559.167 Changes in condominium project; amendment; replat of condominium subdivision plan; right of withdrawal.
(1) A change in a condominium project shall be reflected in an amendment to the appropriate condominium document. An amendment to the condominium document is subject to sections 90, 90a, and 91.
(2) If a change involves a change in the boundaries of a condominium unit or the addition or elimination of condominium units, a replat of the condominium subdivision plan shall be prepared and recorded assigning a condominium unit number to each condominium unit in the amended project. The replat of the condominium subdivision plan shall be designated replat number __________ of __________ county condominium subdivision plan number __________, using the same plan number assigned to the original condominium subdivision plan.
(3) Notwithstanding section 33, for 10 years after the recording of the master deed, the developer, its successors, or assigns may withdraw from the project any undeveloped land or convert the undeveloped condominium units located thereon to “must be built” without the prior consent of any co-owners, mortgagees of condominium units in the project, or any other party having an interest in the project. If the master deed confers on the developer expansion, contraction, or convertibility rights with respect to condominium units or common elements in the condominium project, then the time period is 10 years after the recording of the master deed or 6 years after the recording of the amendment to the master deed by which the developer last exercised its expansion, contraction, or convertibility rights, whichever period ends later. Any undeveloped land so withdrawn is automatically granted easements for utility and access purposes through the condominium project for the benefit of the undeveloped land.
(4) If the developer does not withdraw undeveloped land from the project or convert undeveloped condominium units to “must be built” before expiration of the applicable time period under subsection (3), the association of co-owners, by an affirmative 2/3 majority vote of the members in good standing, may declare that the undeveloped land shall remain part of the project but shall revert to general common elements and that all rights to construct condominium units upon that undeveloped land shall cease. When such a declaration is made, the association of co-owners shall provide written notice of the declaration to the developer or any successor developer by first-class mail at its last known address. Within 60 days after receipt of the notice, the developer or any successor developer may withdraw the undeveloped land or convert the undeveloped condominium units to “must be built”. However, if the undeveloped land is not withdrawn or the undeveloped condominium units are not converted within 60 days, the association of co-owners may file the notice of the declaration with the register of deeds. The declaration takes effect upon recording by the register of deeds. The association of co-owners shall also file notice of the declaration with the local supervisor or assessing officer. In such an event, if it becomes necessary to adjust percentages of value as a result of fewer condominium units existing, a co-owner or the association of co-owners may bring an action to require revisions to the percentages of value under section 95.
(5) A reversion under subsection (4), whether occurring before or after the date of the 2016 amendatory act that added this subsection, is not effective unless the election, notice, and recording requirements of subsection (4) have been met.
(6) Subsections (3) and (4) do not apply to condominium units no longer owned by the developer or by the owner of the property at the time the property became part of the condominium project, unless the purchaser from the developer or owner of the property at the time the property became part of the condominium project is a successor developer under section 135.
(7) As used in this section, “undeveloped land” means land on which were recorded 1 or more condominium units, none of which were either identified in the condominium subdivision plan as “must be built” or have had construction commenced, although infrastructure construction or common element construction may have commenced. Undeveloped land does not include condominium units that are depicted or described on the condominium subdivision plan pursuant to section 66 as containing no vertical improvements.
559.168 Availability of condominium documents.
An association of co-owners shall keep current copies of the master deed, all amendments to the master deed, and other condominium documents for the condominium project available at reasonable hours to co-owners, prospective purchasers, and prospective mortgagees of condominium units in the condominium projects.
559.169 Assessment of common expenses; contribution of co-owner.
(1) Except to the extent that the condominium documents provide otherwise, common expenses associated with the maintenance, repair, renovation, restoration, or replacement of a limited common element shall be specially assessed against the condominium unit to which that limited common element was assigned at the time the expenses were incurred. If the limited common element involved was assigned to more than 1 condominium unit, the expenses shall be specially assessed against each of the condominium units equally so that the total of the special assessments equals the total of the expenses, except to the extent that the condominium documents provide otherwise.
(2) To the extent that the condominium documents expressly so provide, any other unusual common expenses benefiting less than all of the condominium units, or any expenses incurred as a result of the conduct of less than all those entitled to occupy the condominium project or by their licensees or invitees, shall be specially assessed against the condominium unit or condominium units involved, in accordance with reasonable provisions as the condominium documents may provide.
(3) The amount of all common expenses not specially assessed under subsections (1) and (2) shall be assessed against the condominium units in proportion to the percentages of value or other provisions as may be contained in the master deed for apportionment of expenses of administration.
(4) A co-owner shall not be exempt from contributing as provided in this act by nonuse or waiver of the use of any of the common elements or by abandonment of his or her condominium unit.
