May 7, 2009, Introduced by Senators BASHAM, GLEASON and SWITALSKI and referred to the Committee on Economic Development and Regulatory Reform.
A bill to amend 1978 PA 59, entitled
"Condominium act,"
by amending sections 54 and 90a (MCL 559.154 and 559.190a), as
amended by 2002 PA 283.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 54. (1) The bylaws shall contain provisions for the
designation
of persons a person to administer the affairs of the
condominium
project and shall require that those persons the person
keep books and records with a detailed account of the expenditures
and receipts affecting the condominium project and its
administration,
and which that specify the operating expenses of
the project.
(2) The bylaws shall provide that the person designated to
administer the affairs of the project shall be assessed as the
person in possession for any tangible personal property of the
project owned or possessed in common by the co-owners. Personal
property taxes based on that tangible personal property shall be
treated as expenses of administration.
(3) The bylaws shall contain specific provisions directing the
courses of action to be taken in the event of partial or complete
destruction of the building or buildings in the project.
(4) The bylaws shall provide that expenditures affecting the
administration of the project shall include costs incurred in the
satisfaction of any liability arising within, caused by, or
connected with, the common elements or the administration of the
condominium project, and that receipts affecting the administration
of the condominium project shall include all sums received as the
proceeds of, or pursuant to, a policy of insurance securing the
interest of the co-owners against liabilities or losses arising
within, caused by, or connected with the common elements or the
administration of the condominium project.
(5) The bylaws shall provide that the association of co-owners
shall
prepare and distribute to each owner co-owner at least once
each year a financial statement, the contents of which shall be
defined by the association of co-owners.
(6) The bylaws shall provide an indemnification clause for the
board of directors of the association of co-owners. The
indemnification
clause shall require that 10 days' notice , before
payment
under the clause, be given to the
co-owners before payment
is made under the clause. The indemnification clause shall exclude
indemnification for willful and wanton misconduct and for gross
negligence.
(7) The bylaws may allocate to each condominium unit a number
of votes in the association of co-owners proportionate to the
percentage of value appertaining to each condominium unit, or an
equal number of votes in the association of co-owners.
(8) The bylaws shall contain a provision providing that
arbitration
of disputes, claims, and grievances a dispute, claim,
or grievance arising out of or relating to the interpretation of
the application of the condominium document or arising out of
disputes
a dispute among or between co-owners shall be submitted to
arbitration and that the parties to the dispute, claim, or
grievance shall accept the arbitrator's decision as final and
binding, upon the election and written consent of the parties to
the
disputes, claims, or grievances dispute,
claim, or grievance
and upon written notice to the association. The commercial
arbitration rules of the American arbitration association are
applicable to any such arbitration.
(9) In the absence of the election and written consent of the
parties under subsection (8), neither a co-owner nor the
association is prohibited from petitioning a court of competent
jurisdiction
to resolve any a dispute, claim, or grievance.
(10)
The election by the parties to submit any a dispute,
claim, or grievance to arbitration prohibits the parties from
petitioning the courts regarding that dispute, claim, or grievance.
(11) Subsections (8), (9), and (10) apply only to condominium
projects
established on or after the effective date of the
amendatory
act that added this subsection May 9, 2002.
(12) The bylaws shall provide that co-owners may attend all
meetings of the board of directors of the association of co-owners
except as provided in subsection (15). The co-owners' right to
attend the meetings includes the right to speak on a designated
agenda item.
(13) The bylaws shall provide that, except in the case of an
emergency, written notice of a meeting of the board of directors of
the association of co-owners shall be posted in a conspicuous place
on the condominium property not less than 14 days before the
meeting. The notice shall include all agenda items for the meeting.
The notice of a meeting at which regular assessments against co-
owners will be considered shall contain a specific statement that
assessments will be considered and describe the nature of the
assessments.
(14) The bylaws shall provide that in the event of an
emergency requiring a meeting of the board of directors of the
association of co-owners without notice as required in this
section, the board of directors of the association of co-owners
shall provide the details of that emergency to the co-owners
present at the next regular meeting of the board of directors of
the association of co-owners.
(15) The board of directors of the association of co-owners
may meet in a closed session only for 1 or more of the following
purposes:
(a) To consider the dismissal, suspension, or disciplining of;
to hear complaints or charges brought against; or to consider a
periodic personnel evaluation of an officer, employee, staff
member, or individual agent, if the named person requests a closed
hearing. A person requesting a closed hearing may rescind the
request at any time, in which case the matter at issue shall be
considered only in open sessions.
(b) For strategy and negotiation sessions connected with the
negotiation of a collective bargaining agreement if either
negotiating party requests a closed hearing.
