August 2020 B.E.A.T.

 

B.E.A.T.
Board Education and Training

August 12, 2020 from 6:30 p.m. to 8:00 p.m.

Live on Facebook and Zoom with replays on YouTube and Facebook

Edward J. Zelmanski and Richard L. Wagner present:

Managing the Unexpected: How to Handle Fire, Water and Mold Losses

Boards do their best to manage maintenance, budget, insurance, and other administrative needs of their communities. Then, losses caused by fire, water, mold, and other unexpected occurrences can threaten to unhinge the best laid plans. This will help community board members understand and manage the process of casualty remediation and restoration. The discussion will emphasize timeliness, efficiency, and thoroughness in responding to casualties so that you can help get your community back on an even keel.

Brown Bag B.E.A.T. Bites

Wednesday, August 26, 2020 from 12:00 p.m. to 1:00 p.m.

Live on Facebook and Zoom with replays on YouTube and Facebook

Edward J. Zelmanski, Tracy N. Danner-Bond, and Melissa D. Francis present:

How to Conduct Your Annual Meeting Remotely
During the COVID-19 Pandemic
an Association Guide to the “new normal

Join our team for a lunch time discussion on various methods for conducting your annual meetings virtually, including reference materials on the various services and platforms to assist with holding the meetings, voting, and maintaining discussions while adhering to expected social distancing guidelines.

 

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The COVID-19 Health Crisis and Michigan Courts

By: Lee Schofield, Esq.

In response to the COVID-19 health crisis, since March 2020, Michigan Courts have been operating at less than full capacity. Priority has been given to emergency and essential matters, which are defined as those matters which involve an immediate liberty or safety concern–for instance, cases involving personal protection orders, child safety and welfare, domestic matters involving children, etc. Typical community association litigation has not fallen within “emergency” or “essential” definitions and therefore has been delayed, often significantly, with scheduling orders extended, filing deadlines tolled, and jury trials delayed. Those hearings held during the pandemic have generally been heard to the maximum extent possible via remote videoconferencing, and Courts are now encouraged to live stream proceedings to facilitate public remote access.

The Michigan Supreme Court has general superintending control over all courts in Michigan and has issued a significant number of COVID-19-related Administrative Orders, which can be found here: https://courts.michigan.gov/News-Events/Pages/COVID-19.aspx. These orders concern a range of issues, from the handling of cases, including specific types of legal matters to providing guidance on existing Orders and model rules or orders with respect to court access and operations. For instance, on June 29th, the Court issued a Phase 3 Model Local Administrative Order for Michigan courts to follow for Phase 3 reopening. It is hoped that Michigan Courts, along with the State as a whole, will be able to continue a safe re-opening trajectory.

In following and implementing Administrative Orders and guidance issued by the Supreme Court, local court administrators have developed their own local procedures, often based on the model rules but with some variation. While COVID-19 has caused significant delays in pending litigation, Courts have been quick to adapt to remote operations and most matters have, by now, been rescheduled to adjust to the new reality. This adaptation to virtual court and new procedures has happened with remarkable and impressive speed, especially considering the judiciary has made technological and procedural changes at quite a measured pace in the past.

Special mention should again be made with respect to how COVID-19 has affected evictions/landlord-tenant cases. Community associations would typically file such a case if a tenant fails to pay rent to the association after demand, under MCL 559.21(5), if a tenant is persistently violating Condominium Bylaws or Rules under MCL 559.212(4)(b), or in order to obtain possession of a unit following an association foreclosure on a unit.

Governor Whitmer’s latest Executive Order 2020-134, issued on June 24, 2020, extends the moratorium on most evictions in Michigan to July 15, 2020 and simultaneously states that the moratorium will end on July 16. The Order encourages landlords and lenders to take advantage of COVID-19 housing debt remedy funds (termed “Eviction Diversion Program”) rather than proceed with evictions. This fund is available to pay claims for breach of a residential lease, residential executory contract, or residential mortgage due to failure to make a required payment during a state of emergency or state of disaster arising out of the COVID-19 pandemic and, therefore, does not apply (unfortunately) to most community association eviction situations.

In addition to the latest pronouncements from the Governor’s office, the Michigan Supreme Court has a specific subsection related to Landlord-Tenant/Evictions at the link above. On June 24th, the Court issued a new Administrative Order 2020-17 regarding treatment and procedures for evictions.

Further guidance on Order 2020-17 was issued by the Court on July 6, 2020. Among many other things, Order 2020-17 requires:

  1. eviction hearings to be scheduled at a specific time, one at a time, regardless of whether they are remote or in person;
  2. a Plaintiff to amend the complaint to update facts and also file a verification form for any cases older than April 16, 2020;
  3. a new procedure for entry of defaults in remote hearing situations if there has not been personal service under MCR 2.105(A).

Previous contributors have discussed what COVID-19 has meant for matters that a community association might bring to court. For instance, our firm’s discussion of the eviction moratorium and Attorney Tracy Danner-Bond’s Q&A regarding collections. However, the Michigan Supreme Court and Governor continue to issue orders and guidance. Depending on data, re-opening may continue, or restrictions may be re-imposed. In short, this area continues to evolve at a rapid pace. Pending litigation has been significantly delayed for Associations, and given the most recent orders, some Associations may want to re-evaluate pending evictions matters, depending on whether facts and circumstances have changed since filing. If you have any questions about how COVID-19 affects a case that is pending or may affect prospective litigation for your community association, please contact our office and we will be happy to assist you.

