HB 5028 Passes: A Michigan HOAs’ Guide to Solar Panels and Energy-Saving Improvements under the Homeowners’ Energy Policy Act
The Michigan legislature recently enacted the Homeowners’ Energy Policy Act, 2024 PA 68, which imposes new requirements on Michigan homeowners associations with respect to installing solar panels and other energy-saving improvements. The Homeowners’ Energy Policy Act, MCL 559.301 et. seq. will prevent homeowners associations from completely banning solar panels and other energy-saving devices when it becomes effective on March 19, 2025. The Act also creates new regulations that homeowners associations must comply with when reviewing applications to install solar panels, requires homeowners associations to adopt a solar energy policy, and limits the reasons why a homeowners association could deny a request to install solar panels. This article will discuss the new requirements that will apply to Michigan homeowners associations and the steps to take to prepare for the implementation of the Homeowner’s Energy Policy Act.
Are all community associations required to comply with the Homeowners’ Energy Policy Act?
Unfortunately, the legislature did not include a definition of a “homeowners association” in the final version of HB 5028 which was passed by the legislature. Accordingly, the failure to define what is a “homeowners association” may lead to confusion as to whether the Act applies to an “association of co-owners” under the Michigan Condominium Act, which is defined by MCL 559.103(4) as “…the person designated in the condominium documents to administer the condominium project”, a co-op, or a summer resort, which have their own specific statutory schemes that never utilize the term “homeowners association.” The plain language of the Homeowners’ Energy Policy Act does not indicate that it applies to condominium associations, co-ops, or summer resorts, and those entities are governed by different laws than traditional homeowners associations, as Michigan does not have a specific homeowners association act.
Other Michigan statutes enacted by the legislature seem to indicate that the term “homeowners association” is not interchangeable with “condominium association” or an “association of co-owners” as well. By way of example, in MCL 565.866, the Discharge of Prohibited Restrictive Covenants Act, the legislature created a process for a “homeowners’ association” to discharge discriminatory covenants and a separate process for an “association of co-owners of a condominium” to discharge discriminatory provisions in a master deed. Accordingly, if the terms “homeowners association” and “association of co-owners” were synonymous, the legislature would not have needed to create a separate process for each of these types of community associations or refer to them separately in the statute. However, given the lack of clarity in the statute, condominiums, co-ops, and summer resorts may want to voluntarily comply with the Homeowners Energy Policy Act until there is a court ruling interpreting the definition of a “homeowners association” under the Act to avoid potential liability.
Are Michigan homeowners associations still permitted to ban solar panels?
The Homeowners’ Energy Policy Act prohibits homeowners associations from banning solar panels. Specifically, MCL 559.307 states as follows:
A provision in a homeowners’ association agreement or the policy adopted under section 9(1) that prohibits or has the effect of prohibiting the installation of a solar energy system is invalid and unenforceable as contrary to public policy.
However, the Homeowners’ Energy Policy Act still allows a homeowners association to review an application to install a solar panel by an owner and deny an application to install a solar panel if the requirements of the Act are not satisfied. Specifically, MCL 559.309 allows a homeowners association to deny an application to install a solar energy system or remove a solar energy system in the following circumstances:
(A) A court has found that the installation of the solar energy system violates a law.
(B) The installed solar energy system does not substantially conform with the member’s application to install the solar energy system as approved by the homeowners’ association.
(C) The homeowners’ association has determined that the solar energy system will be installed on the roof of a home or unit of the member requesting installation and 1 or more of the following apply:
(I) The solar energy system will extend above or beyond the roof of that home or unit by more than 6 inches.
(II) The solar energy system does not conform to the slope of the roof and has a top edge that is not parallel to the roof line.
(III) The solar energy system has a frame, support bracket, or visible conduit or wiring that is not silver, bronze, or black tone that are commonly available in the marketplace.
(D) The homeowners’ association has determined that both of the following apply:
(I) The solar energy system will be installed in a fenced yard or patio rather than on the roof of a home or unit.
(II) The solar energy system will be taller than the fence line.
Additionally, MCL 559.313 permits the Association to ban solar panels in common areas or on shared roofs, and states as follows:
This act does not apply to either of the following in a common area or on a shared roof:
(a) The replacement, maintenance, installation, or operation of an energy-saving improvement or modification.
(b) The installation of a solar energy system.
What is the process that an owner must comply with when submitting an application to install solar panels to a homeowners association?
MCL 559.311 outlines the application process that an owner must comply with when applying to install solar panels. It is important to note that a homeowners association must approve or deny an application to install solar panels within 30 days of the date the application is submitted. However, if an application is submitted prior to March 19, 2026, and the homeowners association has not yet adopted a solar energy policy statement, the homeowners association has 120 days to approve or deny the application. The specific requirements of the application process are as follows:
(1) Beginning on the effective date of this act, a member who wants to install a solar energy system in the member’s home or unit shall submit a written application to the homeowners’ association. The written application required under this subsection must include all of the following information:
(a) The member’s name.
