Bill Text: MI SB0914 | 2017-2018 | 99th Legislature | Introduced

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Bill Title: Housing; condominium; condominium association documents; provide for inspection and electronic transmission. Amends secs. 6, 15, 56, 57, 90 & 91 of 1978 PA 59 (MCL 559.106 et seq.) & adds sec. 57b.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2018-03-21 - Referred To Committee On Local Government [SB0914 Detail]

Download: Michigan-2017-SB0914-Introduced.html

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SENATE BILL No. 914

 

 

March 21, 2018, Introduced by Senator ROBERTSON and referred to the Committee on Local Government.

 

 

     A bill to amend 1978 PA 59, entitled

 

"Condominium act,"

 

by amending sections 6, 15, 56, 57, 90, and 91 (MCL 559.106,

 

559.115, 559.156, 559.157, 559.190, and 559.191), section 6 as

 

amended by 2000 PA 379, section 15 as added by 1982 PA 4, section

 

57 as amended by 2013 PA 134, section 90 as amended by 2002 PA 283,

 

and section 91 as amended by 1982 PA 538, and by adding section

 

57b.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 6. (1) "Co-owner" means a person, an individual, firm,

 

corporation, partnership, association, trust, or other legal entity

 

or any combination of those entities, who owns a condominium unit

 

within the condominium project. Co-owner includes land contract

 

vendees and land contract vendors, who are considered jointly and

 

severally liable under this act and the condominium documents,

 

except as the recorded condominium documents provide otherwise.

 

     (2) "Developer" means a person engaged in the business of

 

developing a condominium project as provided in this act. Developer

 

does not include any of the following:

 

     (a) A real estate broker acting as agent for the developer in

 

selling condominium units.

 

     (b) A residential builder who acquires title to 1 or more

 

condominium units for the purpose of residential construction on

 

those condominium units and subsequent resale.

 

     (c) Other persons exempted from this definition by rule or

 

order of the administrator.

 

     (3) "Electronic transmission" means any form of communication

 

that meets all of the following requirements:

 

     (a) Does not directly involve the physical transmission of

 

paper.

 

     (b) Creates a record that can be retained and retrieved by the

 

recipient or accessed by the recipient electronically through a

 

website. For the purposes of this act, the record is considered a

 

writing.

 

     (c) Can be directly reproduced in paper form by the recipient

 

through an automated process.

 

     (4) (3) "Escrow agent" means a bank, savings and loan

 

association, or title insurance company, licensed or authorized to

 

do business in this state or a representative designated to

 

administer escrow funds in the name, and on behalf, of the escrow

 

agent.

     (5) (4) "Expandable condominium" means a condominium project

 

to which additional land may be added in accordance with under this

 

act.

 

     (6) (5) "General common elements" means the common elements

 

other than the limited common elements.

 

     Sec. 15. (1) This act shall does not be construed or

 

interpreted as to authorize or permit the incurring of indebtedness

 

of the state contrary to the provisions of the state constitution

 

of 1963.

 

     (2) Notwithstanding any provision contained in the nonprofit

 

corporation act, 1982 PA 162, MCL 450.2101 to 450.3192, if any

 

provision of this act or the condominium documents provides for the

 

association of co-owners to deliver or send a document or

 

information to a co-owner, the association of co-owners may send

 

the document or information by electronic transmission if the co-

 

owner has provided the association of co-owners with an electronic

 

mail address or other means by which the co-owner can receive an

 

electronic transmission.

 

     Sec. 56. The bylaws may contain provisions:

 

     (a) As are deemed appropriate any of the following:

 

     (a) Provisions for the administration of the condominium

 

project not inconsistent with this act or any other applicable

 

laws.

 

     (b) For restrictions Restrictions on the sale, lease, license

 

to use, or occupancy of condominium units.

 

     (c) For Provisions for insuring the co-owners against risks

 

affecting the condominium project, without prejudice to the right

of each co-owner to insure his a condominium unit or condominium

 

units on his on the co-owner's own account and for his the co-

 

owner's own benefit.

 

     (d) Notwithstanding any provision in the nonprofit corporation

 

act, 1982 PA 162, MCL 450.2101 to 450.3192, provisions allowing any

 

action required or permitted to be taken at a meeting of the board

 

of directors of the association of co-owners or a committee of the

 

board of directors of the association of co-owners to be taken

 

without a meeting if a majority of the members of the board of

 

directors or of the committee consent to the action in writing. A

 

record of any written consent shall be filed and made part of the

 

association of co-owners' books and records. The consent has the

 

same effect as a vote of the board or committee for all purposes.

