Condominium and homeowners associations have restrictions on use of the property, contained in governing documents. Over time, associations may find the need to amend the governing documents to address technological developments or changing property use. Amendment procedures vary depending on the type of restriction and community.
Recorded Condominium Documents: Master Deed and Condominium Bylaws
The Michigan Condominium Act, MCL 559.190, regulates amendments to recorded condominium documents. The Act distinguishes amendments by whether they materially affect the rights of the co-owners. The Act specifically identifies material amendment: creating timeshare units (MCL 559.172a). The Act also gives one specific example of a nonmaterial amendment: modifying the types and sizes of unsold units and limited common elements (MCL 559.190(1)).
The association may make a nonmaterial amendment without a vote of the co-owners if the condominium documents specifically reserve the right to amend for that purpose. Condominium documents uniformly reserve amendment rights to developers, so amendments by the developer during the sales and construction period constitute the bulk of nonmaterial amendments. Condominium documents seldom reserve nonmaterial amendment rights to the association, with occasional exceptions for joining or dividing units or moving unit boundaries.
The association may make material amendments only with the consent of 2/3 of all the co-owners. This is the full membership, and not just 2/3 of those voting at a meeting. For larger associations, it may be logistically difficult to gather the required number of votes, and only very popular amendments will pass. To maximize the response, associations should set an amendment meeting date, but also collect proxies and mail-in ballots in advance. The Board may also need to conduct a door knocking campaign in advance of the voting deadline.
Certain amendments also require mortgagee (mortgage company) approval. MCL 559.190a identifies seven specific amendment types. Associations will most often encounter the mortgagee approval requirement when shifting maintenance responsibilities from the association to the co-owners, or modifying leasing restrictions. After 2/3 of the co-owners approve the amendment, the association must mail ballots to the mortgagees. The mortgagees have 90 days to return their ballots with their approval or rejection. In practice, few mortgagees will actually respond. Fortunately, the Act specifies that a mortgagee failing to respond counts as approval. However, it is important to note that failure to respond counts as approval only for mortgagees: it does not count for the required 2/3 of the co-owners.
Once approved by the co-owners and the mortgagees, if required, the association must record the amendment with the register of deeds. The amendment is not effective until the association records it. The association must also deliver a copy of the recorded amendment to each co-owner.
Recorded Homeowners Association Documents: Declaration of Covenants, Conditions, and Restrictions
Michigan has no act specifically regulating homeowners associations. Therefore, the amendment procedure for each homeowners association is unique. A homeowners association planning an amendment will need to review the governing documents to discover the procedure. The original recorded document, normally a Declaration of Covenants, Conditions, and Restrictions, will specify the amendment procedure for itself, and possibly for other governing documents. The required vote for approval may be a simple majority, 2/3, 75%, 80%, or even unanimous. If the declaration does not specify a percentage, then it must be unanimous.
Declarations may have time limits on amendments. It is common for a declaration to be non-amendable for 20-25 years after its original recording. Some declarations are amendable only at the end of 10-year renewal periods. In this case, a homeowners association contemplating an amendment will need to plan significantly in advance.
Unrecorded Documents: Association Bylaws
Homeowners associations have association bylaws governing meeting procedure and elections. The articles of incorporation recorded with the Michigan Department of Licensing and Regulatory Affairs may specify the procedure for amending the association bylaws. If not, then the original association bylaws adopted by the developer may establish the amendment procedure. If no document specifies the amendment procedure for the association bylaws, then the Michigan Nonprofit Corporation Act, MCL 450.2231(1)(b) allows either the members or the Board to amend the bylaws. However, the Act also allows the members to specify that the Board may not unilaterally amend or repeal a bylaw adopted by the full membership.
Condominium associations, mostly older developments, may have association bylaws separate from the condominium bylaws. If so, then the amendment procedure may fall under the articles of incorporation, master deed, condominium bylaws, or the Nonprofit Corporation Act as for homeowners associations. Currently, it is more common for the developer to incorporate the association bylaws into the recorded condominium bylaws, as provided by the Michigan Condominium Act, MCL 559.153. In that case, the association must follow the procedures for amending recorded documents, above.
Unrecorded Documents: Rules and Regulations
Both condominium and homeowners associations have rules and regulations. These often address the use of common areas and amenities, such as clubhouses and pools. The association’s recorded documents authorize and set procedures for establishing rule and regulations. Typically, the Board of Directors has the authority to make rules and regulations without a vote of the full membership. Associations do not normally record rules and regulations with the register of deeds. Rules and regulations may not impose greater restrictions than the association’s recorded documents, and they cannot conflict with the recorded documents.
Associations can amend rules and regulations using the procedures established in the recorded documents. Often, the Board adopts the rule and regulation in a resolution in a Board meeting. The association distributes the new rule and regulation to the membership by mail. The association may further distribute the rule and regulation by email, posting on its website, or posting on a bulletin board in the community. Amendments to rules and regulations may take effect immediately, or after 30 days, as specified by the recorded documents. Some governing documents allow the members to repeal a rule or regulation by a majority vote of the membership. The membership can do this at an annual or general meeting of the association, or at a special meeting called for that purpose.
We Can Help
Do you need help amending the governing documents for your association? We have years of experience amending recorded and unrecorded governing documents for both condominium and homeowners associations. Please reach out to us at (248) 349-6203 or email us using the form below.
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