(c) To consult with its attorney regarding trial or settlement
strategy in connection with specific pending litigation, only if an
open meeting would have a detrimental financial effect on the
litigating or settlement position of the association of co-owners.
(d) To review the specific contents of an application for
employment if the candidate requests that the application remain
confidential. However, all interviews for employment shall be held
in open sessions.
(16) Subsections (12), (13), (14), and (15) shall apply only
to bylaws created on or after the effective date of the amendatory
act that added this subsection.
Sec. 90a. (1) To the extent this act or the condominium
documents require a vote of mortgagees of units on amendment of the
condominium documents, the procedure described in this section
applies.
(2) The date on which the proposed amendment is approved by
the requisite majority of co-owners is considered the "control
date".
(3) Only those mortgagees who hold a recorded first mortgage
or a recorded assignment of a first mortgage against 1 or more
condominium units in the condominium project on the control date
are entitled to vote on the amendment. Each mortgagee entitled to
vote shall have 1 vote for each condominium unit in the project
that is subject to its mortgage or mortgages, without regard to how
many mortgages the mortgagee may hold on a particular condominium
unit.
(4) The association of co-owners shall give a notice to each
mortgagee entitled to vote containing all of the following:
(a) A copy of the amendment or amendments as passed by the co-
owners.
(b) A statement of the date that the amendment was approved by
the requisite majority of co-owners.
(c) An envelope addressed to the entity authorized by the
board of directors for tabulating mortgagee votes.
(d) A statement containing language in substantially the form
described in subsection (5).
(e) A ballot providing spaces for approving or rejecting the
amendment and a space for the signature of the mortgagee or an
officer of the mortgagee.
(f) A statement of the number of condominium units subject to
the mortgage or mortgages of the mortgagee.
(g) The date by which the mortgagee must return its ballot.
(5) The notice provided by subsection (4) shall contain a
statement in substantially the following form:
"A review of the association records reveals that you are the
holder of 1 or more mortgages recorded against title to 1 or more
units in the (name of project) condominium. The co-owners of the
condominium adopted the attached amendment to the condominium
documents on (control date). Pursuant to the terms of the
condominium documents and/or the Michigan condominium act, you are
entitled to vote on the amendment. You have 1 vote for each unit
that is subject to your mortgage or mortgages.
The amendment will be considered approved by first mortgagees
if it is approved by 66-2/3% of those mortgagees. In order to vote,
you must indicate your approval or rejection on the enclosed
ballot, sign it, and return it not later than 90 days after this
notice (which date coincides with the date of mailing). Failure to
timely return a ballot will constitute a vote for approval. If you
oppose the amendment, you must vote against it.".
(6) The amendment is considered to be approved by the first
mortgagees if it is approved by 66-2/3% of the first mortgagees
whose ballots are received, or are considered to be received, in
accordance with section 90(2), by the entity authorized by the
board of directors to tabulate mortgagee votes.
(7) The association of co-owners shall mail the notice
required under subsection (4) to the first mortgagee at the address
provided in the mortgage or assignment for notices.
(8) The association of co-owners shall maintain a copy of the
notice, proofs of mailing of the notice, and the ballots returned
by mortgagees for a period of 2 years after the control date.
(9) Notwithstanding any provision of the condominium documents
to the contrary, first mortgagees are entitled to vote on
amendments to the condominium documents only under the following
circumstances:
(a) Termination of the condominium project.
(b) A change in the method or formula used to determine the
percentage of value assigned to a unit subject to the mortgagee's
mortgage.
(c) A reallocation of responsibility for maintenance, repair,
replacement, or decoration for a condominium unit, its appurtenant
limited common elements, or the general common elements from the
association of co-owners to the condominium unit subject to the
mortgagee's mortgage.
(d) Elimination of a requirement for the association of co-
owners to maintain insurance on the project as a whole or a
condominium unit subject to the mortgagee's mortgage or
reallocation of responsibility for obtaining or maintaining, or
both, insurance from the association of co-owners to the
condominium unit subject to the mortgagee's mortgage.
(e) The modification or elimination of an easement benefiting
the condominium unit subject to the mortgagee's mortgage.
(f) The partial or complete modification, imposition, or
removal of leasing restrictions for condominium units in the
condominium project.
(g) Amendments requiring the consent of all affected
mortgagees under section 90(4).
(10) Notwithstanding any provision of the condominium
documents to the contrary, if an election is held for board of
directors of a condominium association, all candidates shall
receive a ballot to ensure that their names are fairly reproduced
on the ballot. The board or other parties who conduct the election
shall keep the ballots cast in the election available for
inspection by the candidates for at least 6 months after the
election date. Any voter who claims not to have received a ballot
shall be afforded an opportunity by the party conducting the
election to ensure that his or her vote is included in the final
election tally.