 

     Sec. 57. (1) The books, records, contracts, and financial

 

statements concerning the administration and operation of the

 

condominium project shall be available for examination by any of

 

the co-owners and their mortgagees at convenient times.

 

     (1) (2) Except as provided in subsection (3), (2), an

 

association of co-owners with annual revenues greater than

 

$20,000.00 shall on an annual basis have its books, records, and

 

financial statements independently audited or reviewed by a

 

certified public accountant, as defined in section 720 of the

 

occupational code, 1980 PA 299, MCL 339.720. The audit or review

 

shall be performed in accordance with pursuant to the statements on

 

auditing standards or the statements on standards for accounting

 

and review services, respectively, of the American institute of

 

certified public accountants."Statements on Auditing Standards" or

the "Statements on Standards for Accounting and Review Services",

 

respectively, of the American Institute of Certified Public

 

Accountants, Inc.

 

     (2) (3) An association of co-owners may opt out of the

 

requirements of subsection (2) (1) on an annual basis by an

 

affirmative vote of a majority of its members by any means

 

permitted under the association's bylaws.

 

     Sec. 57b. (1) A mortgagee of a co-owner may inspect the

 

records of the association of co-owners during regular business

 

hours.

 

     (2) A co-owner, in person or by attorney or other agent, may

 

inspect the records of the association of co-owners during regular

 

business hours, subject to all of the following:

 

     (a) The inspection is for a proper purpose.

 

     (b) The co-owner gives the association of co-owners written

 

demand describing with reasonable particularity the purpose of the

 

inspection and the records the co-owner desires to inspect.

 

     (c) The records sought are directly connected with the purpose

 

described in the demand.

 

     (d) The demand is delivered to the association of co-owners at

 

its registered office in this state or at its principal place of

 

business.

 

     (e) If the person seeking to inspect the records is an

 

attorney or other agent, the demand includes a power of attorney or

 

other writing that authorizes the attorney or other agent to act on

 

behalf of the co-owner.

 

     (3) If an association of co-owners does not allow an

inspection within 5 business days after a demand is received under

 

subsection (2), or imposes unreasonable conditions on the

 

inspection, the co-owner may apply to the circuit court for the

 

county in which the principal place of business or registered

 

office of the association of co-owners is located for an order to

 

compel the inspection. If the co-owner establishes that the co-

 

owner has complied with the requirements of subsection (2), the

 

court may order the association of co-owners to permit the

 

inspection, prescribe conditions and limitations on the inspection,

 

and award further relief that the court considers just and proper.

 

     (4) A director of an association of co-owners may inspect the

 

records of the association of co-owners during regular business

 

hours for a purpose reasonably related to his or her position as a

 

director. The director may apply to the circuit court for the

 

county in which the principal place of business or registered

 

office of the association of co-owners is located for an order to

 

compel the inspection. The court may order the association of co-

 

owners to permit the inspection, prescribe conditions for the

 

inspection, and award further relief that the court considers just

 

and proper.

 

     (5) If the court orders the association of co-owners to allow

 

the inspection of records under subsection (2) or (4), it shall

 

also order the association of co-owners to pay the co-owner's or

 

director's costs, including reasonable attorney fees, incurred to

 

obtain the order. However, the court shall not order the payment of

 

these costs if the association of co-owners establishes that it

 

failed to permit the inspection in good faith because it had a

reasonable basis to doubt the right of the co-owner or director to

 

inspect the records demanded.

 

     (6) Notwithstanding any other provisions of this act, the

 

articles of incorporation, the bylaws, or a resolution of the board

 

of directors, the records kept by or on behalf of the association

 

of co-owners and the board may be withheld from inspection under

 

this section to the extent that the portion withheld relates to any

 

of the following:

 

     (a) Communications with legal counsel that are subject to the

 

attorney-client privilege or attorney work product pertaining to

 

pending litigation or other matters related to the condominium

 

project.

 

     (b) Meeting minutes or other records of an executive session

 

of a board meeting held to discuss an opinion of legal counsel.

 

     (c) Social Security numbers, bank account numbers, or credit

 

card numbers of individual co-owners.

 

     (d) Any records, which if disclosed, would violate state or

 

federal law.

 

     (7) Notwithstanding the articles of incorporation or

 

condominium documents or any other provision of this act, except

 

subsection (6), the board of directors of an association of co-

 

owners may, by resolution, prohibit a co-owner from inspecting the

 

records of the association of co-owners if the board of directors

 

determines in good faith that 1 or more of the following apply to

 

the proposed inspection:

 

     (a) It would impair the rights of privacy or free association

 

of the co-owners.