559.170 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
559.171 Notice of proposed action.
Not less than 10 days before taking reservations under a preliminary reservation agreement for a unit in a condominium project, recording a master deed for a project, or beginning construction of a project which is intended to be a condominium project at the time construction is begun, whichever is earliest, a written notice of the proposed action shall be provided to each of the following:
(a) The appropriate city, village, township, or county.
(b) The appropriate county road commission and county drain commissioner.
(c) The department of environmental quality.
(d) The state transportation department.
559.171a Rules applicable to condominium project not served by public water and public sewers; submission of plan to department of public health; approval or rejection.
(1) The rules of the department of public health relating to suitability of soils and groundwater supply for subdivisions not served by public water and public sewers shall apply to a condominium project not served by public water and public sewers.
(2) If public water and public sewers are not available and accessible to the land proposed to be included in a project, a developer shall submit 3 copies of the condominium subdivision plan to the department of public health. The department of public health shall transmit these copies to a local health department that elects to maintain jurisdiction over the approval or rejection of the plan pursuant to subsection (3).
(3) Not later than 30 days after receipt of the condominium subdivision plan, the state department of public health or, if the local health department elects to maintain jurisdiction over approval or rejection of the plan, the local health department shall approve the plan and note its approval on the copy to be returned to the developer or reject all or such portion of the plan that is not suitable. If rejected, the department rejecting the plan shall notify the developer and the governing body in writing of the reasons for rejection of the plan and the requirements for approval.
History: Add. 1983, Act 113, Imd. Eff. July 12, 1983
559.172 Establishment of condominium project; sale of condominium unit before master deed recorded prohibited; exception; substantial failure of master deed to comply with act; marketability of title.
(1) A condominium project for any property shall be established upon the recording of a master deed that complies with this act.
(2) Except as provided in section 88, a condominium unit shall not be sold by or on behalf of the developer before a master deed is recorded for the condominium units in the project.
(3) Title to a unit and common elements is not rendered unmarketable or otherwise affected by reason of an insubstantial failure of the master deed to comply with this act. Whether a substantial failure of the master deed to comply with this act impairs marketability is not affected by this subsection.
559.172a Recordation of master deed; creation of time-share unit; amendment of documents as material alteration.
If the master deed for a condominium project is recorded after the effective date of this section, a time-share unit shall not be created unless expressly provided for in the condominium documents. If the master deed for a condominium project was recorded on or before the effective date of this section, a time-share unit shall not be created unless the condominium documents are amended to expressly provide for the creation of time-share units. An amendment of the condominium documents to expressly provide for the creation of time-share units is a material alteration of the rights of co-owners and requires the consent of 2/3 of the votes of co-owners and mortgagees as provided in section 90.
559.172b Air space over fee.
(1) A condominium project may be established for property consisting of a separate legal parcel in space that is considered the air space over a fee, improved or unimproved, in real property law. Such a condominium project may be provided easements, licenses, and other rights as may be necessary to provide access to and otherwise serve the needs of the project from the underlying surface parcel.
(2) This section applies to any question regarding whether any air space existing over a fee may be submitted to, and established as, a condominium under this act and applies to development as a condominium of air space over a fee.
559.173 Recordation of master deed and amendment; certification by treasurer; filing copy of master deed with local supervisor or assessing officer; filing architectural plans and specifications or affidavit with local unit of government.
(1) A master deed and an amendment to the master deed shall be recorded.
(2) A master deed shall not be recorded without a certification by the treasurer collecting the property taxes and special assessments that all property taxes and current installments of special assessments which became a lien on the property involved in the project are paid in full.
(3) When recorded, a copy of the master deed and a copy of any subsequently amended master deed or amendment shall be filed with the local supervisor or assessing officer.
(4) Detailed architectural plans and specifications for the condominium project, if that condominium project contains any units that require architectural plans and specifications to construct, shall be filed with the local unit of government in which the project is located. However, in the case of a conversion condominium where detailed architectural plans and specifications are not available, the developer shall file with the local unit of government an affidavit stating the fact that detailed architectural plans and specifications are not available.
559.174 Delivery and retention of condominium subdivision plan; recordation of consolidating master deed.
(1) The condominium subdivision plan of a size as provided by rule of the administrator shall be delivered to and retained by the local register of deeds office.
(2) A consolidating master deed shall be recorded at the register of deeds office. The register of deeds shall not deny recording of a consolidating master deed because the property taxes and special assessments are not paid in full.
559.181 Service of process.
(1) When a person, including a nonresident of this state, files a notice under section 71, records a master deed, or engages in conduct prohibited or made actionable by this act or a rule promulgated or order issued under this act and personal jurisdiction over the person cannot otherwise be obtained in this state, that conduct shall be considered equivalent to the person’s appointment of the administrator as his or her attorney to receive service of process in any noncriminal action or proceeding against the person or the person’s successor, personal representative, or administrator which grows out of that conduct and which is brought under this act or any rule promulgated or order issued under this act, with the same force and validity as if served on the person personally.