Lee SchofieldLee S. Schofield is an associate attorney with the Firm. He earned his Bachelor of Arts in Comparative Literature at Brigham Young University in 1996, where he was a Trustee Scholar. He obtained his Juris Doctorate at Michigan State College of Law in 2000, where he was an officer of the MSU chapter of Amnesty International. Prior to joining the Firm in 2005, Mr. Schofield practiced commercial law with a firm in Dearborn, Michigan that had an affiliate relationship with an Anglo-Kuwaiti law firm. Mr. Schofield has handled a diverse range of commercial litigation and transactional matters, including litigation and arbitration in state, federal, and international courts, defense contract negotiation and management, small and medium-sized business and real estate transactions, Islamic finance issues, corporate issues, and trademark registrations and disputes.

Mr. Schofield has extensive experience in condominium law, and enjoys advising condominium boards and membership on the diverse array of legal questions that face condominium associations, housing cooperatives, and HOAs. Mr. Schofield’s practice and experience with the Firm has also included a myriad of commercial litigation, real estate and transactional matters.

Mr. Schofield has numerous outside interests, including literature and literary theory, violin, and cooking. He is also a fitness enthusiast and enjoys keeping in shape through running and other physical activities.

 

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Upcoming Live Seminar

We proudly present the following seminar

“Rules Regulating Amenities During COVID-19”

July 15, 2020 from 6:30 p.m. to 8:00 p.m.

on Facebook Live and Zoom

Covering topics such as the process of adopting rules and regulations, what rules and regulations to consider as a result of COVID-19, and how to enforce them once they have been implemented.

Have all your organization’s questions about best practices for a post-pandemic reality answered live by one of our experienced attorneys during this interactive webinar.

Additionally, visit our website’s COVID-19 Support Center blog page for daily postings relating to COVID-19 http://www.zdfattorneys.com/blog/

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Michigan Supreme Court Establishes Eviction Case Protocols – Eviction Moratorium Update

On June 11, 2020, Governor Whitmer signed Executive Order 2020-118, further extending the moratorium on evictions in Michigan until June 30, 2020 at 11:59 p.m. We anticipate this will be the last extension, as there is significant pressure to restore legal activities, including evictions, in the court system. We will continue to provide updates on this blog.

In anticipation of the resumption of eviction proceedings, the State of Michigan Supreme Court recently issued Administrative Order 2020-17 to establish statewide eviction protocols for trial courts in order to protect the health of all participants, dispose of the backlog of cases, and assure that defendants are made aware of their legal rights. Two important parts of these procedures are:

  1. Each case will be scheduled for a hearing on a specific date and time. Multiple cases will no longer be scheduled for hearings at the same time.
  2. Cases will be scheduled for hearings in the following order of priority:
    1. First, cases alleging illegal activities or extreme physical damages to the premises;
    2. Second, cases alleging nonpayment of rent for 120 days or more; and
    3. Last, cases with lesser arrearages.

Depending on the type of eviction case, parties should be prepared for some delay in the scheduling of their case for hearing.

The new landlord-tenant court system procedures also include eviction cases being set for either remote or in-court hearings. Further, tenants will be advised of their statutory right to legal counsel at the first hearing. It is important that you check back with our law firm periodically to see if there are any other changes which may affect your eviction case hearing.

You should also be aware that the FHA has extended the moratorium on foreclosures and evictions for all FHA-backed mortgages until August 31, 2020.

If you have any questions on how the Governor’s Executive Order 2020-118 or the Supreme Court’s Administrative Order 2020-17 affects your landlord-tenant relationship or case, please do not hesitate to contact our law firm at your earliest convenience. Our experienced attorneys are available to assist you through this process during these unique times.

 

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CONSIDERATIONS FOR OPENING YOUR OUTDOOR POOL IN THE WAKE OF COVID-19

By: Melissa D. Francis, Esq.

On June 1, 2020, Michigan Governor, Gretchen Whitmer, issued Executive Order 2020-110 (more information can be found here). Paragraph 8 of this Executive order states “Unless otherwise prohibited by local regulation, public swimming pools, as defined by MCL 333.12521(d), may open as of June 8, 2020 provided they are outdoors and limit capacity to 50% of the bather capacity limits described in Rule 325.2193 of the Michigan Administrative Code, and subject to guidance issued by the Department of Health and Human Services…”. The issuance of this Executive Order caused the Health Department in Macomb, Oakland, and Wayne Counties and the City of Detroit to rescind their previous orders closing all outdoor pools indefinitely.

The issuance of Executive Order 2020-110 and the rescission by the Health Departments of their orders closing all outdoor pools indefinitely makes way for Condominium and Homeowners’ Associations in the State of Michigan to finally get the swim season started and open their pools. However, the question must now be asked, “Should an Association open the outdoor pool?”

