Over a year after it initially went under lockdown in response to the COVID-19 pandemic, the state of Michigan is slowly reopening. As of June 1, 2021, there are no longer any limits on the number of people who may gather together outdoors, and it is expected that, effective July 1, 2021, indoor gathering restrictions will also be lifted. While the lifting of these restrictions does not apply equally across all sectors and people, such as those who are not yet fully vaccinated who are required to continue to wear a face mask while indoors, and while the COVID-19 pandemic has not actually ended, as cases remain prevalent in the state, Michigan community associations will finally have a chance to step back from the frenetic changes in guidance and restrictions and reflect on lessons learned over the past year. In doing so, we anticipate that Michigan community associations will realize that many practices that they adopted over this past year specifically to address the COVID-19 pandemic remain beneficial to their associations and members, global pandemic or not. With this in mind, we present below the 9 best practices that our community associations have learned over the past year that we encourage all associations to continue utilizing and adopting, even as restrictions loosen and we return to a new state of normal. We recommend that community associations wishing to adopt one or more of the below best practices consult with an attorney when doing so.
Best Practice #1: Amend Your Articles of Incorporation to Limit Director and Officer Liability.
In 2015, the Michigan Nonprofit Corporation Act was amended to allow additional liability protections for volunteer directors and officers. MCL 450.2209 permits a community association to amend its articles of incorporation to exempt directors and officers from liability unless they intentionally harm the members of the corporation. Accordingly, community associations should review their governing documents to determine what the current standard of liability is for its volunteer directors and officers and consider whether they want to limit a director’s or officer’s liability for negligent or grossly negligent acts. In the context of the COVID-19 pandemic, such an amendment was particularly important for those community associations that wanted to reopen their recreational facilities in order to avoid having to pay legal fees or potential judgments in the event that insurance coverage did not exist for any COVID-19-related lawsuits.
Best Practice #2: Amend Your Governing Documents to Limit the Association’s Liability.
Many governing documents are silent as to a community association’s responsibility and potential liability related to cleaning the common areas; however, the governing documents are contractual in nature and the Michigan Court of Appeals has held that a “contractual waiver of liability also serves to insulate against ordinary negligence, but not gross negligence.” Xu v Gay, 257 Mich App 263, 269; 668 NW2d 166 (2003). While on October 22, 2020, Michigan adopted 2020 PA 236, which provides community associations with an immunity defense if an owner, tenant or invitee files a civil lawsuit alleging a tort claim, this law is limited only to COVID-19 claims and is not automatic. Accordingly, community associations should consider amending their governing documents to waive potential negligence or breach of covenant claims arising out of COVID-19 or other forms of bacteria and viruses, such as including a notice that the association will perform cleaning that it deems appropriate but that it is still possible that an owner may be exposed to COVID-19, or other forms of bacteria or viruses, that may cause bodily injury, sickness or death, notwithstanding the cleaning efforts undertaken by the association, and a requirement that each owner acknowledge the above risks, that they will be solely responsible for these risks and that they waive any potential liability against the community association.
Best Practice #3: Amend Your Articles of Incorporation to Include Emergency Powers.
MCL 450.2261 permits a community association to adopt emergency bylaws, which many associations found necessary in March 2020 after the sudden shutdown of the state; however, many articles of incorporation are silent as to an association’s scope of emergency powers. Accordingly, community associations should consider amending their articles of incorporation to include emergency powers that are necessary to protect the health, safety and welfare of its members when a state of emergency is declared by either the municipality, county, state or federal government. Such emergency powers include, but are not limited to, taking any action necessary to implement any order or guidance of a governmental entity, adjourning any required association meetings to a later date and closing areas of the community.
Best Practice #4: Post Warning Signs at Recreational Facilities.
In Michigan, a defendant can avoid liability if a danger is open and obvious. A danger is “open and obvious” if “an average user with ordinary intelligence [would] have been able to discover the danger and the risk presented upon casual inspection.” Novotney v Burger King Corp (On Remand), 198 Mich App 470, 475, 499 NW2d 379 (1993). Similarly, “[f]or general negligence, the standard for determining if a defendant breached its duty to warn is whether the defendant warned the plaintiff of foreseeable danger that could arise from the defendant’s conduct.” See Osman v Summer Green Lawn Care, Inc, 209 Mich App 703, 532 NW2d 186 (1995). In applying the above concepts to slip and fall cases, the Michigan Court of Appeals has held that placing several signs throughout a store provided more than adequate notice that wet conditions could exist anywhere in the store. See, e.g., Foster v M & H Party Store, Inc, unpublished per curiam opinion of the Court of Appeals, issued Feb 16, 2017 (Docket No. 328283), p 2; Maness v Carlton Pharmacy, unpublished per curiam opinion of the Court of Appeals, issued Oct 22, 2009 (Docket No. 287486), p 2. The placement of signs warning that COVID-19, or other dangers, may be present on or within the recreational facilities certainly will help provide a defense to a community association that may be sued. We recommend that a community association consider posting warning signs for recreational facilities that accomplish the following:
- Require all users to follow safety precautions, such as not using recreational facilities if they are sick, washing hands and following any specific safety rules adopted by the community association.
