A recent survey by the Community Associations Institute’s Foundation for Community Research reported that 91% of community association managers and HOA board members reported seeing unexpected increases in operating expenses due to inflation. While cost increases are inevitable, it appears that condominium and homeowners associations are dealing with the increased expenses in different ways. When asked how community association managers and HOA board members plan to address unexpected operating expenses, 73% of respondents report that they plan to raise HOA assessments, 41% plan to reduce expenses, and 15% plan to lower their reserve funding contributions. With respect to community associations that plan to reduce expenses, 40% of survey respondents plan to defer maintenance projects, 31% plan to reduce landscaping programs, 18% plan to reduce legal fees, and 14% plan to reduce community amenities.
Unfortunately, homeowners associations that plan to reduce legal fees are unlikely to see a reduction in legal matters. Issues such as collecting HOA assessments, enforcing HOA bylaws, responding to owner or vendor lawsuits, or responding to Fair Housing complaints are not optional. While these legal issues are often unanticipated, they require the involvement of a qualified HOA attorney and cannot simply be eliminated from a budget. Other community associations may forego “optional” legal items such as HOA document amendments, contract reviews, or consultation with an HOA attorney on how to deal with legal problems at the onset. In some cases, the reduction of these types of legal expenses, will likely increase a community association’s risk, which may result in an overall increase in expenses, due to additional liability or increased insurance premiums due to additional insurance claims, if a community association cuts corners.
Condo and homeowners associations that are feeling the pinch due to inflation may consider resorting to AI searches, such as ChatGPT, Google Bard, or Bing, for legal advice, instead of the HOA attorney. Since AI search is the wave of the future, I decided to put ChatGPT to the test to see if it could offer a reasonable substitute for a human HOA attorney and if I should begin my search for a new career. As will be demonstrated in the various searches performed in this article, the age-old adage, “you get what you pay for”, is still applicable in the AI search era, as ChatGPT failed miserably.
Is Chat GPT qualified to provide legal advice to a Condo or HOA?
In fairness to my AI counterpart, I asked ChatGPT whether it thought it was qualified to provide legal advice to a homeowners association board. While a simple “no” would have sufficed, ChatGPT recognized its own limitations and indicated that it was not “qualified or licensed” to provide legal advice and that it “should not be relied upon as a substitute for professional legal advice”, as it provided the following response:
As an AI language model, ChatGPT can provide information on a wide range of topics, including legal matters. However, it is important to note that ChatGPT is not a licensed attorney and cannot provide legal advice.
Homeowners association boards should always consult with a qualified attorney who specializes in the relevant area of law to obtain legal advice. Attorneys can provide legal guidance based on the specific laws and regulations that apply to the situation at hand, and can help ensure that the board is complying with all legal requirements.
While ChatGPT can provide general information on legal topics, it is not a substitute for the advice of a licensed attorney. It is always best to consult with a qualified attorney to obtain legal advice that is tailored to your specific needs and circumstances.
What happens if a Condo or HOA asks Chat GPT for legal advice or to draft legal documents?
Condominium or homeowners associations may think that ChatGPT may be used as a “starting point” and then follow up with the HOA attorney later on. On its face, this approach seems to make sense, but this author decided to put the theory to the test and see how ChatGPT would fare in handling simple and complex HOA legal issues, notwithstanding the above warning.
Drafting a Master Deed and Condominium Bylaws
As an initial test, I asked ChatGPT to draft a Master Deed and Condominium Bylaws for a condominium in compliance with the Michigan Condominium Act. ChatGPT politely refused, and provided the following response:
As an AI language model, I am not authorized to create legal documents such as a Master Deed and Condominium Bylaws. These documents must be prepared by a licensed attorney who is familiar with Michigan law and the specific requirements of the Michigan Condominium Act. It is important to consult a qualified attorney who can provide you with legal advice and guidance on creating the necessary documents that comply with Michigan state law.
While this was a big ask, it does demonstrate that AI is a long way away from replacing a human HOA attorney in drafting or amending condominium documents.
Drafting a Condo Lien
Next up, I asked ChatGPT to draft a condominium lien in compliance with the Michigan Condominium Act. Unlike drafting condominium documents, ChatGPT decided that it was going to give this one a try, without providing any disclaimer as to its limitations, and it provided the following response:
Here is a sample of a lien for delinquent assessments that complies with the Michigan Condominium Act:
CONDOMINIUM ASSESSMENT LIEN
Date of recording: [Date]
Recorded by: [Name of condominium association or its authorized agent]
Condominium name: [Name of condominium]
Unit number: [Unit number of delinquent owner]
Delinquent owner: [Name of delinquent owner]
Amount due: [Total amount of delinquent assessments, interest, late fees, and costs]
Pursuant to the Michigan Condominium Act (MCL 559.101 et seq.), notice is hereby given that a lien has been recorded against the above-described unit in the above-named condominium for the delinquent assessments, interest, late fees, and costs owed by the delinquent owner to the condominium association.