(2) Service under subsection (1) may be made by filing a copy of the process in the office of the administrator together with a $25.00 fee. Service is not effective unless the plaintiff, which may be the administrator in an action or proceeding instituted by it, immediately sends notice of the service and a copy of the process by registered or certified mail to the defendant or respondent at the person’s last known address, or takes other steps which are reasonably calculated to give actual notice and unless the plaintiff’s affidavit of compliance with this section is filed in the case on or before the return day of the process, if any, or within such further time as the court allows.
559.181a Promotional material; labeling structure or improvement “need not be built.”
If any structure or improvement proposed in a condominium project is labeled pursuant to section 66 “need not be built”, or is to be located within a portion of the condominium project with respect to which the developer has reserved a development right, promotional material may not be displayed or delivered to prospective purchasers which describes or portrays that structure or improvement unless the description or portrayal of the structure or improvement in the promotional material is conspicuously labeled “need not be built”.
559.182 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
The repealed section pertained to escrow account and escrow agent.
559.183 Preliminary reservation agreement; use; condominium buyer’s handbook; placing payment in escrow; cancellation of agreement; refund; treating payment as if made under purchase agreement.
(1) After filing a notice under section 71, a preliminary reservation agreement may be used by a developer to reserve a condominium unit for a prospective purchaser. During the time reservations are being accepted, a condominium buyer’s handbook shall be available at the condominium project for all prospective purchasers.
(2) Upon receipt of payment under a preliminary reservation agreement, the developer shall place the payment in an escrow account with an escrow agent.
(3) A prospective purchaser who has made a payment under a preliminary reservation agreement may cancel that agreement. The developer shall fully refund within 3 business days after notice of cancellation is received all payments made.
(4) If a person who has entered into a preliminary reservation agreement subsequently enters into a purchase agreement, the developer shall treat a payment originally made under the preliminary reservation agreement as if made under a purchase agreement pursuant to section 84.
559.184 Section inapplicable to business condominium unit; withdrawal from signed purchase agreement; depositing and retaining funds in escrow; contents of purchase agreement; waiver of right of withdrawal; form.
(1) This section shall not apply to a business condominium unit.
(2) Except as provided in subsection (5), a signed purchase agreement shall not become binding on a purchaser and a purchaser may withdraw from a signed purchase agreement without cause and without penalty before conveyance of the unit and within 9 business days after receipt of the documents required in section 84a. The calculation of the 9 business day period shall include the day on which the documents required under section 84a are received if that day is a business day.
(3) Upon receipt of payment under a purchase agreement, the developer shall deposit all funds in an escrow account with an escrow agent. Funds due a developer from the closing of a unit sale need not be deposited in escrow if such funds are not required by other provisions of this act to be retained in escrow after such closing. After the expiration of the withdrawal period provided in subsection (2), the developer shall retain amounts in escrow or provide other adequate security as provided in section 103b to assure completion of only those uncompleted structures and improvements labeled under the terms of the condominium documents, “must be built”.
(4) A purchase agreement shall contain all of the following:
(a) A statement that all funds paid by the prospective purchaser in connection with the purchase of a unit shall be deposited in an escrow account with an escrow agent and shall be returned to the purchaser within 3 business days after withdrawal from the purchase agreement as provided in subdivision (b). The statement shall include the name and address of the escrow agent.
(b) A statement that unless the purchaser waives the right of withdrawal, the purchaser may withdraw from a signed purchase agreement without cause and without penalty if the withdrawal is made before conveyance of the unit and within 9 business days after receipt of the documents required in section 84a including the day on which the documents are received if that day is a business day.
(c) A statement that after the expiration of the withdrawal period provided in subsection (2), the developer is required to retain sufficient funds in escrow or to provide sufficient security to assure completion of only those uncompleted structures and improvements labeled under the terms of the condominium documents, “must be built”.
(d) The following paragraph:
“At the exclusive option of the purchaser, any claim which might be the subject of a civil action against the developer which involves an amount less than $2,500.00, and arises out of or relates to this purchase agreement or the unit or project to which this agreement relates, shall be settled by binding arbitration conducted by the American arbitration association. The arbitration shall be conducted in accordance with applicable law and the currently applicable rules of the American arbitration association. Judgment upon the award rendered by arbitration may be entered in a circuit court of appropriate jurisdiction.”
(e) A statement that the escrow agreement between the developer and the escrow agent is incorporated by reference.
