Governance of POAs

Welcome & Home Page — 2007 December

2007 December

   Welcome!  Click here for the current Welcome & Home page. 

Draft Revision, Michigan Nonprofit Corporation Act

2007 January 24
See History for brief descriptions of changes and updates. 

    The Nonprofit Corporations Committee of the Business Law Section has been working on a revision of the Michigan Nonprofit Corporations.  The committee's reports are available at Nonprofit Corporations Committee Reports with the latest report dated 2005 March 03. 

    I have briefly reviewed a preliminary draft of the proposed amendments to the Nonprofit Corporation Act which appears to have been released in 2006 April.  I have many concerns about the fairness in the voting and related provisions that affect fundamental fairness and information provided so that members can make informed votes. 

    The continuation of this post is an email I sent to Ms. Jane Forbes, co-chair of the committee, expressing those concerns. 

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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • Initial Post:  2007 Jan 24
• Links:  Draft Revision, Michigan Nonprofit Corporation Act at <http://swagman.typepad.com/poa_governance/2007/01/draft_revision_.html>
  
• Key Words:  • Legislation, CID & POA; • Michigan; • Nonprofit Corporation Act; democratic; Michigan; Nonprofit Corporation Act; Non-profit Corporation Act; POA governance; proxies; proxy; proxy vote; proxy voting; vote; voting

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Meetings, Information, Proxies and Voting

2007 January 10
Last edit:  2009 Jan 23.  See History for brief descriptions of changes and updates. 

    Election laws in most states are comprehensive, and are undergoing change as problems and abuses are discovered.  No part of democratic principles is more fundamental than guaranteeing the right the vote. 

    The voting and election laws for property owners associations are minimal.  In most states, they probably have evolved from corporation law to nonprofit corporation law to laws specific to property owners associations (POAs) in some states.  In Michigan, the voting and election provisions are in the Michigan Nonprofit Corporation Act, and are minimal.

    The continuation of this post discusses the various considerations, the potentials for abuse, the need for a fair method for informed absentee voting, and a recommendation for a "two-meeting" process (similar to the concept of three readings) to ensure fair and informed voting. 

Don Nordeen
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• History: 
  • 2009 Jan 23 — Text from Proxies and Proxy Voting added as new section
  • 2007 Jan 10 — Initial Post
• Links:  Meetings, Information, Proxies and Voting at [http://swagman.typepad.com/poa_governance/2007/01/meetings_inform.html]
• Key Words:  • Fiduciary Duty; • Governing Documents; • Legislative Issues & Proposals; • Michigan; • Nonprofit Corporation Act; • POA Governance; • POA Members' Rights; • Private Government; democracy; democratic; meeting; members' meeting; members' rights; Michigan; proxies; proxy; proxy vote; proxy voting; vote; voting

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Welcome & Home Page — 2006 December

2006 December

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Outline of Dispute Resolution Recommendations

2006 August 13
Last edit:  2008 Dec 27.  See History for brief descriptions of changes and updates. 

    This post provides an outline of dispute resolution recommendations for common interest developments (CIDs) and property owners associations (POAs).  The recommendations provide practical, effective, certain, timely and low-cost means of enforcement and dispute resolution for individual POA members. 

    This is work in progress.  It is being posted at this time for comment and suggestions.  Most of the background is well developed and shows the need for reform.  The concepts of Enforcement Considerations and Dispute Resolution Considerations are closely linked.  Various alternatives for reform for listed with a few notes regarding each.  Previously, the outline in this post was included in the post on Dispute Resolution Considerations. 

Don Nordeen
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• History: 
  • 2006 Aug 13 —Initial Post
    
  • 2006 Aug 17 —added alternative of ordinance to use the municipal court for dispute resolution concerning alleged violations of CC&Rs
  • 2006 Aug 26 —added information concerning pattern of litigation involving POAs
  • 2008 Sep 29 — internet links checked and updated
  • 2008 Dec 27 — addition recommendation for ombudsman office in Office of Attorney General and recommendation on allocation of total legal costs
    
• Links:  Outline of Dispute Resolution Recommendations at <http://swagman.typepad.com/poa_governance/2006/08/outline_of_disp.html>
  