(b) The street address of the location where the solar energy system will be installed.
(c) The name and contact information of the person that will install the solar energy system.
(d) An image that shows the layout of the solar energy system on the member’s home or unit.
(e) A description of the solar energy system to be installed.
(2) Except as otherwise provided in this subsection and in accordance with its policy, a homeowners’ association must approve or deny the member’s request to install a solar energy system within 30 days after receipt of the written application. If the written application is submitted before the homeowners’ association adopts the policy described under section 9(1), the homeowners’ association must approve or deny the member’s request to install the solar energy system within 120 days after receipt of the written application.
(3) If a homeowners’ association fails to adopt the policy within the time period specified under section 9(1) or approve or deny the member’s request to install the solar energy system within the time period specified under subsection (2), a member may proceed with the installation of the solar energy system. If the member proceeds with the installation of the solar energy system, the homeowners’ association shall not impose fines or otherwise penalize the member for complying with this act.
(4) A member may resubmit a written application to install a solar energy system that was submitted to and denied by the homeowners’ association before the effective date of this act. On receipt of the resubmitted written application, the homeowners’ association shall reevaluate the application under this act.
Does the Homeowners’ Energy Policy Act require homeowners associations to update their governing documents?
Yes, homeowners associations will need to update their governing documents to comply with the Homeowners’ Energy Policy Act. At a bare minimum, the Homeowners’ Energy Policy Act will require all homeowners associations to adopt a written solar energy policy statement within 1 year after the effective date of the Act, which is March 19, 2026. Unlike other rules, the Act requires a homeowners association to post a copy of the policy on the Association’s website, if it has a website, along with providing a copy to all the owners within 30 days of adoption, or upon the request of an owner. The solar energy policy must satisfy the following requirements under MCL 559.309:
(1) Within 1 year after the effective date of this act, each homeowners’ association in this state shall adopt a written solar energy policy statement. A policy adopted under this subsection must not conflict with an existing local, state, or federal law. All of the following apply to a policy adopted in accordance with this subsection:
(a) The policy must include the standards established under this act to be enforced by the homeowners’ association.
(b) The policy may not prohibit elements of the solar energy system from being installed on a roof face.
(c) The policy may not require that a specific technology be utilized for the installation of a solar energy system, including, but not limited to, solar shingles rather than traditional solar panels.
(d) Any standards enforced under the policy may not result in a reduction in the production of electricity by the solar energy system by more than 10% or increase the total cost of the installation of the solar energy system to the member by more than $1,000.00. As used in this subdivision, “production” means the estimated annual electrical production of the solar energy system.
(e) The policy must not include a provision that contradicts this act.
(f) The policy must include the following statements:
(i) That the approval of an adjacent home or unit owner is not required to approve a member’s application to install a solar energy system on the member’s home or unit.
(ii) That the homeowners’ association will not do any of the following:
(A) Inquire into a member’s energy usage.
(B) Impose conditions that impair the operation of a solar energy system.
(C) Impose conditions that negatively impact any component industry standard warranty.
(D) Require postinstallation reporting.
(E) Require a fee for submitting an application to install a solar energy system above that which it assesses for other applications related to a change to the property.
(F) Prohibit a member from resubmitting a written application to install a solar energy system after a written application submitted after the effective date of this act was denied by the homeowners’ association.
(iii) That the homeowners’ association will not deny a member’s application to install a solar energy system because of the identity of the entity that owns the solar energy system or financing method chosen by the member.
(iv) That a homeowners’ association may deny an application to install a solar energy system or require the removal of a solar energy system if 1 or more of the following apply:
(A) A court has found that the installation of the solar energy system violates a law.
(B) The installed solar energy system does not substantially conform with the member’s application to install the solar energy system as approved by the homeowners’ association.
(C) The homeowners’ association has determined that the solar energy system will be installed on the roof of a home or unit of the member requesting installation and 1 or more of the following apply:
(I) The solar energy system will extend above or beyond the roof of that home or unit by more than 6 inches.
(II) The solar energy system does not conform to the slope of the roof and has a top edge that is not parallel to the roof line.
(III) The solar energy system has a frame, support bracket, or visible conduit or wiring that is not silver, bronze, or black tone that are commonly available in the marketplace.
(D) The homeowners’ association has determined that both of the following apply:
(I) The solar energy system will be installed in a fenced yard or patio rather than on the roof of a home or unit.
(II) The solar energy system will be taller than the fence line.
