Real Estate Law Update: Landlords, Tenants, and Condos

By:  Lori T. Williams, Owner/Managing Attorney of Your Legal Resource, PLLC

In this real estate update, I interviewed attorney Barry Malone about Landlord Tenant Law and Condominium Law, and its impact on Michigan property owners and tenants in the current economy.   Malone represents local governments, condominium and homeowners associations, and property managers and owners in real estate, business, and land use matters. He serves on the condo association board where he lives, and also owns rental property.  Malone is well versed in this area of the law, both personally and professionally.

Barry Malone has been practicing condominium law and Landlord Tenant law for the last 3 years with the firm of  Adkison Need & Allen PLLC. You may wonder, as I did, why he chose this area of focus for his law practice, in the midst of a housing market downturn.  Malone found that the need for affordable, qualified, legal representation for condominium associations and rental property owners and managers is increasing in this economy.

Challenges Condo Associations Face Today

“A condominium association faces many of the same obstacles local governments face, such as reduced budgets and delinquent assessments, abandoned and blighted properties, and aging infrastructure and buildings,” says Malone.   “If a condo association uses an attorney effectively, it can often see a return on its investment.”

Condo associations built in the early 2000′s have been hit hard by foreclosures, developer bankruptcies, abandonment of the property, and unpaid assessments, and many are struggling to bring in enough money to cover basic services. Additionally, they often find themselves stuck with long term service contracts for security systems, and the like.   Malone notes that having legal representation can often result in a “recoupment of unpaid association dues and savings on renegotiated service contracts.  However, attorneys need to do a better job of communicating their value to the condo association, so they are seen as enhancing an investment rather than a reluctant cost.”

Challenges Landlords Face Today

Additionally, the downturn in the economy has resulted in properties that cannot be sold.  In an attempt to salvage some of its investment, a property owner may become an “inexperienced and ‘reluctant’ landlord  in need of legal representation,” says Malone.

“Many Landlords attempt to cut expenses by relying on lease documents from non-attorney third parties, or the internet. This may, and often does, result in a two-pronged problem of the landlord feeling over confident in the security the lease provides, and the landlord not adequately protecting its interest under the law.”

Michigan has very specific laws for renting residential properties.  See MCL 554. 601 et seq. (Landlord and Tenant Relationships Act), 554.631 et seq. (Truth in Renting Act), and MCL 559.101 et seq. (Condominium Act). “Failing to comply with those laws can have disastrous results. For a relatively small investment, the property and landlord could be far better protected,” notes Malone.

Malone’s Tips for Potential Condo Buyers:

Before you sign the contract to purchase a condo, find out:

• How many units are for sale;
• How many units sold within the last year;
• How many units are currently being rented out.

Review the last three years of budgets and financials to understand how much the dues have increased each year, and what major projects may be on the horizon. A prospective condo buyer should understand what he or she is purchasing, and whether the potential future costs is something he or she is willing and able to bear.

Read the association’s bylaws and master deed. These documents govern most aspects of the community, including how you vote and how much your vote counts, what liability you have for repairs, what constitutes violations, how your dues are assessed, and even how many pets you can have.

Malone’s Tips for Tenants

Before signing the lease:

• Read it thoroughly and have it reviewed by counsel to be sure you understand your obligations and remedies, as well as the landlords obligations and remedies.  If either party fails to perform their contractual obligation, there will be legal and monetary ramifications;

• Don’t be afraid to try and negotiate the lease terms. The worse they can say is, “No!”‘

• During a walk through, point out any concerns you may have.  Landlords usually appreciate tenants who seek to clarify responsibilities and who live up to them.     

After signing the lease, in the event of a problem:

•  Communicate promptly with the landlord and exercise the remedies outlined in the lease.  Ignoring the problems or not following the remedies outlined in the lease will usually make matters worse, not better.

• Give the landlord the opportunity to correct the problem.  In most cases, they do want to keep the tenant in the property and are willing to work with them as long as they act reasonably and in accordance with the terms of the lease.

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Lori T. Williams is a 23 year attorney based in Birmingham, MI. She owns a legal referral and legal consulting business called Your Legal Resource, PLLC. She assists individuals and small businesses in need of legal advice or representation by connecting them with the right legal specialist for their situation. She also provides consulting services for attorneys and other professional service providers on how to generate more business through effective branding, marketing, networking, and by creating strategic partnerships. For more information, visit www.bestlegalresource.com.