• Key Words:  • Attorney Issues; • Common Interest Development; • Fiduciary Duty; • Governing Documents; • Legislation, CID & POA Model & Content; • Legislative Issues & Proposals; • Michigan; • POA Board of Directors Issues; • POA Governance; • POA Members' Rights; • Private Government; abuse; ADR; alternate dispute resolution; alternative dispute resolution; attorney; common interest community; common interest development; community association; complaint; democracy; democratic; dispute; dispute resolution; enforcement; governance; home owners association; homeowners association; Legislation, CID & POA Model & Content; legislative issues & proposals; ombudsman; planned communities; planned development; planned unit development; private government; problem solving; property owners association; public policy; statement of rights

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Letter to UCIOA Chairman — 2006 Jun 30

2006 June 30
See History for brief descriptions of changes and updates. 

    The continuation of this post is a letter to the Chairman of the Drafting Committee for the Uniform Common Interest Ownership Act (UCIOA) developed by the National Conference of Commissioners on Uniform State Laws (NCCUSL), often referred to as the Uniform Law Commissioners. 

    The drafting of amendments appears to have started in early 2005.  Some of the resource information for possible amendments is posted on the NCCUSL/UCIOA website, but most is only listed by title, and does not even include the name of the person and organization submitting the information.  Four drafts of successive proposed amendments are available at the website.   

    To date, almost all of the discussion and effort appears to be focused on the property law issues with very little on governance, constitutional rights, other rights, democratic principles.  My letter to the chairman was written with that perspective. 

    This letter is perhaps a milestone in my research on legislative issues concerning Common Interest Developments (CIDs) and Property Owners Associations (POAs).  An Outline of Legislation for Democratic Governance of CIDs/POAs has just been posted.  I now consider this work sufficiently developed for publication as work in progress, and solicit you suggestions for improvement.  Please add your comments. 

    More letters to the UCIOA Drafting Committee are needed to clearly express the view that it is the purchasers/owners/members who provide all the money to fund the CID Industry (developers, attorneys, builders, other real estate interests, insurance, mortgage, accountants, reserve specialists, association managers, maintenance companies, repair companies, etc.), and that the members' interests must be represented in the drafting of amendments to UCIOA. 

Don Nordeen
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• History: 
  • 2006 Jun 30 — Initial Post
• Links:  Letter to UCIOA Chairman — 2006 Jun 30 at <http://swagman.typepad.com/poa_governance/2006/06/letter_to_ucioa.html>
  
• Key Words:  KeyWords

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Outline of Legislation for Democratic Governance of CIDs/POAs

2006 June 29
Last update:  2008 Dec 27.  See History for brief descriptions of changes and updates. 

Work in Progress — Posted at this time for use and comment.

• 2006 Jul 21 — Description of legislation for governance at maturity is nearly complete.  Remaining work should only concern refinements. 

    Every common interest development and property owners association may have different governing documents.  However, a pattern of content has evolved for many reasons.  A general analysis of the many factors and aspects for current practice is presented in outline form in Outline & Analysis, CID & POA Issues.  The outline provides links to other posts at this weblog and on the internet to provide more depth supporting the analyses.  The analyses of the various aspects of the governance of most common interest developments (CIDs) and property owners associations (POAs) provide: what works well; what does not work well; what problems exist; and what problems can potentially exist — in short, what is working well and should be preserved, and what is not working well and should be discarded or improved. 

    While reactive improvements can be made by detail amendments to the appropriate legislation or governing document, the resulting patchwork may create additional problems.  A general proactive approach requires a "clean sheet of paper" and "out-of-the-box" thinking — a synthesis to create something new that moves the governance definition to a new, higher level. 

    The continuation of this post is an outline of a Democratic Model for Governance of CIDs and POAs as a broad-based, proactive approach. 

Don Nordeen
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• History: 
  • 2006 Jun 29 — Initial Post
    
  • 2006 Jul 08 — added brief description and outline of the phases in  a CID from inception to maturity
  • 2006 Jul 21 — added outline elements:  overview of legislation, difficulty of including a social contract in the CC&Rs, additional  description of enforcement and dispute resolution
  • 2006 Jul 30 — added and integrated section on superordinate (transcendent  principles for private government, also expanded material on liens, foreclosures, fines and other charges
  • 2006 Nov 27 — added reference and link to Statement of Rights 
  • 2008 Dec 23 — added discussion on interfaces with constitutions and laws
  • 2008 Dec 27 — revised minimum requirements for amendment of CC&Rs
    
• Links:  Outline of Legislation for Democratic Governance of CIDs/POAs at <http://swagman.typepad.com/poa_governance/2006/06/outline_of_legi_1.html>
  
• Key Words:  KeyWords

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Voting Requirements in the Michigan Nonprofit Corporation Act

2006 May 01
Last update:  2006 May 11.  See History for brief descriptions of changes and updates. 

    This post provides an analysis of the voting requirements in the Michigan Nonprofit Corporation Act (MNCA).  Voting requirements are specified in the Act for different situations.  However, the voting requirements for members are essentially the same for all of those situations.  Moreover, the Act specifies only very limited and specified deviations to be specified in the Articles of Incorporation or Bylaws, but the Act is silent with regard to mail ballots.  Mail ballots may be a surrogate for consents required for taking action without a meeting.  However, consents must be written and signed. 