(v) That a member shall comply with state and local building codes and permit requirements in the replacement, maintenance, installation, or operation of an energy-saving improvement or modification or the installation of a solar energy system.
(vi) That both of the following apply:
(A) A member who wants to install a solar energy system in the member’s home or unit shall comply with the application requirements under section 11(1).
(B) A member may resubmit a written application to install a solar energy system in accordance with section 11(4).
(g) The policy may impose reasonable conditions concerning the maintenance, repair, replacement, or removal of a damaged or inoperable solar energy system provided that the conditions are not more burdensome than the conditions imposed on nonsolar energy projects.
(2) A homeowners’ association shall do both of the following:
(a) Make a copy of the policy available to a member within 30 days after the adoption of the policy, or on request.
(b) If the homeowners’ association maintains an internet website, post a copy of the policy on its website.
(3) Any provision in a policy that conflicts with this act is void and unenforceable.
Does the Homeowners’ Energy Policy Act cover more than solar panels?
Yes, pursuant to MCL 559.303(c), the Act covers other energy-saving improvements or modifications, which are defined as follows:
“Energy-saving improvement or modification” includes, but is not limited to, all of the following:
(i) A clothesline.
(ii) Air source heat pumps.
(iii) Ground source heat pumps.
(iv) Insulation.
(v) Rain barrels.
(vi) Reflective roofing.
(vii) Energy efficient appliances.
(viii) Solar water heaters.
(ix) Electric vehicle supply equipment.
(x) Energy-efficient windows.
(xi) Energy-efficient insulation materials.
It is important to note that the above list of items is not exhaustive, as MCL 559.303(c) states that an energy-saving device “includes but is not limited to…” the above items. Accordingly, given that this definition is vague, it will likely create disputes over whether certain items are “energy-saving improvements.” Accordingly, it is important for homeowners associations to consult with a community association attorney if a dispute exists as to whether an energy-saving improvement is covered by the Act if it is not specifically listed above.
What restrictions does the Homeowners’ Energy Policy Act place on homeowners associations related to energy-saving improvements other than solar panels?
MCL 559.305(1) provides in pertinent part:
Sec. 5. (1) Any of the following in a homeowners’ association agreement is invalid and unenforceable as contrary to public policy:
(a) A provision that prohibits, or requires the approval of a homeowners’ association for, a member to replace, maintain, install, or operate an energy-saving improvement or modification.
(b) A provision that compels, or requires association approval for, a member to make auxiliary changes needed for the installation of an energy-saving improvement or modification.
Unfortunately, the above language is not clear as to whether it applies to new “homeowners’ association agreements” or whether the Act attempts to invalidate restrictive covenants that existed prior to the effective date of the Act. The Act itself seems to anticipate that it will be subject to challenge, as MCL 559.317 states as follows:
If any provision of this act or its application to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this act that can be given effect without the invalid provision or application, and, to this end, the provisions of this act are severable.
In the instant case, an argument exists that the legislation may interfere with existing contractual rights of homeowners associations. Specifically, a “statute may not be applied retroactively if it abrogates or impairs vested rights, creates new obligations, or attaches new disabilities concerning transactions or considerations occurring in the past.” Davis v State Employees’ Ret Bd, 272 Mich App 151, 158; 725 NW2d 56 (2006).
Accordingly, while MCL 559.305 may prohibit restrictive covenants that are created after the effective date of the Act from prohibiting an owner from installing energy-saving devices, the courts will likely need to resolve whether the statute is constitutional and whether it interferes with vested contractual obligations in existing homeowners association agreements.
What are the potential penalties for violating the Homeowners’ Energy Policy Act?
MCL 559.315 provides the following remedies for a violation of the Act:
If a homeowners’ association violates this act, a member may bring a civil action against the homeowners’ association for damages. If the member prevails in an action brought under this act, the court may award reasonable attorney fees and the costs incurred in bringing the action.
Conclusion
While the Homeowners’ Energy Policy Act was likely well intentioned, it is likely to create new challenges for community associations that will ultimately need to be resolved by the courts. Given that the Act imposes an onerous regulatory scheme on homeowners associations, it is important for homeowners association to consult with a community association attorney to determine the best path forward. At this point in time, the best way to avoid liability is to comply with the Act, which will require community associations to adopt new policies, along with reviewing their governing documents to determine if they need to be updated. Some community associations may also want to challenge the validity of the Homeowner’s Energy Policy Act in court, which is also a viable strategy, as good arguments exist that the statute is void for vagueness and unconstitutionally interferes with vested contractual rights.
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 Michigan Super Lawyer’s Rising Star 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. Hirzel Law, PLC represents community associations, condominium associations, cooperatives, and homeowners associations, in Michigan and Illinois. He may be reached at (248) 986-2290 or kevin@hirzellaw.com.