- Notify that COVID-19 or other dangers may be present, notwithstanding any cleaning undertaken by the association, and that the user will use the facility at their own risk.
- Comply with state mandated requirements for pool signs.
- Posting CDC posters that identify appropriate safety protocols.
Best Practice #5: Create Rules and Regulations That Your Association Can Enforce.
Warning signs and other safety protocols posted and adopted by a community association regarding shared areas and recreational facilities will only be effective, and potentially reduce an association’s liability, if they are actually enforced. Accordingly, we recommend that community associations carefully review any policies it has or will adopt to ensure that it has the capacity to enforce those rules, including the assistance of property managers, lifeguards, security guards or other vendors.
Best Practice #6: Consider Obtaining Individual Waivers for Use of Recreational Facilities.
A community association can also obtain individual waivers from those that use the recreational facilities; however, waivers must be carefully drafted. An individual release must indicate that the user assumes the risk of using the particular recreational facility, that they are solely responsible for any injury and that they “waive” or “disclaim” their claims against the community association. However, community associations should be aware that some owners may not be willing to sign a waiver, minors cannot sign waivers and it will be difficult to monitor whether a person using a recreational facility has, in fact, executed a waiver. Furthermore, an individual may only waive negligence, as opposed to gross negligence and willful or wanton misconduct. Accordingly, given the practical issues and limitations presented by standalone waivers, we recommend that they should only be used in conjunction with the other best practices included in this article.
Best Practice #7: Adopt a Routine Cleaning Schedule for Shared Areas and Facilities.
One piece of guidance community associations have heard frequently throughout the COVID-19 pandemic is to increase cleaning of a high-touch surface areas on a scheduled basis. The Centers for Disease Control and Prevention (“CDC”) continue to offer guidance on cleaning shared facilities in order to reduce the transmission of COVID-19; however, community associations also should consider monitoring and following CDC guidance on how to reduce the transmission of other bacteria and viruses in their recreational facilities moving forward.
Best Practice #8: Consider the Use of Force Majeure Provisions within Service Contracts.
Force majeure clauses are designed “to relieve a party from penalties for breach of contract when circumstances beyond the party’s control render performance untenable or impossible.” Kyocera Corp v Hemlock Semiconductor, LLC, 313 Mich App 437, 438-39; 886 NW2d 445 (2015) (citation omitted). Many contracts, including a community association’s service contract with one of its vendors, may not have a force majeure clause; however, such clauses can be helpful to a party that needs to delay or avoid performing their obligation due to an unforeseen event, such as a pandemic or other event that has made performance impossible or extremely difficult. Such clauses, though, are strictly interpreted by Michigan courts and the event delaying performance or making performance impossible must be specifically listed in the force majeure clause. Kyocera Corp, 313 Mich App at 447. Accordingly, community associations wishing to include a force majeure clause within a service contract should reach out to counsel to help draft such a provision.
Best Practice #9: Implement Electronic and Remote Participation for Meetings and Voting.
MCL 450.2405(1) permits a community association to conduct a meeting via remote communication, such as conference calls, Zoom, etc., unless the articles of incorporation or corporate bylaws specifically prohibit doing so. Accordingly, members can both participate and vote in association meetings via remote means, so long as certain conditions are met, including adequate notice of the means of remote participation, reasonable measures are in place to verify those participating are members, members are provided a reasonable opportunity to participate in the meeting and a record is kept of any votes taking during the meeting. Community associations may also utilize online and electronic voting forms, including those self-created on Microsoft or Google Forms, or created by third-party commercial vendor, such as ElectionBuddy, SurveyMonkey and Vote HOA Now. Electronic and remote participation may allow community associations that have otherwise struggled to obtain quorum or member participation in meetings to provide more flexible options for its members to participate in association business without being confined to attending a meeting at physical location on a specific day and time.
Kayleigh B. Long is an attorney with Hirzel Law, PLC and focuses her practice in the areas of appellate law, community association law and civil litigation. Ms. Long received her Bachelor of Arts degree in International Studies from Indiana University. Prior to attending law school, Ms. Long joined Teach for America, teaching kindergarten in Harper Woods, Michigan and southeast Washington, D.C., and received a Master of Arts in Teaching from Oakland University. Ms. Long then obtained her Juris Doctor degree from Indiana University Robert H. McKinney School of Law, where she graduated in the top 5 of her class and served as the Senior Executive Editor on the Indiana Law Review. Her law review note was published in the Indiana Law Review, and she has published articles in the Denver Law Review and Michigan Real Property Review. She can be reached at (248) 480-8758 or firstname.lastname@example.org.