    As a practical matter for a property owners association (homeowners association, community association, association of co-owners) in which participation at meetings and in votes is relatively small, only voting at a meeting in person or by proxy has a practical quorum or affirmative voting requirement.  The most practical of the alternate "voting provisions" effectively requires approval by the same number of members as would be required for a quorum of 100%. 

    The Michigan Nonprofit Corporation Act is part of the corporate world which allows voting only in person or by proxy at annual and special members' meetings. 

    The continuation of this post provides the supporting analysis. 

Don Nordeen
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P. S.  Please be advised that I am not an attorney.  This post is concerned only with organizing information available on the internet on this subject.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• Key Words:  • Governing Documents;  • Legislation, CID & POA;  • Nonprofit Corporation Acts;  • POA Governance;  • POA Members' Rights;  association of co-owners;  association of owners;  common interest community;  common interest development;  community association;  Governance of Not-for-Profit Organizations;  governance;  governing documents;  home owners association;  home owners associations;  homeowners association;  Michigan;  Non-profit Corporation Act;  non-profit corporation;  Nonprofit Corporation Act;  nonprofit corporation;  property owners association;  property owners associations;  proxies;  proxy vote;  proxy voting;  proxy;  vote;  voting

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Attention: Michigan Residents in Owners Associations

2006 April 30
Last update:  2009 Aug 10.  See History for brief descriptions of changes and updates. 

Dear Michigan Residents in Owners Associations:

    This post is an attempt to locate Michigan residents whose homes/property are in a common interest development (CID) governed by a property owners association (POA), who are interested in Michigan legislation that may address some of the problems you are having with the developer of the CID and/or the property owners association (POA) that manages the affairs of the CID.   

    If you are from Michigan and have found this weblog because of your concerns about governance of property owners association, and are interested in possible legislation to improve that governance and guarantee rights of individual members, please contact me.  An active group of individual property owners to contact their individual representatives and senators for enactment of a comprehensive law concerning Common Interest Developments (CIDs) and Property Owners Associations (POAs).  Click on the email link near the top of the left column. Your reply will be treated with strictest confidence.

    Visitors from Michigan to this weblog for the period, 2009 Jul 18 — 2009 Aug 08, are shown in the map below.  Click on the image for a full-size and clearer view in a new window.  Then close the new window or return to the window for this post.  

 

Click continuation to access maps covering three-week periods in reverse chronological order. 

    At the end of the continuation is a comment section which may also be used for communicating your problems in Michigan POAs to others. 

    Please read the Welcome Page for more information on this weblog.  Thanks for your interest. 

Don Nordeen
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Scroll down past the Key Words for continuation for access to maps and to add comments. 

