rising Star in Real Estate Law from 2013-2017, an award given to only 2.5% of the attorneys in Michigan each year. He was named an Up & Coming Lawyer by Michigan Lawyer’s Weekly in 2015, an award given to only 30 attorneys in Michigan each year. Mr. Hirzel represents community associations, condominium associations, cooperatives,  homeowners associations, property owners and property managers throughout Michigan. He may be reached at (734) 261-2400 or khirzel@cmda-law.com.