(5) The right of withdrawal in subsection (2) may be waived in exceptional cases, by a purchaser who is provided all of the documents listed in subsection (4) and who knowingly and voluntarily waives in writing the purchaser’s right to the protection provided by the right of withdrawal. The waiver form shall include an explanation of this section.
559.184a Providing copies of listed documents to prospective purchaser of condominium unit; amendment to purchase agreement and condominium documents; signature on form as evidence; providing prospective purchaser of business condominium unit copy of recorded master deed; misleading statements; violation.
(1) The developer shall provide copies of all of the following documents to a prospective purchaser of a condominium unit, other than a business condominium unit:
(a) The recorded master deed.
(b) A copy of a purchase agreement that conforms with section 84, and that is in a form in which the purchaser may sign the agreement, together with a copy of the escrow agreement.
(c) A condominium buyer’s handbook. The handbook shall contain, in a prominent location and in boldface type, the name, telephone number, and address of the person designated by the administrator to respond to complaints. The handbook shall contain a listing of the available remedies as provided in section 145.
(d) A disclosure statement relating to the project containing all of the following:
(i) An explanation of the association of co-owners’ possible liability pursuant to section 58.
(ii) The names, addresses, and previous experience with condominium projects of each developer and any management agency, real estate broker, residential builder, and residential maintenance and alteration contractor.
(iii) A projected budget for the first year of operation of the association of co-owners.
(iv) An explanation of the escrow arrangement.
(v) Any express warranties undertaken by the developer, together with a statement that express warranties are not provided unless specifically stated.
(vi) If the condominium project is an expandable condominium project, an explanation of the contents of the master deed relating to the election to expand the project prescribed in section 32, and an explanation of the material consequences of expanding the project.
(vii) If the condominium project is a contractable condominium project, an explanation of the contents of the master deed relating to the election to contract the project prescribed in section 33, an explanation of the material consequences of contracting the project, and a statement that any structures or improvements proposed to be located in a contractable area need not be built.
(viii) If section 66(2)(j) is applicable, an identification of all structures and improvements labeled pursuant to section 66 “need not be built”.
(ix) If section 66(2)(j) is applicable, the extent to which financial arrangements have been provided for completion of all structures and improvements labeled pursuant to section 66 “must be built”.
(x) Other material information about the condominium project and the developer that the administrator requires by rule.
(e) If a project is a conversion condominium, the developer shall disclose the following additional information:
(i) A statement, if known, of the condition of the main components of the building, including the roofs; foundations; external and supporting walls; heating, cooling, mechanical ventilating, electrical, and plumbing systems; and structural components. If the condition of any of the components of the building listed in this subparagraph is unknown, the developer shall fully disclose that fact.
(ii) A list of any outstanding building code or other municipal regulation violations and the dates the premises were last inspected for compliance with building and housing codes.
(iii) The year or years of completion of construction of the building or buildings in the project.
(2) A purchase agreement may be amended by agreement of the purchaser and developer before or after the agreement is signed. An amendment to the purchase agreement does not afford the purchaser any right or time to withdraw in addition to that provided in section 84(2). An amendment to the condominium documents effected in the manner provided in the documents or provided by law does not afford the purchaser any right or time to withdraw in addition to that provided in section 84(2).
(3) At the time the purchaser receives the documents required in subsection (1) the developer shall provide a separate form that explains the provisions of this section. The signature of the purchaser upon this form is prima facie evidence that the documents required in subsection (1) were received and understood by the purchaser.
(4) Promptly after recording a master deed for a condominium project containing a business condominium unit, the developer shall provide to a prospective purchaser of a business condominium unit a copy of the recorded master deed for the project.
(5) With regard to any documents required under this section, a developer shall not make an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.
(6) The developer promptly shall amend a document required under this section to reflect any material change or to correct any omission in the document.
(7) In addition to other liabilities and penalties, a developer who violates this section is subject to section 115.
559.185 Liquidated damages in case of default; actual damages; receipt of escrowed funds.
A provision in a purchase agreement for liquidated damages in case of default shall be limited to a reasonable percentage of the purchase price of the condominium unit. This provision shall not prevent the developer from recovering actual damages. Such an agreement shall not permit the developer to receive escrowed funds until there is a default, or until conveyance of legal or equitable title to the purchaser.
559.186, 559.187 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
The repealed sections pertained to advertising and reservations for purchase of condominium unit.
559.188 Offering for sale and entering into purchase agreement with respect to condominium unit proposed to be included within additional land of expandable condominium or within convertible land without recording amended master deed.
After recording a master deed for the initial phase of an expandable or convertible condominium project, the developer may offer for sale and enter into a binding purchase agreement with respect to any condominium unit proposed to be included within the additional land of the expandable condominium or within the convertible land, without recording an amended master deed, if all of the following occur:
(a) The condominium unit is one which the developer may properly include in the condominium project.