• Key Words:  The list of words and terms are those used typically used in internet searches concerning property owners associations.  Specifically, any search containing "Michigan" and other terms which are included in the list should result in a "hit" to this post.  This is a way to try to locate residents in Michigan who may be interested in joining forces to improve CID and POA legislation.
         List of Key Words and Terms: ABA, ABA Model Nonprofit Corporation Act, abuse, access, access to records, accountable, accounting, accounting standards, ACLU, advocacy, ADR, agency, AICPA, AICPA Audit & Accounting Guide, AICPA Audit & Accounting Guide for Common Interest Reality Associations, alternate dispute resolution, amendment, annual meeting, arbitrary, arbitrary and capricious, architectural control committee, architectural committee, Armand Arabian, Articles of Incorporation, association of owners, association of co-owners, association manager, attorney, attorney client privilege, attorney general, attorney obligations, audit, backlash, bill of rights, board of directors, board of trustees, breach, breach of fiduciary duty, business judgment rule, bylaws, CAI, capricious, Carl Lisman, Carol Silverman, case law, CC&R, CC&Rs, Charles Egan Goff, Charles Goff, CHORE, CID, CIDs/POAs, client, client attorney privilege, client lawyer privilege, client attorney privilege, closed session, collection, common interest community, common interest homeowners coalition, Common Interest Realty Association, CIRA, community association, Community Associations Institute, complaint, compliance, condo, condominium, Condominium Act, condominium association, conflict, consolidated financial statements, constitution, corrective action, Covenant, Covenants Conditions and Restrictions, CPA, declarant, definition, democracy, democratic, depreciation, developer, developer control, development, director, directors obligations, disclosure, dispute, dispute resolution, due process, dues, duties, duty, duty of care, duty of loyalty, duty of obedience, duty to act, easement, election, Elizabeth A. Pitrof, enforcement, enforcing, engagement, engagement letter, Evan McKenzie, excessive, executive, executive session, expert, FASB, fiduciary, fiduciary duty, fiduciary duties, fiduciaries, fine, condo ombudsman, condominium ombudsman, HOA abuse, HOA ombudsman, flsenate, foreclosure, Frank Askin, freedom of information, GAAP, generic CC&Rs, glossary, Goff, governance, Governance of Not-for-Profit Organizations, governing, governing documents, grievance, harass, harassment, handbook, HOA, homeowners associations, home owners associations, HOA, Homeowner Bill of Rights, improvement, Joe West, land development, law, laws, lawsuit, lawyer, lawyer client privilege, legislation, legislative, legislature, limitations, Maryland, members' rights, Michigan, model bylaws, model CC&Rs, model homeowners covenants conditions and restrictions, negligence, Nevada, New Jersey, nonprofit, Nonprofit Corporation Act, nonprofit GAAP, obligations, ombudsman, open meetings, organization as client, owners' rights, Pat Haruff, planned communities, planned unit development, POA Act, private government, Privatopia, privatopia papers, problem solving, problems, property owners association, POA, property rights, proxy vote, proxy voting, public policy, PUD, quorum, Radburn, regulation, rental, reserve, reserve fund, restriction, restrictive covenants, Robert Nelson, roles and responsibilities, rule, rules and regulations, special meeting, Stephen Barton, subdivision, transparency, trustee, UCIOA, Uniform Law Commissioners, Uniform Planned Community Act, unreasonable, vacation rental, Vail and Mintz.

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Developer's Model for Governance of CIDs/POAs

2006 April 02
Last update:  2006 Aug 23.  See History for brief descriptions of changes and updates. 

    Many commentators have observed that governance of common interest developments (CIDs) and property owners associations (POAs) has a similarity from development to development and state to state.  Logically, there are valid reasons for these similarities.  Developers tend to copy what has worked well for others.  Developers don't want to invest the time and effort into development of unique governance for a new development.  The standardization has also occurred as a result of recommended practices from trade associations and agencies of government as described by Dr. Evan McKenzie in Privatopia. 

    It may be important to understand the history and reasons for the development and use of the Developer's Model for Governance to effectively address the issues and problems that are integrally related to the Model.  A Democratic Model for Governance addresses the issues and problems and is the focus of the information in this weblog. 

    This post is work in progress, but is needed at this time to provide necessary references in other posts. Please post your comments at the end of this post.  Thanks. 

Don Nordeen
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• History: 
  • 2006 Apr 02 — Initial Post
    
  • 2006 May 6 — added links to CAI's documents that support the developer's model
  • 2006 May 20 — added more information on legislators being advocates for individual POA members
  • 2006 Aug 23 — added reference to the Homes Association Handbook and brief discussion of its effect on CID/POA governance
  • 2006 Dec 11 — added and revised discussion about the influence of the Homes Handbook on the developer's model
    
• Links:  Developer's Model for Governance of CIDs/POAs at <http://swagman.typepad.com/poa_governance/2006/04/developers_mode.html>
  
• Key Words:  KeyWords

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Michigan Case Law on Corporation Bylaws

2006 February 25
Last update:  2007 Oct 01.  See History for brief descriptions of changes and updates. 

    Various judicial standards exist for the interpretation and applications of Bylaws.  The continuation of this post provides some information on the Michigan case law.

    Your recommendations for other sources of information are requested.

