3 Legal Essentials for Michigan Condo Boards Adopting Rules
The governing documents of a condominium association are intended to address the various provisions and restrictions that apply to the co-owners and the association. The condominium documents, however, simply cannot address each and every specific situation that may arise. Or a provision in the condominium documents may address a topic in general terms without identifying how that provision is to be implemented. Providing greater information about an existing restriction or outlining a process underlying a provision can provide greater clarity and set community expectations. This article discusses three essential things that a condominium association’s board of directors must know before adopting rules and regulations for its community.
Essential #1: Rules and Regulations Must Implement Existing Bylaws, Not Amend or Change the Bylaws
The most common pitfall that boards fall into when drafting rules is addressing a topic that does not have a basis in an existing provision of the bylaws, but instead amends or changes the bylaws. In Meadow Bridge Condo Ass’n v Bosca, 187 Mich App 280, 282; 466 NW2d 203 (1990), the Michigan Court of Appeals stated that a condominium association’s rules and regulations are “tool[s] to implement or manage existing structural law, while an amendment presumptively changes existing structural law.” Accordingly, a condominium association can properly adopt a rule that implements or manages existing provisions within the condominium documents, while a change to an existing provision may only be made through an amendment to the condominium documents.
In Conlin v Upton, 313 Mich App 243; 881 NW2d 511 (2015), the Michigan Court of Appeals considered whether an association could properly impose an architectural review fee that did not exist in the recorded governing document. The Court first reviewed the governing documents to confirm that the association had the authority to adopt rules and regulations:
Because the Association’s articles [of incorporation] authorize it to “make reasonable rules and regulations governing the use and enjoyment” of the subdivision and to “enforce the provisions” of the covenants and restrictions, the Association could validly promulgate rules governing the manner of its exercise of the powers expressly granted to it.
However, the association’s authority to adopt rules was not absolute:
And, as long as the rules did not impose additional burdens on the members’ properties, the adoption of the rules by less than all members would not violate this state’s common-law unanimity requirement.
In other words, the association could adopt rules and regulations “interpreting the covenants and restrictions and setting the procedure governing its own enforcement of those covenants and restrictions.” The Court provided an example to illustrate the difference between a rule that interprets an existing provision and a rule that imposes an additional burden:
For instance, Paragraph 20 of the covenants and restrictions provides that the lot owners may keep “common household pets” unless “they become an annoyance or nuisance to the neighborhood.” The restriction does not define “common household pet” and does not define the conditions under which a common household pet will be deemed to be a nuisance. The Association could for that reason promulgate rules expressing its understanding of those terms and governing its procedure for enforcing that particular restriction. The Association could not, however, expand that restriction or impose a new burden on the lot owners with less than unanimous consent under the guise of interpreting the restriction. It could not—by way of example—define “an annoyance or nuisance to the neighborhood” to mean the keeping of any animal over 5 pounds in weight because that requirement would categorically exclude numerous common household pets without a finding of actual nuisance—that is, the interpretive bylaw would in effect amount to an additional burden on the land; and courts will not enforce restrictions that were not expressly stated in the covenants or permit the expansion of a restriction under the guise of interpretation.
To resolve the ultimate issue of the case, namely whether the association could impose an architectural review fee through a rule, the Court determined that the fee “constitute[d] an additional burden not contemplated by the original covenants and restrictions,” and therefore was not enforceable.
Accordingly, a board that is considering a rule to adopt should first ask themselves two questions:
Question 1: Is there a basis for the proposed rule in the current condominium documents?
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- If yes, then move to Question 2.
- If no, then the association may need to amend the condominium documents to address the topic because the proposed rule may impose a new burden.
Question 2: Does the proposed rule contradict or change the provision in the condominium documents that the rule is based on?
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- If yes, then the association will likely need to amend the condominium documents to address the topic because the proposed topic changes the condominium documents.
- If no, then the proposed rule is likely permitted and the board can move on to Essential #2 below.
Essential #2: The Board Adopts the Rules
Having established that the topic for the rule has a proper basis in the condominium documents, the next step is to adopt the rule. For most condominium associations, the board has the sole authority to adopt a rule. However, some association’s bylaws require that rules be approved both by the board and by the co-owners. Associations should review the condominium documents to ensure the proper procedure is followed to adopt a proposed rule.
For the majority of condominium associations, the board is going to adopt the rule. The board can review, discuss, and adopt a rule at a regular or special meeting of the board. A board may also adopt a rule through unanimous written consent of all board members without a meeting under Section 525 of the Michigan Nonprofit Corporation Act, MCL 450.2525, which states:
Unless prohibited by the articles of incorporation or bylaws, action required or permitted to be taken under authorization voted at a meeting of the board or a committee of the board may be taken without a meeting if, before or after the action, all members of the board then in office or of the committee consent to the action in writing or by electronic transmission. The written consents shall be filed with the minutes of the proceedings of the board or committee. The consent has the same effect as a vote of the board or committee for all purposes.
After the rule is approved and adopted by the board, the board should include a notation of how it was adopted—regular meeting, special meeting, or unanimous consent—and the date of adoption. Finally, the rule should be signed by the board president to signify the rule’s adoption.
Essential #3: Provide Notice to the Community
After the board has adopted the rule, the final hurdle is to notify the co-owners of the new rule. A copy of the rule should be provided to each co-owner. The bylaws will identify the method of notifying the co-owners, such as mail or personal delivery. The association can also email the rule to co-owners who have opted-in to receive email notices under Section 406a of the Michigan Nonprofit Corporation Act, MCL 450.2406a. Depending on the rule-making provision in the bylaws, the rule may either be effective as of the date of adoption, upon delivery to the co-owners, or a specified number of days after delivery to the co-owners.
Conclusion
A condominium association can adopt rules and regulations to effectively address situations that may arise or to provide greater clarity for or procedures that are already identified in the condominium documents. Before adopting a proposed rule, the board of directors should first consider whether there is a basis for the rule in the existing master deed and bylaws. If a rule has a basis in the master deed and bylaws, then the rule may be valid. However, if a rule imposes a new restriction that is not contained in the master deed and bylaws, then the rule would likely be determined invalid and unenforceable if challenged. After a board determines that there is a basis for the rule in the master deed and bylaws, the board should then adopt the rule at a meeting or by unanimous written consent and then provide the rule to the community according to the bylaws. Consulting with a community association attorney can help prevent boards from adopting a rule that could be unenforceable and ensure that the rule is properly adopted and provided to the community.
Michael T. Pereira, Esq., is an Attorney with Hirzel Law, PLC and focuses his practice on general counsel matters and document amendments. Mr. Pereira graduated from the University of Detroit Mercy School of Law in 2018, where he graduated magna cum laude and second in his class. Following graduation from Detroit Mercy, Mr. Pereira spent nearly three years with the Michigan Court of Appeals as a research attorney and as a law clerk to Judge Patrick M. Meter and Judge Anica Letica. Best Lawyers: “Ones to Watch” recognized Mr. Pereira in 2024 for professional excellence in real estate law. He may be reached at (248) 986-2290 or mpereira@hirzellaw.com.
