SIGNIFICANT ADVANTAGES TO HAVING UPDATED DOCUMENTS.

The Documents of a Condominium Project establish the Condominium Project from a legal (title) standpoint, and create the framework for the governance of the Condominium Project. A properly governed Condominium Project can significantly enhance Unit re-sale marketability and real estate appreciation, as well as greatly reduce "headaches" caused by a problematic living environment rife with legal challenges and financial liabilities. The ability of a Condominium Association and its Board of Directors to effectively operate and administer the Condominium is also affected by the manner in which the provisions of the Condominium Documents are worded and how those provisions work together, within and throughout the various documents.

WHICH DOCUMENTS SHOULD WE AMEND?

In determining the need for amending the Condominium Documents, it is wise to confer with the Association’s attorney" to: (1) ensure that all legal requirements have been met and followed (i.e., properly establishing the Condominium and the Condominium Association, and that the required governmental filings have been submitted), and (2) determining the overall effectiveness of the Condominium Documents in terms of ensuring they are clear, reasonable and suited to the individual needs of your project, while dealing with critical issues such as insurance coverage, restrictions, collection of assessments, clear and specific pronouncement of prohibitions, enforcement procedures, and director and officer indemnification, among other things.

• Amending the Bylaws. The most widely desired amendment is to the Condominium Bylaws. This is due to the heavy reliance on the Condominium Bylaws for the day to day operation of the Condominium. The "state of the art" set of Condominium Bylaws also now incorporates the provisions of the Corporate Bylaws, thereby creating one cohesive, consistent document containing all Bylaw provisions (the "Bylaws"). If several provisions of the Bylaws are being amended, it is often preferable to not only amend the Bylaws, but to restate the entire document so that you have one entirely new set to use, rather than a piecemeal approach whereby some of the old Bylaw provisions would still be applicable, while other provisions are superseded by amendments. In deciding whether to amend the Bylaws, you want to ask yourself the following questions:

o      How many years has it been since our Bylaws were created, or amended, and how many laws have been passed and/or changed since then?

o      Would you like to improve Unit re-sale marketability and real estate appreciation, and strengthen the Condominium against potential legal challenges and financial liabilities that could be thwarted through good document provisions?

o      Do you have financial difficulties that are caused by delinquent assessments, inadequate budget or reserves, or non-recoverable attorney fees incurred in pursuing bylaw infractions, and the Bylaws do not seem to provide any remedies or a roadmap for relief?

o      Do your Bylaw provisions seem to be contrary to public policy, such as prohibiting the flying of the American flag, allowing transient tenants, discriminating against children or single people?

o      Do you have problems around the Condominium community such as parking, pet owners not cleaning up after their dogs or not keeping them leashed at all times, common elements not being properly maintained, satellites and antennas indiscriminately erected, and the Bylaws do not provide remedies, direction or relief?

o      Do you have trouble getting the Co-owners to attend meetings, satisfying the quorum requirements, passing votes on important issues, keeping members on the Board of Directors, getting people to volunteer for the Board, and your documents lack reasonable notice or quorum requirements, or lack the protective indemnification, limitation of director and officer liability, and the director and officer insurance coverage provisions?

o      Are there clear procedures in your Bylaws for dealing with insurance proceeds, Association funds, eminent domain and other factors which serve to protect the owners' collective investment?

o      Do your Bylaws contain outdated provisions regarding the Developer's rights, and references to governmental agencies or governmental documents which may have been abolished or an unenforceable and potentially discriminatory right of first refusal Unit re-sale provision?

o      Many of the above mentioned problems can be protected against, avoided and/or significantly reduced, as the case may be, through the adoption of the proper Bylaw amendments. A vote of approval of a certain percentage of the Co-owners and, possibly, of the mortgagees would be required prior to amending the Bylaws. There is an art to getting these documents approved, but it can be done through careful planning and Board dedication.

• Amending the Master Deed.

Although not as heavily relied upon on a day to day basis, the Master Deed is the most important of the Condominium Documents. The Master Deed legally establishes the Condominium, sets forth the basis of ownership of the Unit space, defines the Common Elements, establishes the maintenance, repair and replacement responsibilities between the Association vis-a vis the Co-owners; creates and identifies the easements; defines the terms used throughout the Master Deed and Bylaws; and it provides approval guidelines for amending the Condominium Documents and terminating the Condominium. Your Master Deed could be amended, by way of example, to clarify and/or change Common Element maintenance, repair and replacement responsibilities, to update the easement Article regarding telecommunications, security, encroachment, utilities and maintenance, and to update the amendment requirements which have been substantially changed pursuant to the 2001 amendments to the Michigan Condominium Act. Other problems common in Master Deeds are that they contain obsolete developer provisions, or the Condominium may have been developed in phases and the Consolidating Master Deed was never filed or is improper. But, do not let any purported unanimous amendment approval requirement deter you from amending your documents, since those onerous unanimous approval requirements have been declared void and superseded by lesser requirements set forth in the Michigan Condominium Act, as amended. Amendments to the Master Deed and to the Condominium Bylaws must be recorded in the county Register of Deeds office.

• Rules and Regulations. If any additional policies, procedures or clarification of the Condominium Documents are desired, new rules and regulations should be drafted and adopted to implement the existing "structural law" already set forth in the current Condominium Document provisions. Any existing rules and regulations should be amended if they conflict with any of the changes in the laws discussed above, or with any of the Condominium Document provisions. Rules and regulations can consist of delinquent assessment collection procedures, bylaw enforcement procedures, fine procedures, pet policies, procedures governing the use of common elements such as parking areas, trash pick-up, and amenities such as a pools, clubhouses, park areas, and lakes, among other things. Some Bylaws require that rules be approved by a vote of the Co-owners, while other Bylaws give the Co-owners the right of revocation. You may want to consider recording your rules and regulations with the County Register of Deeds office so that the Co-owners and new purchasers are on constructive notice of their existence, just like the other Condominium Documents, but confer with your Condominium attorney to determine whether what you have is properly classified as a rule as opposed to a Bylaw and visa versa.