Don Nordeen

P. S.  Please be advised that I am not an attorney.  This post is concerned only with organizing information available on the internet on this subject.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2006 Feb 25 — Initial Post
    
  • 2007 Jun 10 — added case which restates the standards for interpretation
  • 2007 Oct 01 — added case re statute of limitations
    
• Links:  Michigan Case Law on Corporation Bylaws at <http://swagman.typepad.com/poa_governance/2006/02/michigan_case_l_1.html>
  
• Key Words:  KeyWords

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Michigan Case Law on Restrictive Covenants (CC&Rs)

2006 February 24
Last update: 2009 Aug 14. See History for brief descriptions of changes and updates. 

    Various judicial standards exist for the interpretation and applications of Restrictive Covenants, or more particularly Covenants, Conditions and Restrictions (CCRs).  (added 2009 Aug 06) See Restrictive Covenants for definitions and descriptions of restrictive covenants.  Scroll down to read the various definitions and descriptions. 

    The continuation of this post provides some information on the Michigan case law. 

    Your recommendations for other sources of information is requested. 

Don Nordeen
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P. S.  Please be advised that I am not an attorney.  This post is concerned only with organizing information available on the internet on this subject.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• Key Words:  • Case Law, Michigan & Other;  • Common Interest Development;  • Governing Documents;  • POA Governance;  • Private Government;  • Reference Materials & Papers;  case law;  Covenant;  Covenants Conditions and Restrictions;  governance;  governing documents;  planned communities;  planned community;  planned unit development;  reference materials & papers;  rental;  restriction;  restrictive covenant;  rules and regulations;  subdivision;  vacation rental

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Enforcement Consideratons

2006 February 16
Last edit:  2006 Aug 13.  See History for brief descriptions of changes and updates. 

• Use your browser's search command to search for dates as shown above, or just search for year and month, to locate text that has been added or revised.

    This post is the enforcement part of a discussion of enforcement and dispute considerations in common interest developments (CIDs) and property owners associations (POAs).  The Dispute Resolution Considerations are in a separate post and refer to recommendations to provide practical, effective, certain, timely and low-cost means of enforcement and dispute resolution for individual POA members.

    This is work in progress.  Most of the background is well developed and shows the need for reform.  Various alternatives for reform for listed with a few notes regarding each.  The various notes will be converted into appropriate text.  It is being posted at this time for comment and suggestions. 

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2006 Feb 16 — Initial Post
  • 2006 Jul 24 — post split into two posts:  Enforcement Considerations and Dispute Resolution Considerations
  • 2006 Aug 13 — added more discussion about the lack of separation of powers in a POA as related to enforcement and dispute resolution
• Links:  Enforcement Consideratons at [http://swagman.typepad.com/poa_governance/2006/02/enforcement_con_1.html]
• Key Words:  KeyWords

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Obligations and Authorities for the Board of Directors

2006 January 08
Last update: 2007 Feb 08. See History for brief descriptions of changes and updates. 

    Typically, the nonprofit corporation law and the governing documents in common interest development (CID) managed by a property owners association (POA) concentrate the powers and authorities with the board of directors.  When "things go wrong", an inevitable and predictable division and distrust develop between the board and the members.  The problems the POA then has are the direct result of the actions of the boards of directors.  The decisions and actions are those of the board or recommendations of the board approved by the members.  One can argue that members are not given full and accurate information, but regardless the actions taken were those recommended by the board. 

    There are many principles for democratic organizations which include:  rule of law, separation of powers, limited powers in any single group, independent judiciary, due process, independent press, fair and disciplined processes for elections and votes by members, freedom of information, open meetings, ... . 

    Part of a philosophy of "Building Community into the Community" is for the members to limit the powers of the board of directors (stewards is a better name) with more involvement and decisions by the members.  Rather than a broad authority for the board "to manage the affairs" of the associations (which attorneys at the board's request will gladly interpret to mean the board has virtual total power), the bylaws and other governing documents should define specific and enumerated Obligations and Authorities. 

    The continuation of this post is a straw man for defining limited Obligations and Authorities for the board.  The limitations also make the task of being a board member easier, which may create a willingness on the part of more members of the POA to serve the community. 

    Please provide your thoughts and ideas. 

Don Nordeen
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• History: 
  • 2006 Jan 08  — Initial Post
    
  • 2007 Feb 08 — general description of the limited authorities for the board added
• Links:  Obligations and Authorities for the Board of Directors at <http://swagman.typepad.com/poa_governance/2006/01/obligations_and.html>
  
• Key Words:  KeyWords

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Thoughts on Problem Solving for CIDs/POAs

2006 January 01
Last edit:  2006 Apr 25.  See History for brief descriptions of changes and updates. 

    Several inquiries have been directed to this weblog concerning specific complaints, grievance and/or problems members are having within their common interest developments (CIDs) and/or property owners associations (POAs). 

