The State of Michigan adopted Public Act 68 of 2024, known as the “Homeowners’ Energy Policy Act” (the “Act”). Although it was signed by the Governor on July 8, 2024, it is not yet in effect, and is scheduled to go into effect in early 2025. This Act impairs the ability of condominium and subdivision associations (referred to in this article as “community associations”) to restrict energy-saving improvements and solar energy systems. This article summarizes the Act and provides guidance for associations on how to comply with the new requirements. Although the Act has a greater impact on site condominiums and subdivision associations, all community associations in Michigan are affected and must act in response to this new law.
Key Provisions of the Homeowners’ Energy Policy Act
1. Act Does Not Apply to “Shared Roofs” and “Common Areas”
It is important to note that the Act does not apply to “shared roofs” or “common areas.” The Act defines a “shared roof” as a roof that serves more than one residence or unit, including contiguous roofs serving adjacent units. For developments with shared roofs, associations can deny applications for “solar energy system” installations or of “energy-saving improvements or modifications” on these roofs. The Act defines “Solar energy system” as a complete assembly, structure, or design of a solar collector or solar storage mechanism that uses solar energy for generating electricity or heating or cooling materials. In other words, a typical roof-mounted solar panel energy system. The Act specifies that “Energy saving improvements or modifications” include, but are not limited to: clotheslines, air source heat pumps, ground source heat pumps, insulation, rain barrels, reflective roofing, energy efficient appliances, solar water heaters, electric vehicle supply equipment, energy-efficient windows, and energy-efficient insulation materials.
Similarly, the Act does not apply to “common areas,” which the Act defines as “a portion of a building, land, or amenities owned or managed by the homeowners’ association that is generally accessible to all members of the association.” This includes open space areas, hallways, stairways, elevators, lobbies, laundry and recreational rooms, garages, public green space and parks, community buildings, or fitness rooms. This means that boards will still be generally permitted to prohibit the installation of solar energy systems or energy-saving improvements or modifications on general common elements, including open space areas.
2. Invalidates Provisions in Governing Documents Prohibiting or Requiring Approval of “Energy Saving Improvements or Modifications”
The Act invalidates any provisions in an association’s governing documents that prohibit or require association approval for the replacement, maintenance, installation, or operation of “energy-saving improvements or modifications,” except in “common areas” or on “shared roofs.” It also nullifies provisions that compel or require association approval for auxiliary changes needed for these improvements. As referenced above, these items are things such as clotheslines, air source heat pumps, ground source heat pumps, insulation, rain barrels, reflective roofing, energy efficient appliances, solar water heaters, electric vehicle supply equipment, energy-efficient windows, and energy-efficient insulation materials.
Simply put, associations cannot require approval for installation of these “energy-saving improvements or modifications” (except within common areas or on shared roofs), and the Act supersedes any inconsistent restrictions in governing documents currently requiring approval.
3. Solar Energy Systems (Including Solar Panels)
The Act guarantees that owners may install a wide variety of solar energy systems by invalidating any restriction in an association’s governing documents that prohibits or has the effect of prohibiting energy-saving improvements or modifications, as well as solar energy systems. It prohibits associations from inquiring into a member’s energy usage, imposing conditions that impair the operation of solar energy systems, or charging excessive application fees.
4. Adoption of a Solar Energy Policy Statement
All associations in Michigan must adopt a written solar energy policy statement within one year of the Act’s effective date (which is anticipated to be in early 2025). This policy is crucial because it sets the framework for how solar energy systems are to be integrated within the community, ensuring clarity and uniformity in their adoption and maintenance. The Act does not exempt associations from adopting a policy, even if their community has primarily (or solely) shared roofs and common areas which the Act doesn’t apply to.
The solar energy policy statement must reflect the standards established under the Act and must not conflict with local, state, or federal laws. It must facilitate the installation of solar energy systems on roof faces without specifying the type of technology used, such as solar shingles versus traditional solar panels. The policy must ensure that any standards enforced do not reduce electricity production by more than 10% or increase installation costs by more than $1,000.