The delinquent assessments, interest, late fees, and costs have been assessed in accordance with the bylaws and rules of the condominium association, and the delinquent owner has failed to pay the amounts owed despite notice and demand.
This lien secures the payment of the delinquent assessments, interest, late fees, and costs, and all costs associated with the enforcement of the lien, including but not limited to attorneys’ fees, court costs, and recording fees.
This lien shall be prior to any other lien or encumbrance on the unit, except for liens for real estate taxes and first mortgages, and shall remain in effect until the delinquent assessments, interest, late fees, and costs, and all costs associated with the enforcement of the lien, are paid in full.
DATED this [Date].
[Name of condominium association or its authorized agent]
ChatGP’s condo lien template is problematic for a few reasons, which include the following:
- The condo lien does not include a spot for a legal description, which is required in order for it to be recorded in the register of deeds, and to comply with MCL 559.208(3)(a)(i).
- The condo lien asks the drafter to include all “delinquent assessments, interest, late fees, and costs, and all costs associated with the enforcement of the lien.” MCL 559.208(3)(a)(iii), provides as follows, and states that interests, costs and attorney fees” are excluded in this section of the lien.
- The condo lien is recorded before any “court costs” would be incurred, and the lien fails to recognize that Michigan allows condo liens to be foreclosed by advertisement.
- The lien does not identify the person recording it, and who it should be returned to, which is required for it to be recorded in the register of deeds.
In this scenario, ChatGPT drafted a condo lien that did not comply with the requirements of MCL 559.208, and in fact, put items into the lien that were contrary to the plain language of the statute. Similarly, the lien did not comply with basic recording requirements and would have been rejected by the register of deeds.
Researching Cases to Interpret the Michigan Condominium Act
I asked ChatGPT to assist in some legal research and requested a list of cases that interpret MCL 559.167 of the Michigan Condominium Act. MCL 559.167 addresses the circumstances in which “need not be built” units in condominiums cease to exist. MCL 559.167 has been subject to a great deal of litigation over the past several years and there are several appellate decisions interpreting this section of the Michigan Condominium Act. ChatGPT provided the following answer:
MCL 559.167 is a Michigan statute that relates to the powers and duties of condominium associations. This statute has been the subject of several court cases in Michigan, and below are some notable cases that interpret this statute:
- Bayberry Condominium Association v Kondur, unpublished per curiam opinion of the Michigan Court of Appeals, issued June 5, 2014 (Docket No. 313075): This case involved a dispute between a condominium association and a co-owner who had failed to pay assessments. The court held that the association had the power to collect assessments, including interest and late fees, under MCL 559.167(1)(m).
- Shaw v The Hamlet Condominium Association, unpublished per curiam opinion of the Michigan Court of Appeals, issued September 6, 2018 (Docket No. 340072): This case involved a dispute between a condominium association and a co-owner who had installed a satellite dish on his unit without permission. The court held that the association had the power to regulate the installation of satellite dishes under MCL 559.167(1)(e).
- Fox Bay Civic Association v Creswell, 246 Mich App 598 (2001): This case involved a dispute between a homeowner and a civic association that had been granted certain powers under MCL 559.167. The court held that the association did not have the power to regulate the use of a homeowner’s property, as this power was not specifically granted under the statute.
- Arbors at Chippewa Valley Condominium Association v Omilian, unpublished per curiam opinion of the Michigan Court of Appeals, issued March 8, 2018 (Docket No. 336141): This case involved a dispute between a condominium association and a co-owner who had installed a fence without permission. The court held that the association had the power to regulate the installation of fences under MCL 559.167(1)(e).
- Lakes of the North Association v Petrovich, unpublished per curiam opinion of the Michigan Court of Appeals, issued May 22, 2012 (Docket No. 300642): This case involved a dispute between a property owner and an association that had been granted certain powers under MCL 559.167. The court held that the association had the power to assess fees for the use of common areas, as this power was specifically granted under the statute.
The answer to this request was alarming for a variety of reasons, by the major errors in ChatGPT’s response were as follows:
- All 5 of the cases identified by ChatGPT were made up and do not exist. Fox Bay Civic Association v Creswell is the name of an actual case, but the citation is wrong and this case was decided in 2019, not 2001. Similarly, the 2001 case has nothing to do with MCL 559.167.
- The above answer cites MCL 559.167(1)(e) and MCL 559.167(1)(m), neither of which exist under the Michigan Condominium Act.
- None of the summaries have anything to do with the topic of “need not be built” units or anything else that is covered by MCL 559.167.
Once again, ChatGPT did not provide a disclaimer as to its limitations, it failed to understand the plain language of MCL 559.167, it did not find one of the numerous cases that have interpreted this statute, and it made up a completely incorrect answer in response to this question. Accordingly, condo and HOA board members should be very careful about relying on legal advice from ChatGPT, as it may point them in the wrong direction, doing more harm than good.