     (b) It would impair the lawful purposes of the association of

 

co-owners.

 

     (c) It is not in the best interests of the association of co-

 

owners.

 

     (8) If an association of co-owners limits the inspection of

 

the list of co-owners under subsection (7), it shall provide a

 

reasonable means for the co-owner to communicate with all other co-

 

owners concerning the election of directors and other affairs of

 

the association of co-owners. The association of co-owners may

 

require a co-owner that wishes to communicate with other co-owners

 

under this subsection to pay the reasonable costs of labor and

 

materials and third-party charges incurred by the association of

 

co-owners under this subsection, including a charge for copies of

 

records provided to a co-owner and for labor costs directly

 

associated with searching for, locating, and examining the records

 

demanded.

 

     (9) As used in this section:

 

     (a) "Inspection" includes copying, making extracts, and, if

 

reasonable, requiring the association of co-owners to supply copies

 

made by photographic, xerographic, or other means. "Inspect" has a

 

corresponding meaning.

 

     (b) "Proper purpose" means a purpose that is reasonably

 

related to a co-owner's interest as a member of the association of

 

co-owners.

 

     (c) "Records" means books, contracts, financial statements, a

 

list of co-owners, or other records concerning the administration

 

or operation of a condominium project.

     Sec. 90. (1) The condominium documents may be amended for a

 

particular purpose without the consent of co-owners or mortgagees

 

if the amendment does not materially alter or change the rights of

 

a co-owner or mortgagee and if the condominium documents contain a

 

reservation of reserve to the developer or the association of co-

 

owners the right to amend the condominium documents for that

 

purpose. to the developer or the association of co-owners. An

 

amendment that does not materially change the rights of a co-owner

 

or mortgagee includes, but is not limited to, a modification of the

 

types and sizes of unsold condominium units and their appurtenant

 

limited common elements.

 

     (2) Except as provided in this section, the master deed,

 

bylaws, and condominium subdivision plan may be amended, even if

 

the amendment will materially alter or change the rights of the co-

 

owners or mortgagees, with the consent of not less than 2/3 of the

 

votes of the co-owners and mortgagees. A mortgagee shall have 1

 

vote for each mortgage held. The 2/3 majority required in this

 

section may not be increased by the terms of the condominium

 

documents, and a provision in any condominium documents that

 

requires the consent of a greater proportion of co-owners or

 

mortgagees for the purposes described in this subsection is void

 

and is superseded by this subsection. Mortgagees are not required

 

to appear at any meeting of co-owners except that their approval

 

shall be solicited through written ballots. Any mortgagee ballots

 

not returned within 90 days of mailing shall be counted as approval

 

for the change.

 

     (3) The developer may reserve, in the condominium documents,

the right to amend materially the condominium documents to achieve

 

specified purposes, except a purpose provided for in subsection

 

(4). Reserved rights shall not be amended except by or with the

 

consent of the developer. If a proper reservation is made, the

 

condominium documents may be amended to achieve the specified

 

purposes without the consent of co-owners or mortgagees.

 

     (4) The method or formula used to determine the percentage of

 

value of units in the project for other than voting purposes shall

 

not be modified without the consent of each affected co-owner and

 

mortgagee. A co-owner's condominium unit dimensions or appurtenant

 

limited common elements may not be modified without the co-owner's

 

consent.

 

     (5) Co-owners shall be notified of proposed amendments under

 

this section not less than 10 days before the amendment is

 

recorded. Notice shall be provided by hand delivery, first-class

 

mail, or, subject to section 15(2), electronic transmission.

 

     (6) A person causing or requesting an amendment to the

 

condominium documents shall be is responsible for costs and

 

expenses of the amendment. , except for amendments However,

 

expenses of an amendment based upon a vote of a prescribed majority

 

of co-owners and mortgagees or based upon the advisory committee's

 

decision , the costs of which are expenses of administration.

 

     (7) A master deed amendment, including the consolidating

 

master deed, dealing with the addition, withdrawal, or modification

 

of units or other physical characteristics of the project shall

 

comply with the standards prescribed in section 66 for preparation

 

of an original condominium subdivision plan for the project.

     (8) For purposes of this section, the affirmative vote of a

 

2/3 of co-owners is considered 2/3 of all co-owners entitled to

 

vote as of the record date for such votes.

 

     Sec. 91. (1) An amendment to the master deed or other recorded

 

condominium document shall not be is not effective until the

 

amendment is recorded.

 

     (2) A copy of the recorded amendment shall be delivered to

 

each co-owner of the project by hand delivery, first-class mail,

 

or, subject to section 15(2), electronic transmission.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.