(b) There is a site plan showing the location of the unit.
(c) A substantially identical condominium unit was already included within the project or plans for the condominium unit which describe the physical characteristics of the unit exist and are appended to the purchase agreement.
(d) The purchase agreement states that the condominium unit shall be conveyed to the prospective purchaser within 1 year after the execution of the purchase agreement. If conveyance is not made within that time the agreement is voidable under the conditions set forth in the agreement.
(e) Within 6 months after the date the purchase agreement becomes binding, an amendment to the master deed is recorded which includes the unit.
559.189 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
The repealed section pertained to documents to be provided prospective purchaser.
559.190 Amendment of condominium documents; consent; void provision superseded by subsection (2); reservation of right to amend; notice of proposed amendments; costs and expenses; master deed amendment; affirmative vote.
(1) The condominium documents may be amended 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 the right to amend 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.
(6) A person causing or requesting an amendment to the condominium documents shall be responsible for costs and expenses of the amendment, except for amendments 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.
559.190a Voting procedures.
(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).
559.191 Recording of amendment to recorded condominium document required; copy to co-owner.
(1) An amendment to the master deed or other recorded condominium document shall not be effective until the amendment is recorded.
(2) A copy of the recorded amendment shall be delivered to each co-owner of the project.
559.192, 559.193 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
The repealed sections pertained to disposition of fees and charges, and to conditions for refusing permit to sell or permit to take reservations.
559.194 Title insurance policy.
The developer shall furnish a purchaser buying a condominium unit from the developer a title insurance policy, in the amount of the purchase price, by a title insurance company licensed to do business in the state.
559.195 Revision of condominium subdivision plan; altering percentage of value; revisions in percentage of value per condominium unit.
If the condominium subdivision plan is revised subsequent to its initial filing, and the revisions would alter the percentage of value per condominium unit when applied to the formula used to derive the percentage of value, then the percentage of value shall be altered by the developer to reflect the revisions. If the percentage of value is not altered to reflect these revisions, then a co-owner may bring an action or initiate a proceeding to require revisions in the percentage of value per condominium unit, without the consent of the co-owners, mortgagees, or other interested parties, as are determined to be fair, just, and equitable in accordance with the basic formula used to originally establish the percentage of value for the project.
559.201-559.203 Repealed. 1982, Act 538, Imd. Eff. Jan. 17, 1983.
The repealed sections pertained to disclosure statements and to escrow or security requirements for construction of recreational facilities.
559.203a Repealed. 1983, Act 113, Imd. Eff. July 12, 1983.
The repealed section pertained to the release of escrow funds.
559.203b Section inapplicable to business condominium unit; release of deposits or amounts retained in escrow; conditions; substantial completion; furnishing escrow agent with evidence of adequate security in place of retaining funds; certificate; notice to developer; release of interest paid on amounts escrowed; escrow agent deemed independent party; liability; certification by licensed professional architect or engineer; “licensed professional engineer or architect” defined.
(1) This section shall not apply to a business condominium unit.
(2) Deposits in escrow with an escrow agent required under sections 83 and 84 shall be released pursuant to those sections upon cancellation of a preliminary reservation agreement or withdrawal from a purchase agreement, and in all other cases shall be retained and released pursuant to this section and condominium documents which are not inconsistent with this section.
(3) Except as provided in subsection (5), amounts required to be retained in escrow in connection with the purchase of a unit shall be released to the developer pursuant to subsection (6) only upon all of the following:
(a) Issuance of a certificate of occupancy for the unit, if required by local ordinance.
(b) Conveyance of legal or equitable title to the unit to the purchaser.
(c) Receipt by the escrow agent of a certificate signed by a licensed professional engineer or architect either confirming that those portions of the phase of the project in which the condominium unit is located and which on the condominium subdivision plan are labeled “must be built” are substantially complete, or determining the amount necessary for substantial completion thereof.
(d) Receipt by the escrow agent of a certificate signed by a licensed professional engineer or architect either confirming that recreational or other facilities which on the condominium subdivision plan are labeled “must be built”, whether located within or outside of the phase of the project in which the condominium unit is located, and which are intended for common use, are substantially complete, or determining the amount necessary for substantial completion thereof.
(a) Substantial completion and the estimated cost for substantial completion of the items described in subsections (3)(c) and (3)(d) and in subsection (6) shall be determined by a licensed professional engineer or architect, as provided in subsection (4)(b), subject to the following:
(i) Items referred to in subsection (3)(c) shall be substantially complete only after all utility mains and leads, all major structural components of buildings, all building exteriors and all sidewalks, driveways, landscaping and access roads, to the extent such items are designated on the condominium subdivision plan as “must be built”, are substantially complete in accordance with the pertinent plans therefor.
