By Trevor Kupfer
Though homeowners associations, condo associations, co-ops and summer resorts have the same types of legal concerns, each is subject to different state and federal statutes. This makes the job of governing tricky to navigate. So when a board attempts to amend its bylaws, contract with a vendor, or complete many other common actions without legal counsel, it can lead to trouble.
“Boards that rely on the advice of professionals have protection from liability. Boards that tend to go it alone don’t have that protection,” says real estate attorney Kevin Hirzel, whose firm, Hirzel Law in Farmington, is primarily devoted to representing such entities.
One of the biggest things attorneys like Hirzel do is to review, update, and draft documentation to ensure associations’ policies are effective while still in line with state and federal laws.
“Generally speaking, most associations want to amend their documents when the developer turns over control of the project,” Hirzel says. “The developer drafts documents in its own interests, not for the long-term operation of the property.”
Once drafted, those documents require frequent updates as associations encounter new concerns.
“A lot of people try to make well-intentioned rules—say, kids cannot play loudly in the common areas. But that could be familial discrimination since it applies to children,” says Hirzel. “They can still get what they want; they just don’t know to apply the rule to everyone. I see a lot of associations thinking they’re using a common-sense approach, but then unwittingly do things that violate laws.”
Litigation and Enforcement
Once in writing, these rules require enforcement and, once again, a legal team may come in handy.
“The most common issue we encounter is bylaw enforcement,” Hirzel says.
A lot of these issues are resolved with a simple letter, drafted by the attorney, but sometimes it escalates further, he adds. “For instance, we recently had a case that went up to the court of appeals due to the fact that someone painted their front door and didn’t want to change the color or the address numbering. Rather than correcting this for $150, they decided to take it to court and lost, so they had to pay attorney’s fees and costs for pursuing it. Occasionally you get people who won’t comply and want to press the issue.”
Assessments and due collection can be a pain for associations, and firms like Hirzel Law dedicate entire positions to those kinds of headaches. Others at the firm specialize in construction defects, vendors that fail to honor contract terms, and corporate governance disputes.
In truth, disputes of any kind can involve an attorney—depending on how far associations plan to take them.
“Other common issues we deal with are parking; pets, like how many and the types you’re allowed to have, and we’re encountering emotional support animals now; smoking, because Michigan has legalized medical and recreational marijuana; water loss and leak issues because people don’t keep their heat on and pipes burst; and short-term rental conflicts like residents utilizing Airbnb, Vrbo or HomeAway.”
There are many associations throughout Michigan that are self-managed, and only reach out for legal advice when an issue has escalated. “But we like to practice preventative maintenance, especially with regard to documents, because it will help save you money on litigation,” Hirzel says. “A lot of the issues we see in litigation could have been avoided, had there been action taken earlier on.”
Education is a focus of Hirzel’s practice “because being on the board is one of the few jobs you can have where you get no training before going into it,” he says. “We built a classroom in our office, and offer a series of seminars on a variety of topics. We want to teach people how to do things the right way in advance.”
The legal services Hirzel offers depends on the needs of the client. Some like attorneys present at their meetings and regularly updates to their documents, while others confer with their attorney once per year or only if they receive a letter threatening legal action against them.
As for when the right time to call might be for you?
“If you’re going to deviate from what your documents say, that’s a good time to speak with a lawyer. If you don’t know what to do, don’t guess. If you’re going to get into a situation that could cost the association money, like vendor contracts, that’s another good reason to consult a lawyer,” Hirzel adds.
This article first appeared in the Super Lawyers.com on October 10, 2019. Access the article here.