In determining whether or not to open an Association’s outdoor pool in the wake of COVID-19, Association Boards must address three basic questions:

1. WHAT IS THE HEALTH DEPARTMENT IN THE COUNTY WHERE THE ASSOCIATION IS LOCATED REQUIRING FOR POOLS TO OPEN?

In preparing this article, the writer was able to make contact with the Health Departments in Macomb County, Oakland County, Wayne County and the City of Detroit to discuss what would be required of Homeowners’ and Condominium Associations to reopen their pools following the Executive Order issued by Governor Whitmer on June 1, 2020.
While the Washtenaw County Health Department is closed until June 15, 2020 and the writer was unable to speak with someone from the Department, Washtenaw County updated the pool opening package on their website June 8, 2020

In Macomb County, Oakland County, Wayne County, and the City of Detroit, the procedures for pool openings will remain the same as they have in past years. A pre-opening inspection will need to be conducted prior to the pool opening to the public if the pool was closed by the County for violations in the 2019 season. Homeowners’ and Condominium Associations must submit the same paperwork to the Health Department required in past seasons for opening the pool. In Macomb County, the paperwork can be obtained by contacting the Health Department at (586) 469-5236. Paperwork for the City of Detroit can be obtained by contacting the Health Department’s Environmental Health Department at (313) 876-4000. The paperwork for Oakland County, Wayne County.

In addition to submitting the required opening paperwork in the above referenced counties, Associations must make certain they have a properly stocked, readily accessible first aid kit which is checked and replenished daily and adequate rescue equipment. A good reference for stocking your aquatic first aid kit can be found on Aquatic Council, LLC’s website.

While the requirements for opening the pool have not changed in Macomb, Oakland, and Wayne Counties, and the City of Detroit, each of these Health Departments stressed that Associations must reduce the capacity of their pool area to 50% of regular capacity (up to 100 people) and the United States Centers For Disease Control (CDC) guidelines must be followed regarding cleaning, personal protective equipment, and social distancing. These Health Departments will be inspecting pools throughout the summer and will be specifically reviewing each facility to verify these requirements are being met. Each pool must have a designated person available within 15 minutes if called by anyone to respond to an emergency at the facility, test water, or meet inspectors.

Unlike the other counties and the City of Detroit, Washtenaw County requires that the inspection of the aquatic facility be done prior to the facility’s opening for the season. Each pool must have a designated person available within 15 minutes if called to respond to an emergency at the facility, test water, or meet inspectors. Washtenaw County is also requiring that a pool attendant regularly inspect and clean the pool. The pool attendant does not have to be onsite the entire day, but make several trips to the pool during operating hours to monitor and properly clean in and around the pool. Further, Washtenaw County requires that each Association complete and keep a Covid-19 Preparedness and Response Plan onsite. A template for the Plan and the other documentation which must be submitted to Washtenaw County for pool opening can be found here.

If your Homeowners’ Association or Condominium Association is not within Macomb County, Oakland County, Wayne County, Washtenaw County, or the City of Detroit, it is suggested that you contact your local County and/or City Health Department and review their website for guidelines on opening your outdoor aquatic facility.

As of June 12, 2020, no new guidelines or information on requirements for opening pools had been posted by the State of Michigan Department of Health and Human Services or the Michigan Department of Environment, Great Lakes, and Energy. The writer will continue to monitor the websites of the State of Michigan, Macomb County, Oakland County, Wayne County, Washtenaw County, and the City of Detroit and will update this post as necessary with any new information.

Association Boards must analyze all of the requirements for their County and determine if they can meet these requirements before opening their outdoor aquatic facility. Boards should consider the costs and practicality of implementing these new requirements.

2. CAN THE ASSOCIATION MEET THE MINIMAL GUIDELINES SET BY THE CENTERS FOR DISEASE CONTROL (CDC) FOR PUBLIC POOLS, HOT TUBS, AND WATER PLAYGROUNDS DURING COVID-19?

Each of the Health Departments interviewed for this article stressed that each aquatic facility must be able to adhere to the guidelines devised by the Centers for Disease Control (CDC). The full guidelines can be found here.

The guidelines that may cause the biggest hurdles for Associations are the guidelines for cleaning the facility. The CDC guidelines provide that each facility, including any restrooms or locker rooms, must be fully stocked with adequate soap, hand sanitizer with at least 60% alcohol, paper towel, and facial tissues. The guidelines provide that an adequate amount of “no touch” or open trash cans be placed in the facility and frequently emptied. Additionally, the guidelines state that all frequently touched surfaces must be disinfected and cleaned daily and shared surfaces EACH time they are used, including but not limited to, handrails, slides, tables, chairs, pool toys, and bathroom surfaces. Signage should be posted regarding proper hygiene and disinfection/cleaning of surfaces. The guidelines specifically provide that lifeguards who are actively guarding the swimming pool SHOULD NOT be monitoring the cleaning of the facility and an additional person should be on staff to ensure these areas are properly cleaned.

Additional guidelines of importance to Associations are guidelines dealing with social distancing. The CDC guidelines lists no gatherings, or meetings both in and out of the water if social distancing between people who don’t live together cannot be maintained. An exception is made for patrons and/or staff providing or receiving first aid or CPR or rescuing a distressed swimmer. Associations may need to change the layouts of their pool areas to provide for proper social distancing. It is recommended that visual cues be utilized in and out of the water to encourage social distancing using lane lines, tape, cones, etc. Face masks or other adequate coverings should be worn at all times when not in the water. Signage regarding social distancing and face mask usage should be posted.

