TO AMEND OR NOT TO AMEND… THAT IS THE QUESTION

By: Richard L. Wagner, Jr., Esq.

Unless you have been living in a cave, you have assuredly been bombarded with information about COVID-19.  With all of that information flying around, one question that has arisen is whether Condominium or Homeowners’ Associations should consider amending their governing documents to better address COVID-19 related issues in the event that this type of situation arises again in the future.

First, in order to deal with the unique challenges presented by COVID-19 and the Executive Orders of Michigan Governor Gretchen Whitmer, an Association Board of Directors may consider adopting new Rules and Regulations or Board Resolutions.  These new policies, which can usually be adopted by the Board unilaterally without a full membership vote, may be used to address issues such as closing community amenities (i.e. pools and clubhouses) and the adoption of CDC-compliant safety procedures for use and cleaning of common elements and access to the community.

A Board of Directors may also consider proposing amendments to the Association’s governing documents to specifically address the operation and management of the Association and the Board during similar emergency or “crisis” events.  Relevant topics for such crises-related amendments could include the following: distribution of notices to Members/ Residents during an emergency; requirements for meetings of the Board during a crisis and the conduct of business by the Board during such events; the Board’s power to adopt Emergency Rules; and handling catastrophic Events.

If your current government documents do not allow for notices to be given via electronic means (such as email, or for the use of electronic meetings via electronic conferencing services such as ZOOM or TEAMS), then steps should be undertaken to accommodate such procedures and administration in your Association’s documents in order to fully utilize these means of communication for Association business.

When discussing the amendment of documents, the Board of Directors should keep in mind that the amendment of an Association’s Articles of Incorporation typically requires a majority vote of approval by those co-owners entitled to vote, unless a greater number is stated in the documents.  The amendment of Condominium Association Master Deeds and Bylaws requires a two-thirds vote of approval by those co-owners entitled to vote; in some situations, a vote of the mortgagees may also be required.  The voting requirements for Homeowners’ Association Declarations and Bylaws are dependent upon the specific language in those documents.

In order to prepare for future crises similar to COVID-19, amendments to an Association’s documents should address the following:

  1. How will an Association provide notices to its members? If notice is to be provided electronically, members must consent to receive electronic notices.  What will be the procedure for members to consent to receive electronic notices, and how will the Association disseminate electronic notices?
  2. Will the Association allow actions to be taken without a formal meeting or by written ballot without a formal meeting? The Michigan Nonprofit Corporation Act (MNPCA) allows for the taking of corporate action by the membership by written consent without a meeting, provided certain procedures are followed and proper authority for such action exists in the Association’s Articles of Incorporation. The MNPCA also allows for the taking of corporate action without a meeting by the membership by written ballot, only if there is authority in the Articles of Incorporation or the Bylaws permit such action and certain procedures are followed.  How will the Association implement the procedures for taking action without a formal meeting?  Will the Association allow for voting by written ballot without a meeting?
  3. Will the Association allow action by the Board of Directors via electronic means or without a formal meeting? The MNPCA also allows actions by the Board without a meeting as prescribed in the Bylaws. Subject to the terms of the Association’s documents, the Board can participate in a meeting electronically via conference call or other means of remote communications if all participants can communicate with the other participants.  Action by the Board without a meeting also requires all members of the Board to consent in writing or by electronic transmission and such action is subject to any provisions in the documents which impacts same.

While amending an Association’s documents takes time, it is important to note that  subject to any limitations set forth in the MNPCA, other applicable laws (e.g. the Michigan Condominium Act), or the Association’s Articles of Incorporation, an Association, acting via its Board of Directors, “can exercise all powers necessary or convenient to effect any purpose for which the corporation formed.”  These purposes are generally stated in the Association’s Articles of Incorporation and further set forth in the other governing documents of the Association.  As such, subject to the terms of the Association’s documents, the Association and its Board may have further options and powers for addressing crisis-related concerns while any needed amendments are pending.

As we continue to work through the new “normal” brought about by COVID-19, our firm will continue to work with Association’s to update their policies, rules and governing documents to fit our changing times.

 

Richard L. Wagner, Jr. joined the Firm in 2016 as a long-time practitioner with over 40 years’ experience.  He is a Senior Associate Attorney with the Firm.  Prior to becoming an attorney, Mr. Wagner gained valuable experience working in the fields of construction, real estate, and property management.  He is truly a “veteran” in the realm of community association law, having provided real estate and community association legal services since 1976.  Before joining Zelmanski, Danner, and Fioritto, PLLC, Mr. Wagner was principal owner of the law firm of Schlottman & Wagner, PC, which focused heavily on the practice of community association law and represented hundreds of associations throughout the State of Michigan, with a particular focus on the Metro Detroit area.  Schlottman & Wagner, PC was highly-regarded in the world of community associations as one of the primary law firms in Michigan practicing in the field.

Through years of dedication and hard work, Mr. Wagner gained a depth of experience in the field of community association law which few Michigan attorneys can match.  His primary practice areas include civil litigation, collections matters, document amendments, general counsel, board education, and developer disputes and litigation.

Mr. Wagner is admitted to practice in the Michigan and Federal Bar Associations.  He is a member of the Real Property Law Section of the State Bar and its Legislative Sub-Committee for Condominiums, Cooperatives, and PUD’s.

Mr. Wagner’s professional affiliations include the State Bar of Michigan, the Community Associations Institute (CAI), the United Condominium Owners of Michigan (UCOM), the Macomb County Chamber of Commerce, and the Bar Associations for Macomb and St. Clair Counties.  Mr. Wagner formerly served as the Chairperson and, later, Vice Chairperson on the Clay Township (St. Clair County) Downtown Development Authority for several years.  Mr. Wagner works in our Mt. Clemens office and resides in Clay Township, Michigan.

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