Drafting a Blog Article on an HOA Topic
In my previous blog article, Federal Court Permits Fair Housing Claim to Keep Six Emotional Support Chickens to Proceed to Trial – The Michigan Community Association Law Blog, I discussed a recent case in which a federal court ruled that an issue of fact existed as to whether the Fair Housing Act had been violated when a property owner requested that a city make a reasonable accommodation to its zoning ordinance to keep six (6) emotional support chickens. I asked ChatGPT to summarize the key points of Whiteaker v City of Southgate, 66 NDLR P 136 (ED Mich, January 19, 2023), and it provided the following response:
Whiteaker v City of Southgate is a recent case that was decided in the United States District Court for the Eastern District of Michigan. The case deals with the issue of whether a city can be held liable for the conduct of its employees in the context of a housing discrimination claim.
The plaintiff in the case, Whiteaker, alleged that the City of Southgate discriminated against her on the basis of her disability by denying her a reasonable accommodation. Specifically, she claimed that the city’s building inspector failed to approve modifications to her home that would have allowed her to access her bedroom and bathroom.
The court held that the city could be held liable for the actions of its employees under the theory of respondeat superior. This legal principle holds that an employer can be held responsible for the actions of its employees if those actions were taken in the course of their employment.
In this case, the court found that the building inspector’s conduct was within the scope of his employment with the city. Therefore, the city could be held liable for the discriminatory conduct.
The court also found that Whiteaker had presented sufficient evidence to support her claim that the city had engaged in a pattern or practice of discrimination against individuals with disabilities. This finding allowed her to seek punitive damages against the city.
Overall, the Whiteaker v City of Southgate case serves as an important reminder that cities can be held responsible for the discriminatory conduct of their employees. It also underscores the importance of ensuring that individuals with disabilities have equal access to housing, and that reasonable accommodations are made to facilitate that access.
ChatGPT once again had no issue with taking liberties with reality, and its synopsis had the following material errors:
- Whiteaker v City of Southgate, 66 NDLR P 136 (ED Mich, January 19, 2023) has nothing to do with granting access to a bedroom or bathroom under the Fair Housing Act. The summary provided by ChatGPT does not discuss emotional support chickens, and the crux of this case involved a claim for a violation of the Fair Housing Act after the city denied a property owner a reasonable accommodation to keep emotional support chickens.
- Whiteaker v City of Southgate, 66 NDLR P 136 (ED Mich, January 19, 2023) has nothing to do with employment law. The term “respondeat superior” is never used in the case, but this term was identified as a key topic by ChatGPT.
- In Whiteaker v City of Southgate, 66 NDLR P 136 (ED Mich, January 19, 2023), the federal court judge ruled that an issue of fact existed on whether the Fair Housing Act had been violated. The Court did not rule that the city was liable for discriminatory conduct, that the city engaged in a pattern or practice of discriminating against individuals with disabilities, or that the plaintiff was entitled to punitive damages.
Even though I had previously written a blog article on Whiteaker v City of Southgate, 66 NDLR P 136 (ED Mich, January 19, 2023) that was searchable on micondolaw.com, and the text of the opinion was available online, ChatGPT made up its own summary that completely missed the key points of this case, and it once again fabricated inaccurate information.
AI search is certainly interesting and it does a great job answering certain questions. By way of example, I asked ChatGPT to tell me a joke about condominiums and it provided the following answer:
Sure, here’s a joke about condominiums:
Why did the condo owner bring a ladder to the board meeting?
Because he wanted to raise the roof!
However, the fiduciary duty that condominium and HOA board members owe to act in the best interest of a community association is no laughing matter. Specifically, MCL 450.2541 provides the following standard of care for a director of a nonprofit corporation:
(1) A director or officer shall discharge his or her duties as a director or officer including his or her duties as a member of a committee in the following manner:
(a) In good faith.
(b) With the care an ordinarily prudent person in a like position would exercise under similar circumstances.
(c) In a manner he or she reasonably believes is in the best interests of the corporation.
(2) In discharging his or her duties, a director or officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by any of the following:
(b) Legal counsel, public accountants, engineers, or other persons as to matters the director or officer reasonably believes are within the person’s professional or expert competence.
As stated above, relying on ChatGPT likely does not satisfy the standard contained in MCL 450.2541, as ChatGPT routinely provided fabricated or inaccurate legal advice in answering questions. Accordingly, while AI search is free, and it may be entertaining, it is not an advisable way for a community association to reduce legal expenses. Rather, using ChatGPT as a substitute for a human HOA attorney, and will likely only increase legal expenses in the long run when a community association has to contact the human HOA attorney to fix ChatGPT’s mistakes.
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 law 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. Mr. Hirzel has been recognized as a Super Lawyer in Real Estate Law by Super Lawyers Magazine, a Leading Lawyer in Condominium & HOA law by Leading Lawyers Magazine, and as a Best Lawyer in Real Estate Law by U.S News and World Report’s Best Lawyers Publication. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 450-0339 or firstname.lastname@example.org.