Prior to opening their outdoor aquatic facilities, Associations will need to adopt new rules, regulations, and procedures for these facilities which take into account all of the CDC guidelines. In order to minimize the number of surfaces needing to be cleaned, Associations should consider storing all pool equipment and furniture for the summer in an area that cannot be accessed by patrons and advising patrons to bring their own furniture and pool equipment. Associations may also want to consider keeping restroom and locker room areas closed, again to minimize areas that need to be cleaned.

3. ARE THERE COST OR INSURANCE BARRIERS TO REOPENING AN ASSOCIATION’S OUTDOOR POOL?

The third consideration for reopening Association pools is cost. Associations must determine how they will implement the requirements set forth by the health department and the CDC guidelines. Will implementation of these requirements increase the operating budget for the pool due to costs of additional cleaning supplies, barriers, and staff? If yes, how will these costs be covered by the Association? Associations should also thoroughly investigate whether their insurance policies will cover Covid-19 related claims. A thorough review of the Association’s insurance policies and contacting your insurance agent should be considered. Attorneys from Zelmanski, Danner & Fioritto, PLLC have spoken with several insurance professionals specializing in insuring Community Associations and concluded that there will likely be no insurance coverage for claims brought against an Association or its Board related to a person contracting Covid-19 at a community pool. More information regarding insurance considerations can be found in the webinar, “Back to the Office: Restarting Operations” jointly presented by Zelmanski, Danner & Fioritto, PLLC and Fraser Trebilcock Davis and Dunlap, P.C. which can be found here.

In conclusion, Homeowners’ and Condominium Association Boards must do a thorough analysis of the above factors before deciding to open the Association’s outdoor pool for the summer of 2020. This type of analysis will save the Association from potential problems arising from a quick decision to reopen.

Attorney Melissa FrancisMelissa D. Francis joined the Firm in 2013 as an associate attorney. She is a graduate of Plymouth-Canton High School and earned her Bachelor of Arts Degree in International Relations from Michigan State University’s James Madison College in 1998. She earned her Juris Doctorate from Wayne State University Law School in 2001.  Ms. Francis is admitted to practice law in the State of Michigan, Federal District and Bankruptcy Courts for the Eastern and Western District of Michigan, and the United States Supreme Court. Ms. Francis has extensive experience representing both Creditors and Debtors in Chapter 7, 11, and 13 Bankruptcy proceedings.  Since association collections matters routinely involve bankruptcy issues, her vast experience in that field provides the Firm with a unique resource that provides tremendous value to the Firm’s Clients.  Ms. Francis is a member of the American Bankruptcy Institute.  She was a speaker at the 2019 Community Association Institute Law Conference in New Orleans discussing Consumer Bankruptcy and its impact on Community Associations.  She is also a speaker at the 2019 American Bankruptcy Institute Detroit Conference on Veteran’s Day.

Ms. Francis is a Past Dean of the Metro Detroit Alumni Senate of Delta Theta Phi Law Fraternity International.  She is active in the Plymouth-Canton Community as a member of the St. Thomas A’Becket Church choir, BeckRidge Productions, Spotlight Players Theater Company, and the Plymouth-Canton Marching Band Alumni Community.

 

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IT’S TIME TO WORK OUT PAST DUE RENT ARRANGEMENTS – EVICTION MORATORIUM UPDATE

As Governor Whitmer slowly reopens the State, now is the time for landlords and tenants to work out final arrangements on past due rent payments and cooperative occupancy charges. As we have indicated in previous articles, there has been a moratorium on evictions and actions to displace tenants during the COVID-19 state of emergency. Executive Order 2020-85, the Governor’s most recent moratorium, is set to expire at midnight on June 12, 2020. While it is possible that the moratorium will be extended, it is our opinion that an extension will not be given.

The Michigan Supreme Court has recently authorized the trial courts in Michigan to submit their plans to reopen. Once the courts have an approved and established plan in place for reopening, we expect that the District Courts will again start accepting landlord-tenant eviction complaints. Barring any extension of the previously mentioned moratorium, we expect the District Courts will have a solid backlog of cases that they will move through the system as quickly as possible. Therefore, it is recommended that tenants who have not made arrangements to pay their past due rent should do so immediately. Landlords should expect to hear from those tenants shortly or prepare to file their eviction actions.

Please keep in mind that the expiration of the moratorium and the reopening of the courts does not at this time have any effect on the federal moratorium on evictions under federally backed mortgage loan properties or federally supported low-income housing, which continues until it expires under the terms of the CARES Act (July 26, 2020). Also, remember that any intentional action to evict a tenant prior to the expiration of the state’s moratorium will be considered a misdemeanor. It is important that you check back with our law firm periodically to see if the moratorium has been further extended.

If you have any questions regarding how the Governor’s Executive Order 2020-85 affects your landlord-tenant relationship, please do not hesitate to contact our law firm at your earliest convenience. Our experienced attorneys are available to assist you through this process during these unique times.

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Q & A: Handling Collections During COVID-19 Pandemic

By: Tracy Danner-Bond, Esq.

Q: What should we do in preparation for an increase in delinquencies due to the COVID-19 pandemic?

