Owners who live in a condo association or subdivision have agreed to abide by the rules in the master deed and bylaws or declaration of covenants and restrictions. As time goes on, owners may decide to amend their governing documents to reflect the sensibilities and desires of the community. However, some associations struggle with getting enough owners to participate in the amendment process and therefore may not be able to pass an amendment. A new law went into effect on December 13, 2022, the Discharge of Prohibited Restrictive Covenants Act, MCL 565.861 et seq., which allows condo associations and HOAs to bypass their normal amendment requirements and allow the association’s Board of Directors to amend the governing documents and remove a number of “prohibited restrictions”, including racially restrictive covenants.
A (Very) Brief History of Racially Restrictive Covenants
In the 1926 case Corrigan v Buckley, 271 US 323 (1926), the Supreme Court of the United States declined to rule that a racially restrictive covenant for a neighborhood in Washington, D.C., was unconstitutional. Instead, the Supreme Court effectively gave white homeowners and developers the go-ahead to develop racially exclusive and restrictive communities. Throughout the next two decades, the number of communities that had racially restrictive covenants flourished; from 1943 to 1965, there were 192 associations in Detroit alone that used racially restrictive covenants to maintain segregation.
The Supreme Court next addressed racially restrictive covenants in the 1948 case Shelley v Kraemer, 334 US 1 (1948), and held that racially restrictive covenants were void and unenforceable. In 1968, Congress passed the Fair Housing Act, 42 USC 3601 et seq., which in part prohibits discrimination in the sale and rental of housing. Although Shelley renders racially restrictive covenants unenforceable and the Fair Housing Act imposes civil penalties on any party that seeks to enforce such racially restrictive covenants, those same restrictions may still be present in an association’s governing documents. Indeed, Michigan Law School professor Michael Steinberg and Taubman College of Architecture and Urban Planning at the University of Michigan professor Robert Goodspeed have identified 66 Ann Arbor subdivisions whose governing documents still contain racially restrictive covenants.
Governing Documents “Prohibited Restrictions”
The Discharge of Prohibited Restrictive Covenants Act now makes it easy for an association to amend its governing documents to remove a racially restrictive covenant, among other discriminatory, prohibited restrictions. Under MCL 565.862(c), a “prohibited restriction” is “a restriction, covenant, or condition, including a right of entry or possibility of reverter, that purports to restrict occupancy or ownership of property on the basis of race, color, religion, sex, familiar status, national origin, or other class protected by the fair housing act, in a deed or other instrument.”
How a Board Can Act to Remove a Prohibited Restriction
A simple majority of the Board of Directors of an HOA or a condo association can vote to remove any prohibited restriction contained in the association’s master deed and bylaws or declaration of covenants and restrictions by recording a discharge form with the local register of deeds, including racially restrictive covenants. MCL 565.866(1) and (5). Alternatively, an owner can provide the Board of Directors with a written request that the Board exercise its power under the statute to remove the prohibited restriction. MCL 565.866(2) and (6). If the Board of Directors receives a written request from an owner, it is required to investigate whether a prohibited restriction is present in the governing documents, and if so, the Board is required to record a discharge form. MCL 565.866(2) and (6).
Whether the issue is discussed by the Board of Directors on its own initiative or brought to the board’s attention by an owner, the owners of the association are not required to vote or approve the amendment. MCL 565.866(3) and (7). And in the case of a condo association, the mortgagees are not required to vote or approve the amendment. MCL 565.866(7). After the Board of Directors has determined that is must amend its governing documents to remove a prohibited restriction, MCL 565.865 provides the substance that must be contained in the discharge form: a reference to the recoding information of the governing document, a statement that the discharge form removes and abolishes a prohibited restriction, the name and signature of the Board ember, and a space for notarization. The Board of Directors is also permitted to include a copy of the governing document with the prohibited restriction redacted.
Unless the Board of Directors receives a written request from an owner to investigate and remove a prohibited restriction such as a racially restrictive covenant, the statute does not require a Board to review its master deed and bylaws or declaration of covenants and restrictions for the presence of a prohibited restriction. MCL 565.871(1). Nonetheless, a Board of Directors’ refusal to file a discharge form to remove a prohibited restriction may subject it to liability under the Elliott-Larsen Civil Rights Act, MCL 37.2101, et seq.
Conclusion
Although court cases such as Shelley and legislation such as the Fair Housing Act prevent racially restrictive covenants and other discriminatory restrictions from being enforced in Michigan HOAs and condo associations, such restrictions may still be present in an association’s governing documents. The Discharge of Prohibited Restrictive Covenants Act allows an HOA or condo association’s Board of Directors to act swiftly and amend its documents to remove a racially restrictive covenant or other prohibited restriction. This is a useful tool for associations to amend its governing documents to reflect the sensibilities and desires of an open and inclusive community.
Owners and board members who would like to learn more about the Discharge of Prohibited Restrictive Covenants Act or are looking for assistance with recording a discharge form should seek the advice and guidance of an experienced HOA and condo attorney. If you would like to read even more about racially restrictive covenants, consider reading the 8 page article Racially Restrictive Covenants in the United States: A Call to Action by Nancy H. Welsh.
Michael T. Pereira is an attorney with Hirzel Law, PLC, and focuses his practice on community association law. Mr. Pereira received his Bachelor of Arts in Political Science from the University of Michigan and his Juris Doctor degree from the University of Detroit Mercy School of Law, where he graduated second in his class and served as the Executive Editor of Outside Articles on the Detroit Mercy Law Review. After law school, Mr. Pereira worked as a research attorney and law clerk at the Michigan Court of Appeals. Mr. Pereira can be reached at (248) 986-2290 or mpereira@hirzellaw.com.