    The continuation of this post contans "Thoughts on Problem Solving for CIDs/POAs" based on my replies and other information.  The "Thoughts" are offered for whatever assistance they might provide.  Your ideas on improvement in the problem solving are needed, and will be considered and added. 

Don Nordeen
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2006 Jan 01 — Initial Post
  • 2006 Feb 19 — added discussion about the importance of a "gang of 20"
  • 2006 Mar 11 — added discussion on the Montgomery County, Maryland, Commission on Common Interest Communities
  • 2006 Apr 25 — added discussion about the unique aspects of interpretation of restrictive covenants
• Links:  Thoughts on Problem Solving for CIDs/POAs at <http://swagman.typepad.com/poa_governance/2006/01/thoughts_on_pro.html>
• Key Words:  KeyWords

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Fiduciary Duty

2005 November 30
Last update: 2006 Mar 01. See History for brief descriptions of changes and updates. 

     This post is work in progress, and may be nearly completed.  The continuation now contains excerpts from the Michigan Nonprofit Corporation Act, excerpts from the ABA Model Nonprofit Corporation Act of 1987, excerpts from case law, one paper on the subject, and numerous references available on the internet.  At this time, I believe that most of the concepts are in the continuation. 

    Your questions and comments are welcome. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Nov 31 — Initial Post/li>
  • 2006 Jan 10 — added discussion and reference that courts tend to apply fiduciary duty for business corporations to nonprofit corporations
    
  • 2006 Mar 01 — Added excerpts concerning fiduciary duty from Michigan Nonprofit Corporation Act and the Revised ABA Model Nonprofit Corporation Act of 1987, and revised other discussion. Use your browser's search on the date to identify the added/revised text.
• Links:  Fiduciary Duty at <http://swagman.typepad.com/poa_governance/2005/11/fiduciary_duty.html>
  
• Key Words:  fiduciary duty KeyWords

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About This Writer

2005 October 30

    As explained in the Welcome post, I am particularly interested in establishing communication with those of you who have a similar interest in democratic reform of property owners association law to broaden the collaborative effort.

    Click on the "ABOUT" link at the top of the left column for general information on this writer.  More specific information related to governance of property owners associations is given below. 

    I was a president of an owners association for four years (board member for five) during which there was major ligitation with the developer leading to conveyance of $5,000,000 in common property (golf course, clubhouse, community center, park on a lake, other) to the association and transition from developer control to member control. 

    Subsequent to the transition, the board of directors became an oligarchy and has plunged the association into major debt by overspending on improvement to common facilities based on defective financial justification and inadequate capabilities in budgeting and financial controls.  Many of their actions appear to have been inconsistent with the governing documents.  Expressions of concern, explanation of the provisions in the governing documents, and requests for corrective action were ignored. 

    Even though some amendments were made to the governing documents in preparation for conveyance of the common properties, the provisions in the governing documents were still largely based on the developer's interest as originally drafted by the developer — I call this the Developer's Model for Governance.  Consequently, the governing documents did not provide the basis for intervention by a few members who believed that the board was overspending and was not responsive to the collective interests of the members. 

    It was also apparent that the Michigan Nonprofit Corporation Act under which the association was organized (Michigan does not have a POA law) was of no help.  Moreover, there is very limited case law in Michigan regarding POAs to have any certainty as to how courts might rule.  Likely, case law concerning for-profit corporations would be applied to the POA as a non-profit corporation. 

    This leads to the conclusion that, even if all the "right" provisions had existed in the governing documents, the basis for the members to intervene through legal action was still uncertain because of lack of Michigan POA law concerning POAs. 

    The continuation of this post provides additional information on my involvement in property owners associations which should explain my interest in POA legislation. Specifically, it includes a brief history of the PUD and its owners association.  It is an interesting story of what can happen and does in common interest developments.  This story is not unique. 

Don Nordeen
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Proposed Amendments to UCIOA

2005 September 30

    The Uniform Law Commissioners, formally the National Conference of Commissioners on Uniform State Laws (NCCUSL), drafted an existing model law for POAs called Uniform Common Interest Ownership Act (UCIOA) in the mid 1990s.  They have recently undertaken a project to draft amendments to the UCIOA.  Incorporation of governance provisions for POAs is one of the areas under consideration. 

    The continuation of this post is an email to the Uniform Law Commissioners on their work to draft amendments to the Uniform Common Interest Ownership Act (UCIOA).