A: Check out Greg Fioritto’s article posted March 30, 2020 on our website’s special COVID-19 Support Center (www.zdfattorneys.com) entitled COVID-19 and Collections – How to Prepare Your Association for a Possible Spike in Delinquencies. Here are some highlights from his article:

  1. Examine (and adjust) your 2020 budget and expenditures.
  2. Review your collections policy (or adopt one).
  3. Plan and revise your 2021 budget.
  4. Review your relationships and contracts with your association’s collections professionals.
  5. Reach out to the membership ahead of time about how the Association will handle collections.

Q: Should the Association waive assessments due during the COVID-19 pandemic?

A: NO.

Q: Does the Board of Directors have the authority to waive late fees due to the COVID-19 pandemic?

A: YES.

Q: Should the Association waive late fees during the COVID-19 pandemic?

A: YES, if the Co-owner’s delinquency is directly related to the COVID-19 pandemic. Collection of late fees is generally not an income line item on an Association’s budget, so waiving late fees during the pandemic will not have a direct effect on the Association’s current budget.

Q: Should the Association make a community-wide announcement that Co-owners can postpone payment of their assessments during the COVID-19 pandemic?

A: NO. Such an announcement could invite abuse. Reviewing Co-owner requests for payment plans or waiver of late fees should be reviewed on a case-by-case basis, as some Co-owners may be financially affected more severely than others.

Q: Should the Association make a community-wide announcement that late fees will be waived during the COVID-19 pandemic?

A: NO. Such an announcement could invite abuse. Reviewing Co-owner requests for waiver of late fees should be reviewed on a case-by-case basis, as some Co-owners may be financially affected more severely than others.

Q: What should we do if a Co-owner who was delinquent prior to the COVID-19 pandemic requests a waiver of fees due to the COVID-19 pandemic?

A: If the delinquent Co-owner had a payment plan in place, that plan could be revised to take into consideration their change in financial circumstances. Documentation to support the change in financial circumstances due to COVID-19 should be required from the Co-owner before the payment plan is revised. The revised payment plan terms should be put in writing.

Q: Should the Association automatically file a lien against the Unit of a Co-owner who became delinquent due to COVID-19.

A: It depends. If the Association has a Collection Policy in place, the provisions of that policy must be followed. If the Co-owner is requesting a payment plan with a term that extends past the time a lien would be filed against their Unit pursuant to the Collection Policy, the Association should proceed with filing the lien to protect the Association’s interest.

Q: What should we do if a Co-owner contacts the Association because they can’t pay their assessments due to the COVID-19 pandemic?

A: The Association’s Property Management Company should communicate directly with the Co-owner regarding the delinquency. If the Co-owner is requesting a waiver of late fees, that request should be put in writing by the Co-owner for the Board of Directors’ review and consideration. If the Co-owner is requesting a payment plan, that request should be put in writing by the Co-owner for the Board of Directors’ review and consideration. Regardless of the type of request, the Co-owner should describe their financial hardship (ex. job loss or reduction in wages due to COVID-19) and provide documentation to support their claim. The Board of Directors may review each request on a case-by-case basis, or it can develop a standard policy for Co-owners who become delinquent solely due to the COVID-19 pandemic.

Q: If the Board of Directors agrees to a payment plan with a delinquent Co-owner, what details should be in the payment plan?

A: Payment plans should be in writing, either drafted by the Association’s Property Manager or the Association’s legal counsel. The payment terms should be clear, including the following:

  • Length of the payment plan
  • Start date of the payment plan
  • Amount of the monthly payment toward the account arrearage, in addition to the current regular monthly assessment
  • Whether late fees will be waived or applied during the payment plan term
  • Consequences for default of the payment plan

Q: How long should a payment plan be with a Co-owner who became delinquent due to the COVID-19 pandemic?

A: It depends. It is still uncertain when the entire state will be back to work, so consideration must be taken when determining when a payment plan should start and how long the payment plan should be. For example, there is talk that hair and nail salons and spas will be one of the last group of businesses to reopen. It may be reasonable for a payment plan to start 30 days after the Co-owner is back to work in their industry and last 90 days. If a Co-owner will not have a job to return to because their job has been eliminated due to the COVID-19 pandemic, it may be reasonable for a payment plan to start later than 30 days and last longer than 90 days. In most cases, a payment plan for up to 6 months will be reasonable. Assuming everyone is back to work and able to start making payments by July 1, 2020, most delinquent accounts will be current by December 31, 2020.

Q: How should an association respond to a Co-owner’s request for a reduction in assessments if common areas or facilities have been closed during the COVID-19 pandemic?

A: The association’s property manager should remind the Co-owner that the common areas or facilities were closed for health and safety concerns, pursuant to Governor Whitmer’s Executive Orders. Cleaning costs for these common areas or facilities will increase once they are open for use, due to new health and safety guidelines.

Q: What if Co-owner delinquencies have decreased an association’s income so much that the association can’t sustain its current operating budget and pay its bills?