(ii) If the estimated cost of substantial completion of any of the items referred to in subsection (3)(c) and (d) cannot be determined by a licensed professional engineer or architect due to the absence of plans, specifications, or other details that are sufficiently complete to enable such a determination to be made, such cost shall be the minimum expenditure specified in the recorded master deed or amendment for completion thereof. To the extent that any item referred to in subsection (3)(c) and (d) is specifically depicted on the condominium subdivision plan, an estimate of the cost of substantial completion prepared by a licensed professional engineer or architect shall be required in place of the minimum expenditure specified in the recorded master deed or amendment.
(b) A structure, element, facility or other improvement shall be deemed to be substantially complete when it can be reasonably employed for its intended use and, for purposes of certification under this section, shall not be required to be constructed, installed, or furnished precisely in accordance with the specifications for the project. A certificate of substantial completion shall not be deemed to be a certification as to the quality of the items to which it relates.
(5) In place of retaining funds in escrow under subsection (3), the developer may, if the escrow agreement so provides, furnish an escrow agent with evidence of adequate security, including, without limitation, an irrevocable letter of credit, lending commitment, indemnification agreement, or other resource having a value, in the judgment of the escrow agent, of not less than the amount retained pursuant to subsection (3).
(6) Upon receipt of a certificate issued pursuant to subsection (3)(c) and (d) determining the amounts necessary for substantial completion, the escrow agent may release to the developer all funds in escrow in excess of the amounts determined by the issuer of such certificate to be necessary for substantial completion. In addition, upon receipt by the escrow agent of a certificate signed by a licensed professional engineer or architect confirming substantial completion in accordance with the pertinent plans of an item for which funds have been deposited in escrow, the escrow agent shall release to the developer the amount of such funds specified by the issuer of the certificate as being attributable to such substantially completed item. However, if the amounts remaining in escrow after such partial release would be insufficient in the opinion of the issuer of such certificate for substantial completion of any remaining incomplete items for which funds have been deposited in escrow, only the amount in escrow in excess of such estimated cost to substantially complete shall be released by the escrow agent to the developer. Notwithstanding a release of escrowed funds that is authorized or required by this section, an escrow agent may refuse to release funds from an escrow account if the escrow agent, in its judgment, has sufficient cause to believe the certificate confirming substantial completion or determining the amount necessary for substantial completion is fraudulent or without factual basis.
(7) Not earlier than 9 months after closing the sale of the first unit in a phase of a condominium project for which escrowed funds have been retained under subsection (3)(c) or for which security has been provided under subsection (5), an escrow agent, upon the request of the association or any interested co-owner, shall notify the developer of the amount of funds deposited under subsection (3)(c) or security provided under subsection (5) for such purpose that remains, and of the date determined under this subsection upon which those funds can be released. In the case of a recreational facility or other facility intended for general common use, not earlier than 9 months after the date on which the facility was promised in the condominium documents to be completed by the developer, an escrow agent, upon the request of the association or any interested co-owner, shall notify the developer of the amount of funds deposited under subsection (3)(d) or security provided under subsection (5) for such purpose that remains, and of the date determined under this subsection upon which those funds can be released. Three months after receipt of a request pertaining to funds described in subsection (3)(c) or (3)(d), funds that have not yet been released to the developer may be released by the escrow agent for the purpose of completing incomplete improvements for which the funds were originally retained, or for a purpose specified in a written agreement between the association and the developer entered into after the transitional control date. The agreement may specify that issues relating to the use of the funds be submitted to arbitration. The escrow agent may release funds in the manner provided in such an agreement or may initiate an interpleader action and deposit retained funds with a court of competent jurisdiction. In any interpleader action, the circuit court shall be empowered, in its discretion, to appoint a receiver to administer the application of the funds. Any notice or request provided for in this subsection shall be in writing.
(8) If interest is paid on the amounts escrowed under this act, that interest shall be released in the same manner as provided for release of funds in this section except that the parties may, by written agreement, provide that interest on funds refunded to a depositor upon withdrawal may be paid to the developer.
(9) The escrow agent in the performance of its duties under this section shall be deemed an independent party not acting as the agent of the developer, any purchaser, co-owner, or other interested party. So long as the escrow agent relies upon any certificate, cost estimate, or determination made by a licensed professional engineer or architect, as described in this act, the escrow agent shall have no liability whatever to the developer or to any purchaser, co-owner, or other interested party for any error in such certificate, cost estimate, or determination, or for any act or omission by the escrow agent in reliance thereon. The escrow agent shall be relieved of all liability upon release, in accordance with this section, of all amounts deposited with it pursuant to this act.