Don Nordeen
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Michigan POAs & Legislation

2005 September 15
Last update:  2009 Jan 19.  See History for brief descriptions of changes and updates. 

    Work in progress.  When completed, this post will contain  information about Michigan POAs, and links to the various Michigan laws that apply to POAs

Don Nordeen
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• History: 
  • 2009 Jan 19 — added link to the Land Sales Act
  • 2007 Dec 05 — added internet link to References on Michigan
  • 2006 May 07 — added discussion and links to Michigan laws and regulations concerning CIDs and POAs
  • 2005 Sep 15 — Initial Post
• Links:  Michigan POAs & Legislation at [http://swagman.typepad.com/poa_governance/2005/09/michigan_poas_l.html]
• Key Words:  Michigan, legislation, Condominium Act, Land Division Act, Land Sales Act, Nonprofit Corporation Act, Planned Unit Development, Summer Resort and Parks Association Act

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Analysis of POA Problems

2005 September 14
See History for brief descriptions of changes and updates. 

    Work in progress (posted for your interest and comments)

Don Nordeen
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• History: 
  • 2005 Sep 14 — Initial Post
• Links:  Analysis of POA Problems at [http://swagman.typepad.com/poa_governance/2005/09/analysis_of_poa.html]
• Key Words:  KeyWords

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Sample of POA Problems

2005 September 13
Last update:  2005 Dec 22 and ongoing.  See History for brief descriptions of changes and updates.  

    The continuation of this post provides a sample of POA problems reported on the internet.

    Based on reviews of these examples and many more problems posted on the internet, there is a pattern to these problems which is described in Analysis of POA Problems.  To avoid those problems, appropriate provisions are needed in POA law and each POA's governing documents. 

Don Nordeen
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• History: 
  • 2005 Sep 13 — Initial Post
  • 2005 Dec 22 — many additions identified by date added to the list
  • Ongoing — dates noted with addition internet links
• Links:  Sample of POA Problems at [http://swagman.typepad.com/poa_governance/2005/09/sample_of_poa_p.html]
• Key Words:  KeyWords

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Attorney Obligations to Third Parties

2005 September 10
See History for brief descriptions of changes and updates. 

Derivative Liabilities a Danger
Eye on Ethics
Arizona Attorney
2005 June

Introduction

    The above title is from the Arizona Attorney, a publication of the Arizona Bar Association.  The article follows this introduction. 

    Have you ever thought that your POA’s attorney should be responsive to your interests since you are affected by the attorney’s advice and recommendations?  Are you a client since you, as a member of your POA, are paying your part of the attorney’s fees through your dues?  Since you are paying for the advice and recommendations, shouldn’t you be able to read the advice and recommendations?  Shouldn’t the advice and recommendations include a description of the facts and circumstances on which the advice was developed? 

    A partial answer to the above questions is that the board could act immediately to make all board/attorney communications available for inspection/copying to the members, with one important temporary exception.  Is it in the interest of the Association to do so?  Yes.  The temporary exception is for communications on any matter concerning negotiation or litigation while that matter is in progress.  Once the matter has been completed, then there is no reason for the information to be privileged. 

    Is the attorney obligated obligated to so advise the board?

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Sep 10 — Initial Post
• Links:  Attorney Obligations to Third Parties at [http://swagman.typepad.com/poa_governance/2005/09/attorney_obliga.html]
• Key Words:  KeyWords

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Letter of Engagement by Attorney

2005 September 10
Last edit:  2008 Nov 15.  See History for brief descriptions of changes and updates. 

    Do you understand the role of a POA's attorney(s)?  Who is the client?  What information between the attorney and the POA should be privileged?  To whom?  Who should decide?

    What should you do if there is a disagreement with an interpretation of the governing documents?  You believe the plain language in the governing document is clear?  The board has a different interpretation and claims that their interpretation is made by the POA's attorney.  (added 2008 Sep 28)  But the board as agent provided the instructions to the attorney and provided the documents and other information to be used in the attorney's opinion.  How should this be resolved?  Should you have access to the attorney's letter containing the interpretation and the analysis on which the opinion is based?  Should you have access to the instructions from the POA to the attorney that resulted in the opinion?

    Suppose a proposed amendment to the bylaws is represented as having the approval of the POA's attorney.  Should you be able to question the expertise of the attorney to recommend such an amendment?  Many of the same questions as in the above paragraph are also applicable. 

