Over the course of our many years practicing condominium law, we have found that co-owners and board members alike will require guidance to correct some common misconceptions about condominium living and the respective responsibilities of the co-owners, management and board of directors of the Association. Following are some thoughts on some of the most persistent myths that we regularly come across.
The Association hasn’t made repairs as required by the governing documents, so I can just withhold my dues until they do.
Big mistake. The Association is not your landlord. Under Section 139 of the Michigan Condominium Act (the “Act”), a co-owner may not withhold payment of assessments due to the fact that the Association has not provided the services or management to a co-owner. Not only will you end up being required to pay the assessments in full, you will also will likely be required to pay late fees, interest and the Association’s legal fees and costs.
I’ve kept my dues payments in “escrow”, so I have the money to pay it and I don’t have to pay the late fees, interest and attorney fees.
Doesn’t work like that either. According to Section 108 of the Act, unpaid assessments, “together with interest on such sums, collection and late charges, advances made by the association of co-owners for taxes or other liens to protect its lien, attorney fees, and fines in accordance with the condominium documents, constitute a lien upon the unit”. In addition, Section 106 provides that in the case of a default by a co-owner, the Association shall recover the costs of the proceeding and reasonable attorney fees to the extent the condominium documents expressly so provide. I have reviewed hundreds of condominium documents and never seen one that did not expressly provide that the Association was entitled to collect legal fees and costs. So, you will be obligated to pay the legal fees, and if you don’t, you run the risk of a lien being recorded against your unit and, ultimately, even foreclosed.
I’ll sue the Association to force it to make repairs required by the governing documents, and I’ll get my attorney fees back.
Not likely. Section 107 of the Act does give a co-owner the right to sue the Association and its officers and directors to compel enforcement of the condominium documents, and even goes on to state that the co-owner, if successful, shall recover the costs of the proceeding and reasonable attorney fees to the extent that the condominium documents expressly so provide. The problem is that of the hundreds of condominium documents that I have reviewed, I have never seen one that provided that a co-owner could recover attorney fees from the Association. To the contrary, they almost always say, “in no event shall any Co owner be entitled to recover costs and/or attorney fees from the Association.” Keep in mind also that whenever you sue the Association, to some extent, at least, you are suing yourself. The Association pays its legal fees and any money judgment that may be rendered against it out of the funds it has from the collection of assessments, including yours. So, you are contributing to the legal defense against you.
We pay our property manager to run the Association, so it’s best to let the manager make all the decisions.
While there may be some property managers who may have convinced the Association and its members of this proposition, it is not true. Although there is no statutory requirement that Condominium Associations be organized in any particular way, every one that I am aware of is organized as a Michigan Non-profit Corporation. Under the Michigan Non-profit Corporation Act, the affairs of the corporation (the Association) are to be managed by a Board of Directors. It is the Board of Directors that is required to run the Association. The property manager is required to take instruction from the Board and do as instructed, not the other way around. The job of the property manager is to assist the Board by handling the day-to-day operations of the Association, such as collecting the assessments, paying the routine bills, and handling routine repair requests. All major decisions and actions are the Board’s to make. Certainly, the Board should seek input and recommendations from an experienced property manager, as well as other experienced community association professionals depending upon the nature of the decision, but the Board must make its own, independent decision, exercising its own business judgment in accordance with the best interests of the Association. There should always be limitations on the property manager’s authority, such as for example, on the amounts and nature of the checks that may be written without prior Board approval, and a prohibition on entering into contracts on behalf of the Association without Board approval.
I purchased a condo, and now I will have maintenance-free, care-free living.
Not so. Again, the Association is not your landlord. If your dishwasher breaks, or your air conditioning unit stops working, in all probability, it is not the Association’s obligation to fix or replace it. The Association’s maintenance and repair obligations are set forth in your condominium documents, and you are well-served to read them. Generally, the Association only has responsibility for the General Common Elements, such things as are shared by everyone, such as the roads, the clubhouse, the roofs and the exterior walls; and sometimes for certain Limited Common Elements, such as patios or decks. However, the trend has been to place more and more responsibilities on the co-owners. Thus, while traditionally, exterior doors and windows, as well as air conditioning condensers and patios and decks have been the responsibility of the Association, those responsibilities are being increasingly shifted onto the individual co-owners through amendment of the Bylaws. This trend is not necessarily a bad thing. It helps to keep assessments lower, and generally, it is fair to have individuals pay for the items from which only they get the benefit. Instead of “care-free living”, residing in a condominium may be better described as “careful living”.
By Daniel P. Feinberg, Esq., The Meisner Law Group