(10) A licensed professional architect or engineer undertaking to make a certification under this section shall be held to the normal standard of care required of a member of that profession in determining substantial completion and the estimated cost of substantial completion under this act, but such architect or engineer shall not be required to have designed the improvement or item or to have inspected or to have otherwise exercised supervisory control thereof during the course of construction or installation of the improvement or item with respect to which the certificate is delivered. The certification by a licensed professional architect or engineer shall not be construed to limit the developer’s liability for any defect in construction.
(11) For purposes of this section, “licensed professional engineer or architect” means a member of those professions who satisfies all requirements of the laws of this state for the practice of the profession, and who is not an employee of the developer or of a firm in which the developer or an officer or director of the developer is a principal or holds 10% or more of the outstanding shares of that firm.
559.204 Conversion condominium project; notice; termination of tenancy.
(1) Except for the requirements of subsection (2), this section shall not apply to a business condominium unit.
(2) Before offering any unit for sale, the developer of a conversion condominium project shall notify each existing tenant of any unit in the proposed conversion condominium project of all of the following:
(a) The proposed conversion.
(b) The right of a prospective purchaser to receive the disclosure documents enumerated in section 84a.
(c) The right to remain in the unit of residence for 120 days after receipt of this notice, or until expiration of the term of the lease, whichever is longer.
(d) The right to terminate tenancy after receipt of this notice upon 60 days’ notice to the developer. The notice shall be physically delivered or sent by first class mail to each unit, addressed to the tenant. A tenancy in a conversion condominium, whether month to month or otherwise, shall not be terminated by the lessor without cause within 120 days after delivery of notice under this subsection, or until expiration of the term of the lease, whichever is longer.
(3) A tenant who receives notice under subsection (2) may terminate his or her tenancy, at any time, if notice of termination of tenancy is given to the developer not less than 60 days before the date of termination.
(4) If a developer of a conversion condominium project desires to take reservations before delivery of the notice required under subsection (2), the developer shall, before taking any reservations, notify each existing tenant of any unit in the proposed conversion condominium of both of the following:
(a) The tenant’s lease is not affected by the taking of reservations for units in the proposed conversion condominium.
(b) If a conversion condominium project is established, the tenant may obtain from the developer a full statement of the rights and options available to the tenant.
559.204a Terminating tenancy of certain persons without cause prohibited; criteria; notice.
The tenancy of a person who meets all of the following criteria on the date a master deed is filed for the conversion of a building to a condominium, shall not be terminated without cause within 1 year after receipt of notice required under section 104(2):
(a) The person is 65 years of age or older or paraplegic, quadriplegic, hemiplegic, or blind as that term is defined in section 504 of the state income tax act of 1967, Act No. 281 of the Public Acts of 1967, as amended, being section 206.504 of the Michigan Compiled Laws.
(b) The person is a resident of the building.
(c) The person does not qualify for an extended lease arrangement under section 104b.
559.204b Definitions; applicability of section; notice of right to elect extended lease arrangement; election; extended lease arrangement provisions; number of years lease renewable; notice by developer entering into restricted lease arrangement; assignment, device, sublease, or transfer of lease by qualified senior citizen or person with disabilities prohibited; automatic termination of lease; liability of lessor violating rental restrictions; recovery of possession of restricted unit; transfer of restricted unit.
(1) As used in this section and sections 104a, 104d, 104e, and 131:
(a) “Qualified conversion condominium project” means a structure or group of structures containing a total of 6 or more residential units occupied before the establishment of a conversion condominium project.
(b) “Qualified person with disabilities” means a person who is a resident of a qualified conversion condominium project and paraplegic, quadriplegic, hemiplegic, or blind as that term is defined in section 504 of the income tax act of 1967, 1967 PA 281, MCL 206.504.
(c) “Qualified senior citizen” means an individual who is both of the following:
(i) A resident, on October 10, 1980, of a unit in a qualified conversion condominium project who on or after June 1, 1980, was a party to an oral or written agreement to pay less than $450.00 monthly rent for an apartment in the project having 1 bedroom or less, or less than $500.00 monthly rent for an apartment in the project having 2 or more bedrooms.
(ii) Sixty-five years of age or older on October 10, 1980.
(d) “Rent” or “monthly rent” means the total monthly amount payable to the lessor, and shall include any amount payable to the lessor for utilities.
(e) “Resident” means an individual who uses a unit as his or her primary residence, to which the individual intends to return whenever absent.
(f) “Restricted unit” means an apartment that is subject to an extended lease arrangement as provided in subsection (4).
(2) Except as to a developer who has been issued a permit to sell before October 10, 1980, this section applies to a developer of a qualified conversion condominium project.