Moreover, the policy should explicitly state that the approval of an adjacent home or unit owner is not required for a member to install a solar energy system. It must also include provisions that prohibit the association from inquiring into a member’s energy usage, imposing conditions that impair the operation of the solar energy system, or negatively impacting any industry standard warranties. The policy should clearly outline that no post-installation reporting is required and that any application fees for installing a solar energy system should not exceed those for other property changes.
Furthermore, the policy must specify that the association will not deny a member’s application to install a solar energy system based on the entity owning the system or the financing method chosen by the member. It should also outline that a member’s application can only be denied if it violates a law, does not conform to the approved application, or fails to meet specific installation standards (e.g., the system extends more than 6 inches above the roof or does not conform to the roof slope).
Steps for Associations to Comply
1. Adopt a Solar Energy Policy
Whether your association consists of 4 homes or 400 homes, all associations must adopt a solar energy policy within one year of the Act taking effect. This policy should reflect the standards established by the Act, ensure compliance with existing local, state, or federal laws, and be clear about the approval process for solar energy system applications, including timelines and required documentation. Our Firm will assist your association in preparing a policy which both complies with the Act and suits the needs of your community. All associations must adopt a policy, even if the community is comprised solely of shared roofs and common areas.
2. Establish an Application Process
Associations must create a straightforward application process for members wishing to install solar energy systems. The process should include a written application form which requires a member to submit their name, the street address of the location where the solar energy system will be installed, the name and contact information of the company that will install the solar energy system, an image that shows the layout of the solar energy system on the member’s home or unit, and a description of the solar energy system to be installed.
The association must respond to the application within specific timeframes. If the association has already adopted a solar energy policy, the response must be given within 30 days of receiving the application. If the application is submitted before the association adopts the required solar energy policy, the response must be given within 120 days of receiving the application. If the association fails to respond within these timeframes, the member is permitted to proceed with the installation of the solar energy system without further approval, and the association cannot impose fines or otherwise penalize the member.
3. Communicate the Policy to Members
Associations must ensure all members are aware of the new policy by making a copy of the policy available within 30 days of adoption, as well as posting the policy on the association’s website (if applicable), and providing it upon request.
4. Address Maintenance and Repair Conditions
The Act allows associations to impose reasonable conditions for the maintenance, repair, replacement, or removal of damaged or inoperable solar energy systems. These conditions must not be more burdensome than those for non-solar projects.
When an Association Can Deny an Application
An association may deny an application to install a solar energy system under certain conditions. These conditions include if: (1) the installation is proposed for a shared roof; (2) the solar energy system will extend above or beyond the roof of the home or unit by more than 6 inches; (3) the system does not conform to the slope of the roof and has a top edge that is not parallel to the roof line; (4) if the system has a frame, support bracket, or visible conduit or wiring that is not in a silver, bronze, or black tone that is commonly available in the marketplace; or (5) the system is proposed to be installed in a fenced yard or patio and will be taller than the fence line. Additionally, an application can be denied if a court has found that the installation of the solar energy system violates a law or if the installed solar energy system does not substantially conform with the member’s approved application.
Penalties for Violation
If an association violates the Act, a member may bring a civil action against the association for damages. If the member prevails, the court may award reasonable attorney fees and the costs incurred by the member in bringing the action.
Conclusion
Ultimately, as a result of this Act, associations with detached residences (which do not have common element roofs in the community) no longer have exclusive architectural control over energy saving improvements and solar energy systems. The Homeowners’ Energy Policy Act represents a significant shift towards promoting energy efficiency and sustainability within homeowners’ associations to the detriment of restrictions contained in associations’ governing documents and a board’s oversight concerning its community’s aesthetics.
Author
Amy M. Smith
Reprinted with permission from MAGWV – Condominium & HOA Lawyers, Michigan