A: The Board of Directors has several options available to counteract decreased association income due to increased Co-owner delinquencies:

  • Review and revise the current budget. The Board should consider postponing projects scheduled for the spring/summer that could be completed in the fall, when Co-owners’ finances have (hopefully) improved.
  • Revise the annual budget and reallocate reserve funds to pay Association’s immediate expenses. Condominium Bylaws generally indicate that reserve funds shall be used for major repairs and replacements of Common Elements and for emergency expenditures. The COVID-19 pandemic is arguably an emergency.
  • Increase the annual assessment or levy an additional assessment. Condominium Bylaws generally indicate that the Board has the authority to increase the annual assessment or to levy an additional assessment as it deems necessary, to meet deficits incurred or anticipated because current assessments are insufficient to pay the costs of operation and maintenance of the association or for any emergencies, without a vote of the Co-owners. While those Co-owners who have become delinquent due to the COVID-19 pandemic will not be able to pay the increased annual assessment or additional assessment, those Co-owners who are in a better financial position will be able to assist the association in meeting its short-term financial shortfall.

 

Tracy Danner-Bond

Tracy N. Danner-Bond is a partner with the Firm. She graduated from Michigan State University with Honors in 1993, where she obtained her Bachelor of Arts in General Business Administration-Prelaw and was a member of the Spartan Marching Band and Spartan Brass. Ms. Danner-Bond earned her Juris Doctorate from the University of Detroit Mercy School of Law in 1997, where she was the Managing Editor of the University of Detroit Mercy Law Review and a member of the American Inn of Court. Prior to joining the Firm in 2004, Ms. Danner-Bond practiced estate planning, probate, and tax law with a firm in downtown Ann Arbor.

In addition to being certified in probate and estate planning law by The Institute of Continuing Legal Education, Ms. Danner-Bond has extensive experience in community association law. She handles assessment collection matters, lien foreclosure, bylaw enforcement, master deed and bylaw amendments, as well as FHA certification issues. Ms. Danner-Bond has presented lectures on community association topics for United Condominium Owners of Michigan and for private community management classes. Ms. Danner-Bond has been licensed to practice law in Michigan since 1998 and has been admitted to practice before the United States Federal District Court for the Eastern District of Michigan and the United States Tax Court. She has spoken at several events for United Condominium Owners of Michigan, the Michigan Chapter of the Condominium Association Institute, and the Firm’s Condominium and HOA Board Education and Training (B.E.A.T.) program.

Ms. Danner-Bond served 8 years on the Board of Directors for her own condominium association in Canton, Michigan. This first-hand experience as a Co-owner and Director, in addition to being a Community Association Attorney, allows her to relate well to the many challenges that community association Boards face each day.

Ms. Danner-Bond resides in Plymouth with her husband, two children, and their rescue dog. She has numerous interests, including spending time with family and friends, riding her Harley, reading, cooking, and traveling.

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Condo B.E.A.T

IN ALLIANCE WITH

Zelmanski, Danner & Fioritto, PLLC and Fraser Trebilcock Davis and Dunlap, P.C.

Proudly present:

“Back to the Office: Restarting Operations for your Organization after the Covid-19 Lockdown”

June 10, 2020 at 2:00 p.m. to 3:30 p.m.

on Facebook Live and Zoom

Covering topics such as restarting contracts, handling Covid-19 related insurance claims, and the proper conducting of remote meetings for organizations

Presented by:

Edward J. Zelmanski,
of
Zelmanski, Danner & Fioritto, PLLC
Gregory J. Fioritto,
of
Zelmanski, Danner & Fioritto, PLLC
Edward J. Castellani,
of
Fraser Trebilcock, Davis & Dunlap, PC

Have all your organization’s questions about best practices for a post-pandemic reality answered live by one of these experienced attorneys during an interactive webinar presented via Facebook Live and Zoom.

Another B.E.A.T. (Board Education and Training) Session

brought to you as a community service at no charge to attendees by the law firms of

Zelmanski, Danner & Fioritto, PLLC and Fraser Trebilcock Davis Dunlap, P.C.

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STEP FORWARD MICHIGAN KEEPS MARCHING ON

By: Melissa D. Francis, Esq.

In 2010, the Michigan State Housing Development Authority (MSHDA) received funding of $499 million dollars from the Federal Hardest Hit Program to provide financial assistance to homeowners left struggling after the recession and mortgage crisis.  In response, MSHDA created Step Forward Michigan aka The Michigan Hardest Hit Fund (“Step Forward”).

Through the Step Forward program, MSHDA provides loans of up to $30,000.00 at 0% interest to qualified homeowners for payment of delinquent mortgages, property taxes, and homeowners’/condominium association assessments on their primary residence.  Homeowners are only eligible to receive one loan from the program, but may utilize that loan to pay multiple qualifying debts.  Homeowners do not need to make payments on these loans as long as they retain the property as their primary residence.  Each year the property is retained as the owner’s primary residence, 20% of the loan is forgiven, after five years, the loan is completely forgiven and any lien on the property securing the loan is discharged.

Initially, it was anticipated that Step Forward would wind down operations and be out of funds by the end of 2017.  However, as of October, 2018, the program still had $19 million dollars left to disburse ( https://www.canr.msu.edu/news/how-to-apply-for-step-forward-michigan, October 12, 2018).  On June 8, 2020, it was announced that the Step Forward Michigan Program is being extended through June 30, 2021.

In order to receive funds on accounts for homeowners that qualify to receive assistance from Step Forward Michigan, homeowners’/condominium associations must complete and submit an application with supporting documentation to Step Forward Michigan.  Once this documentation is reviewed and approved by Step Forward, the Association will be listed as a Participating Partner with the program.  Participating Partners are listed on the Step Forward Michigan website.  Currently, there are approximately 86 homeowners’/condominium associations which are participating in the program. In submitting the application, the association must agree, among other things, to communicate with MSHDA or the homeowner/co-owner regarding the outstanding balance on the account and accept payment from Step Forward via direct deposit from the State of Michigan.