    The continuation of this post discusses these considerations and proposes that a letter of engagement be written by the attorney (added 2008 Sep 28)  But the board as agent provided the instructions to the attorney and provided the documents and other based on the above and other considerations defined by the POA and approved by members to address these and other issues in the attorney-client relationship and that the letter be available to members. 

    Your comments and questions on this important matter are encouraged.  Members should not assume that attorney-client relationship will serve their interests. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History:  Changes are usually identified in the text with the date which facilitates searching by date.
  • 2008 Nov 15 — added/edited discussion that legal opinions are not singular or unique, and that some uncertainty is inherent but can be reduced by good procedures
  • 2008 Sep 28 — added discussion to better ensure that legal opinions are in the interests of the POA
  • 2008 Apr 20 — added discussion of standards for legal advice
  • 2007 Oct 18 — added introduction for the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2007 Oct 13 — added further discussion of the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2006 Sep 24 — added discussion of the standard for legal advice from POA's attorney to represent all the interests inherently involved
  • 2006 Sep 10 — Initial Post
• Links:  Letter of Engagement by Attorney at [http://swagman.typepad.com/poa_governance/2005/09/letter_of_engag.html]
• Key Words:  KeyWords

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Attorney as Expert

Date:  2005 September 10
See History for brief descriptions of changes and updates. 

    This is "Work in Progress."  Your comments and questions are invited for consideration in drafting this post.  If there are any errors, please advise. 

    Is the attorney an expert?  If so, on what?  If the attorney has a bridge design company as a client, does that make the attorney an expert in bridge design?  Does an attorney have to be an expert in bridge design to be an attorney for a bridge design company?

    The answers to these questions are obvious.  The attorney should be an expert in the law.  The attorney does not have to be an expert in bridge design because the attorney is not asked for advice on bridge design.  Further, the attorney does not have to be an expert in organization, governance and management of the bridge design company. 

    How does this reasoning apply to attorneys and property owners associations?

    My tentative conclusion is that the retainer for an attorney for a POA should include a "letter of engagement" that defines how all of the attorney-client issues will be handled for the POA, the POA board, and the POA members, including the subjects on which the attorney is an expert. 

Don Nordeen
   
P. S.  Please be advised that I am not an attorney.  This post is concerned with governance and management issues arising out of attorney-POA relationships.  Any analyses or opinions expressed or inferred are those of a lay person and are not legal advice.
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• History: 
  • 2005 Sep 10 — Initial Post
• Links:  Attorney as Expert at [http://swagman.typepad.com/poa_governance/2005/09/attorney_as_exp.html]
• Key Words:  KeyWords

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Organization is the Client

2005 July 02
Last update:  2009 Jan 12.  See History for brief descriptions of changes and updates. 

• Search with updated date as shown to identify added/revised text. 

    This is "Work in Progress."  Your comments and questions are invited for consideration in drafting this post.  If there are any errors, please advise.

    Who is the client?  the board?  the property owners association (POA)?  each and every member?  members collectively?  Important questions.  

    (Added 2005 Sep 09)  My tentative conclusion is that the retainer for an attorney for a POA should include a "letter of engagement" that defines how all of the attorney-client issues will be handled for the POA, the POA board, and the POA members.  This requirement should be a provision in the appropriate governing document, since the POA should speak through its governing documents on such policy matters.

Don Nordeen
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Please be advised that the writer is not an attorney, and this is not legal advice. The information is based on research on information available in the public domain.
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• History: 
  • 2009 Jan 12 — added discussion concerning difficulties for ensuring that attorney represents the Association as client
  • 2008 Oct 04 — revised discussion of applicable Michigan case law
  • 2008 Jan 24 — added paragraph citing a Michigan Court of Appeals case
  • 2006 Sep 24  — added discussion of standard for legal advice from POA's attorney  to represent all the interests inherently involved
  • 2005 Nov 12 — added reference to paper, "Attorneys should represent entire  association, not just the board"
  • 2005 Oct 23 — added discussion re attorney relationships for POAs
  • 2005 Sep 21 — added discussion that Florida and Virginia laws in effect require  attorney-client privilege to be waived
  • 2005 Sep 09 — Post date changed with addition of paragraphs concerning highest authority, attorney-client  privilege and other subjects
  • 2005 Jul 02 — Initial Post
• Links:  Organization is the Client at [http://swagman.typepad.com/poa_governance/2005/09/organization_is.html]
• Key Words:  KeyWords

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