Summer resort and park associations are a unique type of community association that have been in existence in Michigan since 1887 but generally have been superseded over the past several decades by homeowners and condominium associations. Notwithstanding the rise of other types of community associations, Michigan summer resort and park associations can still be found, particularly along lake and waterfront properties, and they have been operating under Michigan laws created over a century ago.
However, Michigan summer resort and park associations that were formed under the Summer Resort and Park Associations Act, Act 230 of 1897, just got major 21st century updates to their 19th century statutory operating provisions that will go into effect 91 days after the end of the Michigan legislature’s regular 2022 session. On March 10, 2022, Michigan’s governor, Gretchen Whitmer, signed Senate Bill No. 129, which will amend four different sections of the Summer Resort and Park Associations Act that will promote more operational flexibility for these associations. Below is a summary of these updates that every Michigan summer resort and park association formed under the Summer Resort and Park Associations Act needs to know.
1. MCL 455.3: Personal Property Caps Increased From $200,000.00 to $6 Million
Currently, MCL 455.3 restricts a Michigan summer resort and park association that was formed under the Summer Resort and Park Associations Act to personal property holdings of no more than $200,000.00. In 1897, $200,000.00 was worth about $7 million today. Consequently, what appeared to be generous allowances for personal property holdings in 1897 became less so as the years passed on.
MCL 455.3, as amended by Senate Bill No. 129, will permit these associations to hold up to $6 million dollars worth of personal property, roughly equivalent to the value of $200,000.00 in 1897, and this amount will be adjusted for inflation using the Consumer Price Index, avoiding the previously restrictive effect of the $200,000.00 limitation which did not account for inflation.
2. MCL 455.9: Director Qualifications Expanded Beyond The Stockholders
Presently, MCL 455.9 restricts who qualifies to serve as a director of a Michigan summer resort and park association formed under the Summer Resort and Park Associations Act to only the stockholder (or member) themselves. MCL 455.9, as amended by Senate Bill No. 129, will permit the stockholder to nominate, in writing, one of their immediate family members to serve as a director in their place. Consequently, spouses, children and their spouses, and stepchildren and their spouses will qualify to serve as directors of summer resort associations.
3. MCL 455.10: Annual Expenditures Without Majority Stockholder Approval Increased from $1,000.00 to $30,000.00
As of the date of this article, MCL 455.10 restricts the amount the board of directors of a Michigan summer resort and park association formed under the Summer Resort and Park Associations Act can spend in a year without majority stockholder approval to only $1,000.00, except for associations in Emmet County, which have a cap of $5,000.00. In 1897, $1,000.00 was worth about $35,000.00 today, again hampering these associations’ ability to operate over a century later.
MCL 455.10 will allow these associations to spend up to $30,000.00 in a year before seeking majority stockholder approval and, similar to the personal property cap in MCL 455.3, this amount will be adjusted for inflation using the Consumer Price Index. Furthermore, the increased cap for associations in Emmet County has been removed.
4. MCL 455.23: Special Dues Increased from $25.00 to $750.00
At present, MCL 455.23 permits a Michigan summer resort and park association formed under the Summer Resort and Park Associations Act to levy special dues with majority stockholder approval so long as those special dues do not exceed $25.00 per share in any one year, or about $865.98 in today’s money. To reflect that substantial change in value, MCL 455.24 will allow these association to levy special dues of up to $750.00 per share, adjusted for inflation using the Consumer Price Index, in any one year with majority stockholder approval.
While these amendments to the Summer Resort and Park Associations Act have been signed into law, Michigan summer resort and park associations formed under the Summer Resort and Park Associations Act should remember that these amendments do not go into effect until the end of the 2022 legislative session. Accordingly, directors of Michigan summer resort and park associations formed under the Summer Resort and Park Associations Act need to continue operating under the Summer Resort and Park Associations Act that is currently in effect. In the meantime, though, these summer resorts associations can begin proactively planning their future operations to account for the upcoming amendments to MCL 455.3, MCL 455.9, MCL 455.10 and MCL 455.23. Accordingly, summer resort associations should be contacting their HOA attorney to determine whether their bylaws need to be updated to account for the Summer Resort and Park Associations Act.
If you are unsure whether your summer resort and park association was formed under the Summer Resort and Park Associations Act or one of the other summer resort and park acts, the association’s articles of incorporation or organization likely will provide you with this information. If you still are unsure, or if you would like help navigating the new amendments to the Summer Resort and Park Associations Act, we recommend contacting a homeowners association attorney knowledgeable in Michigan’s summer resort laws for further assistance and guidance.
Kayleigh B. Long is a senior attorney with Hirzel Law, PLC and focuses her practice in the areas of community association law and appellate litigation. Ms. Long 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. Ms. Long has been recognized as a Michigan Rising Star in Real Estate Law by Super Lawyers since 2020, an award given to no more than 2.5% of the attorneys in the State of Michigan. Ms. Long has also made numerous presentations on community association law, along with having articles published in the Michigan Real Property Review. She can be reached at (248) 480-8758 or firstname.lastname@example.org.