(3) A developer shall notify each existing tenant at the same time notice is given under section 104(2), of the right to elect an extended lease arrangement and the terms and conditions of an extended lease arrangement. A qualified senior citizen or qualified person with disabilities shall have not more than 60 days after receipt of notice under this subsection to communicate the election of an extended lease arrangement to the developer.
(4) An extended lease arrangement shall be in writing and shall provide for the following:
(a) A written lease renewable from year to year for the number of years specified in subsection (5) with respect to a unit occupied by a qualified senior citizen, and for the number of years specified in subsection (6) with respect to a unit occupied by a qualified person with disabilities.
(b) That the number of years for which a lease subject to an extended lease arrangement may be renewed shall be measured from the date on which the election of an extended lease arrangement is communicated to the developer.
(c) That any increase in the rent during the time the unit is a restricted unit will not be an unreasonable increase beyond the fair market rent for a comparable apartment.
(d) That upon request of the resident of a restricted unit, the owner shall disclose all information used in determining a reasonable rent increase based upon the standard in subdivision (c).
(5) Except as provided in section 104d, the number of years for which a qualified senior citizen may renew a lease subject to an extended lease arrangement shall be determined by his or her age on the date of receipt of the notice required under section 104(2), as follows:
(a) A person who is not less than 65 years of age and not more than 69 years of age may renew year to year for 4 years. However, if the developer is notified that sufficient loan funds are not available under former section 104c, the period of renewal under this subdivision is reduced 2 years. The developer immediately shall notify affected qualified senior citizens of a reduction in the number of years of renewal.
(b) A person who is not less than 70 years of age and not more than 74 years of age may renew year to year for 6 years.
(c) A person who is not less than 75 years of age and not more than 79 years of age may renew year to year for 7 years.
(d) A person who is 80 years of age or more may renew year to year for 10 years.
(6) Except as provided in section 104d, a person who is a qualified person with disabilities on the date of receipt of notice required under section 104(2) may renew a lease subject to an extended lease arrangement year to year for 4 years; or, if the qualified person with disabilities is also a qualified senior citizen, for the number of years provided in subsection (5), whichever is greater.
(7) A developer who enters into a restricted lease arrangement or the developer’s successor shall notify:
(a) The Michigan state housing development authority of each tenant who elects an extended lease arrangement as soon as practicable after the election is communicated to the developer.
(b) The office of services to the aging created in section 5 of the older Michiganians act, 1981 PA 180, MCL 400.585, 18 months before the expiration of the extended lease arrangement for a qualified senior citizen who is in the age categories described in subsection (5)(c) and (d).
(8) A lease subject to an extended lease arrangement shall not be assigned, devised, subleased, or transferred by the qualified senior citizen or qualified person with disabilities.
(9) A lease subject to an extended lease arrangement shall terminate automatically upon the death of the qualified senior citizen or qualified person with disabilities. However, a surviving spouse of a qualified senior citizen who is 65 years of age or older at the time the qualified senior citizen dies shall have the right to execute a lease under an extended lease arrangement subject to the right of renewal, and other conditions, that applied to the deceased. A surviving spouse who does not qualify for an extended lease shall have 6 months in which to vacate the premises, during which time the conditions of the deceased spouse’s extended lease shall apply, except for the right of renewal.
(10) A lessor who violates the rental restrictions of subsection (4)(c) is liable to the qualified senior citizen or qualified person with disabilities in an amount equal to 3 times the amount by which the rental payments exceed the fair market rent, to be recovered in a civil action.
(11) The owner may recover possession of a restricted unit for nonpayment of rent, illegal use or occupancy of the premises, or other grounds for recovery of possession under chapter 57 of the revised judicature act of 1961, 1961 PA 236, MCL 600.5701 to 600.5759.
(12) A restricted unit may be transferred by the owner to any person, subject to the extended lease arrangement.
559.204c Repealed. 1985, Act 183, Imd. Eff. Dec. 18, 1985.
The repealed section pertained to loans to developers of qualified conversion condominium projects.
559.204d Developer not required to offer extended lease arrangement; conditions; compliance.
(1) A developer, but not a successor developer, who meets all of the following conditions, shall not be required to offer an extended lease arrangement described in section 104b for longer than 1 year:
(a) Not later than January 1, 1980, is the legal or equitable owner of a qualified conversion condominium project.
(b) Not later than March 1, 1980, has filed an application for a permit to sell units in that qualified conversion condominium project, and not later than March 1, 1980 has transmitted the required fee.
(c) On October 10, 1980, a permit to sell has not been issued by the administrator for the qualified conversion condominium project described in subdivision (b).
(d) Has received notice from the Michigan state housing development authority that sufficient funds are not available to advance the full amount of loans for which application has been made by the developer.
(2) A developer described in subsection (1) shall comply with, and be subject to, section 104b(1) to (3), (4)(b) to (d), and (8) to (12).