If a homeowner qualifies to receive assistance and the association is already a Participating Partner, the money will be deposited into the association’s account shortly after Step Forward contacts the association for a payoff of the debt owing and the payoff is provided by the association.  However, if a homeowner qualifies for assistance and the association is not a Participating Partner, the association will need to quickly complete the application and submit it to Step Forward for review and processing before they are able to receive funds.  In some cases, the association’s application cannot be processed before the Homeowners’ Step Forward approval expires.  In these cases, the homeowner will need to re-apply to receive assistance or agree to accept assistance only as to any other qualifying debts, knowing that they will not be able to apply for the program again and get assistance for the association debt.

With many homeowners experiencing an interruption in employment and the forecasting of an increase in delinquencies, association Boards should discuss and make a decision about becoming a Participating Partner with Step Forward Michigan.  Becoming a Participating Partner with Step Forward Michigan allows the association to offer its owners another option in seeking assistance to pay the association and potentially the mortgage company and/or property taxing authority.

It is recommended that associations that are not currently Participating Partners apply for Step Forward as soon as possible to ensure that their applications are reviewed and processed before homeowners start their own application process.  Please call our main office in Plymouth (734-459-0062) or email Ms. Francis (mfrancis@zdfattorneys.com) for information on how our office can assist your association in getting the Step Forward Michigan Participating Partner Application completed, or if you have any questions about the program.

 

Melissa D. Francis joined the Firm in 2013 as an associate attorney. She is a graduate of Plymouth-Canton High School and earned her Bachelor of Arts Degree in International Relations from Michigan State University’s James Madison College in 1998. She earned her Juris Doctorate from Wayne State University Law School in 2001.  Ms. Francis is admitted to practice law in the State of Michigan, Federal District and Bankruptcy Courts for the Eastern and Western District of Michigan, and the United States Supreme Court. Ms. Francis has extensive experience representing both Creditors and Debtors in Chapter 7, 11, and 13 Bankruptcy proceedings.  Since association collections matters routinely involve bankruptcy issues, her vast experience in that field provides the Firm with a unique resource that provides tremendous value to the Firm’s Clients.  Ms. Francis is a member of the American Bankruptcy Institute.  She was a speaker at the 2019 Community Association Institute Law Conference in New Orleans discussing Consumer Bankruptcy and its impact on Community Associations.  She is also a speaker at the 2019 American Bankruptcy Institute Detroit Conference on Veteran’s Day.

Ms. Francis is a Past Dean of the Metro Detroit Alumni Senate of Delta Theta Phi Law Fraternity International.  She is active in the Plymouth-Canton Community as a member of the St. Thomas A’Becket Church choir, BeckRidge Productions, Spotlight Players Theater Company, and the Plymouth-Canton Marching Band Alumni Community.

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MICHIGAN SUPREME COURT RULES THAT MUNICIPALITY MAY ENACT REASONABLE RESTRICTIONS ON PRODUCTION OF MEDICAL MARIJUANA

By: Mark B. Davis, Esq.

On April 27, 2020, the Michigan Supreme Court decided the case of DeRuiter v Byron Township, Supreme Court No. 158311.   Ms. DeRuiter was a registered caregiver under the Michigan Medical Marijuana Act (“MMMA”), MCL §333.26421 et seq.   Pursuant to the terms of the MMMA, a caregiver can assist medical marijuana patients in the growing and processing of marijuana for their particular medical condition.  In exchange, each patient that is served by the caregiver transfers their right to grow their own marijuana to the caregiver.  A caregiver can support up to 5 patients and themselves if they qualify, and they are authorized to grow 12 plants per patient (up to a maximum of 72 plants).  A caregiver is allowed to be reimbursed for their costs to produce marijuana for their patients.

Ms. DeRuiter, not wanting to grow the marijuana plants in her residence, secured a lease on a commercial unit for her purposes.  The unit was appropriately situated in a commercial zone according to Byron Township’s zoning ordinance.

Byron Township had amended their zoning ordinance and classified caregiver activity as a home occupation.  The ordinance required that the home occupation be conducted “entirely within a dwelling or attached garage.”  In addition, the Byron Township ordinance required that the caregiver acquire a license.  After being warned that her caregiver activity in a commercially zoned building was a nuisance per se and that she needed a license, Ms. DeRuiter declined to move her marijuana plants or get the appropriate license.

Instead of complying with the Byron Township Ordinance, Ms. DeRuiter filed a lawsuit in the Circuit Court asking for a declaratory judgment stating that the zoning ordinance was pre-empted by the MMMA:

The MMMA states, in pertinent part, that a qualifying patient “is not subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including, but not limited to, civil penalty or disciplinary action . . . for the medical use of marihuana in accordance with this act[.]” MCL 333.26424(a). The MMMA also provides the same immunity to a primary caregiver in “assisting a qualifying patient . . . with the medical use of marihuana in accordance with this act.” MCL 333.26424(b).

