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.