DeRuiter v Byron Township, MI Supreme Court No. 158211

Ms. DeRuiter contended that the Byron Township zoning ordinance deprived her of her right to grow marijuana under the MMMA.  The Circuit Court ruled in favor of Ms. DeRuiter.  Byron Township appealed, and the Court of Appeals confirmed the Judgment of the Circuit Court.  Both courts confirmed that the MMMA preempted the Michigan Zoning Enabling Act and therefore the Byron Township zoning ordinance was void.

The Judgment of the Circuit Court was based on an early Michigan medical marijuana case, Ter Beek v Wyoming; the Supreme Court in DeRuiter, in fact referred to the case as “Ter Beek II.”  A brief summary of Ter Beek is as follows: shortly after the MMMA was passed, the City of Wyoming amended its zoning ordinance to state that any land use that conflicted with federal law was prohibited under the zoning ordinance.   This effectively prohibited any use of, cultivation or possession of marijuana in the City of Wyoming, since marijuana is a “Schedule I” controlled substance pursuant to federal statute.  The Michigan Supreme Court eventually held that the MMMA in that case preempted the Michigan Zoning Enabling Act because it effectively prevented the use, cultivation, or possession of medical marijuana in the City of Wyoming completely and totally.

In DeRuiter v. Byron, the Michigan Supreme Court, by comparison, held that a municipality was entitled to enact reasonable restrictions on the production of marijuana under the MMMA.   In the legal world “reasonable” is a loaded term, and the parameters of “reasonableness” under DeRuiter are yet to be defined.  At the very least, we do know that limiting such caregiving to a residential home occupation (and location) and the requiring of a license is permitted under DeRuiter.

While the impact of the DeRuiter ruling on any particular dispute over medical marijuana use and cultivation is not certain, what is certain is that the legal result in each case will be greatly determined by whatever actions are or have been taken by the particular municipality in which the affected parties live.  My “crystal ball” tells me that many municipalities will take advantage of this opportunity under DeRuiter to enact what they consider to be “reasonable” regulation of medical marijuana production and cultivation. Some of these regulations will survive, while others may ultimately be struck down by a higher court as “overreaching” through litigation.

The other significant aspect of the DeRuiter ruling is that while many condominium associations prohibit “business uses” or “commercial activity” completely within their premises, many make exceptions for home occupations that do not unduly disrupt neighborhood/community life. There is an extensive line of cases that define what activity might qualify as an allowable “home business” in residential condominium and HOA settings.  For example, home day-cares have been allowed in some circumstances despite the extra traffic that they often produce. The outcomes in these cases have been very “language specific” meaning the prevailing party is usually the one that can better justify their activities as being “non-commercial” or “residential” in view of the particular language of their bylaws or declaration of restrictions (as the case may be).  In condominium and HOA communities where “home businesses” are allowed, I believe that a “caregiver” could potentially fit into the category of home businesses that are allowable.  Acting as a caregiver that provides or cultivates medical marijuana is low traffic activity, and (other than smell), it is not inherently intrusive – the marijuana must be cultivated in a secure, locked facility under the MMMA.

One final note, nothing in the DeRuiter ruling affects recreational marijuana under the Michigan Regulation and Taxation of Marijuana Act (“MRTMA”).  An individual may grow up to 12 plants for personal use under the MRTMA.

If private marijuana cultivation is a concern for your association, then you most assuredly should consider further action, such as amending your governing documents to expressly prohibit the growing of marijuana in your condominium/HOA in order to prevent the potential problems that may accompany the growing of marijuana plants.

Our attorneys have extensive experience in drafting document amendments to prohibit the use, cultivation, and/or smoking of marijuana in community associations.  Please contact us to discuss these and other possible solutions for any marijuana-related issues you may be encountering in your community.

 

Attorney Mark B. DavisMark B. Davis is a senior associate attorney and has been with the Firm since 2007.  Mr. Davis brings quite a diverse background of experience to the Firm.  He served in the U.S. Army from 1983 to 1987 and achieved the rank of sergeant in the Rapid Deployment Force.  After leaving the U. S. Army, Mr. Davis attended Eastern Michigan University, where he graduated with a degree in Public Law and Government.  He then attended Wayne State University Law School and obtained his Juris Doctor degree in 1997.

After graduating law school, Mr. Davis practiced law in Dearborn, Bay City, and Florida before landing in Plymouth with the Firm.  He has extensive experience in real estate, litigation and appellate matters (including federal litigation and circuit court appeals).  He also has significant experience in assisting condominium associations with lending transactions.

Mr. Davis has extensive experience in the emerging field of marijuana law and the impact that both recreational and medical marijuana can have on condominiums.  He is a member of the Marijuana Law Section of the State Bar of Michigan and frequently conducts seminars for community association organizations (such as UCOM) as well as for the ZDF Condo & HOA B.E.A.T. Program on the subject.

Mr. Davis appears in court regularly and enjoys engaging in vigorous debates with judges and opposing attorneys.  He is admitted to practice in all state courts in Michigan and Florida, the U.S. District Courts for the Eastern and Western District of Michigan and the Middle District of Florida, the U.S. Court of Appeals for the Sixth Circuit, and the U.S. Supreme Court.

Mr. Davis has many interests outside of legal practice.  He spends most of his free time with his wife, three children, and the family dog.  He is an avid follower of the Lions and Tigers, and also enjoys working on home improvement projects, wood working, and reading.

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