While collecting delinquent condo dues is never really fun for a board of directors, it is essential for any well-run condominium association. One of the most common ways to collect delinquent condo dues is to place a lien for unpaid condo assessments on a co-owner’s unit. If the co-owner fails to pay the delinquent condo dues after a lien is placed on the condominium unit, the condominium association may then move forward with foreclosing on the lien. Prior to foreclosing on a condo association lien, it is important that a condominium association ensures that it provides appropriate notice, and that the lien complies with the requirements of the Michigan Condominium Act. Accordingly, this article will discuss the requirements that a Michigan condominium association must comply with to pursue foreclosure of a condominium lien.
What are the Required Contents of a Condominium Lien?
MCL 559.208(3) of the Michigan Condominium Act sets forth the pre-foreclosure notice requirements as follows:
A foreclosure proceeding may not be commenced without recordation and service of notice of lien in accordance with the following:
(a) Notice of lien shall set forth all of the following:
(i) The legal description of the condominium unit or condominium units to which the lien attaches.
(ii) The name of the co-owner of record.
(iii) The amounts due the association of co-owners at the date of the notice, exclusive of interest, costs, attorney fees, and future assessments.
(b) The notice of lien shall be in recordable form, executed by an authorized representative of the association of co-owners and may contain other information that the association of co-owners considers appropriate.
(c) The notice of lien shall be recorded in the office of register of deeds in the county in which the condominium project is located and shall be served upon the delinquent co-owner by first-class mail, postage prepaid, addressed to the last known address of the co-owner at least 10 days in advance of commencement of the foreclosure proceeding.
MCL 559.208(3)(a) outlines the required contents of the notice, which are the legal description, name of the co-owner of record, and amounts due. The name of the co-owner and the legal description can be obtained from the records of the respective county’s register of deeds. In order to determine the amounts due, a condominium association should keep a ledger detailing the amount of the delinquent assessments, along with any other fees that are permitted to be charged such as late fees, interest, attorney’s fees, and costs.
How to Record a Michigan Condominium Lien
After drafting a lien that complies with MCL 559.208(3), the lien should be recorded in the register of deeds for the county in which that condominium unit is located. While a condominium lien automatically attaches to a condominium unit for unpaid condominium assessments, recording the lien is important for the purposes of providing record notice to third parties. The COVID-19 pandemic has often delayed the recording of a lien, either in-person or by mail. However, many of the register of the deeds allow e-recording to alleviate delays.
Is Actual Notice of a Michigan Condominium Lien Required to Foreclose?
As outlined above, notice of a condominium lien must “be served upon the delinquent co-owner by first-class mail, postage prepaid, addressed to the last known address of the co-owner at least 10 days in advance of commencement of the foreclosure proceeding.” MCL 559.208(3)(c). The question then arises, what if the co-owner does not receive actual notice of the condominium lien? As will be discussed below, the Michigan Court of Appeals has held that MCL 559.208 does not require that actual notice be provided to the co-owner.
In Trademark Properties of Michigan, LLC v Federal National Mortgage Association, 308 Mich App 132, 143 (2014), Fannie Mae asserted that Manor Homes of Troy Association’s (“MHTA”) lien foreclosure “was invalid because MHTA did not provide notice of the lien in accordance with MCL 559.208(3)(c)….” Fannie Mae asserted that it did not receive actual notice. Id. However, the Michigan Court of Appeals pointed out that the Michigan Condominium Act “does not require a showing of actual notice, but instead provides that notice must be sent by first-class mail ‘to the last known address of the co-owner at least 10 days in advance of commencement of the foreclosure proceeding.’” Id. quoting MCL 559.208(3)(c). Therefore, the Court of Appeals held that “MHTA complied with [the notice] requirement by sending notice of the lien to the address listed in the sheriff’s deed that was issued to Fannie Mae.” Id. citing Smith v Cliffs on the Bay Condo Ass’n, 463 Mich 420, 429; 617 NW2d 536 (2000).
Similarly, in Detroit Club Holdings LLC v Edward, unpublished opinion of the Court of Appeals, issued August 13, 2019 (Docket No. 340874), 2019 WL 3809450 *1, Belle Point Estates Condominium Association (“BPEC”) sent the required notice to the co-owner at his address listed on the deed conveying him title to the subject unit. One of the issues in the case was the foreclosure sale purchaser’s inspection notices, pursuant to MCL 600.3237 and MCL 600.3238, as the notices were sent to the subject unit, which it was known the co-owner did not live in, instead of the address used by BPEC for notice of the lien. Id. at *2. The Michigan Court of Appeals remanded the case for further proceedings as to whether the foreclosure sale purchaser complied with the notice requirements under MCL 600.3237 and MCL 600.3238 by making adequate efforts to provide actual notice. Id. at *7.
These cases show that actual notice of the lien is not required, but a condominium association should be able to show where it attempted to provide actual notice and that the address was reasonably believed to be the last known address of the co-owner. A best practice would be to also send the notice via certified mail, return receipt requested, to track the delivery of the notice.
Contact the Michigan Condo Lawyers at Hirzel Law For Assistance Today
In sum, foreclosing on a condominium lien is a powerful tool that a condominium association can use to collect delinquent condominium assessments. However, a condominium association should ensure that it complies with the requirements of MCL 559.208 when placing a lien on a condominium unit for delinquent condominium assessments. The condominium lien should contain the legal description, the name of the co-owner of record, and the amounts due. The notice of lien must then be served on the co-owner at their last known address as determined through reasonable efforts. However, as held by the Michigan Court of Appeals, actual notice is not required.
Chantelle R. Neumann is an experienced creditors’ rights attorney who leads Hirzel Law, PLC’s Collections Department. Ms. Neumann received her Bachelor of Arts degree in Psychology from the University of Michigan. She then obtained her Juris Doctor degree from Thomas M. Cooley Law School, where she graduated cum laude and served as the Comments Editor on the Board of Editors for the Thomas M. Cooley Law Review. Ms. Neumann has been named a Michigan “Rising Star” in creditor debtor rights by Super Lawyers Magazine from 2016 to 2020 – a designation given to no more than 2.5% of the attorneys in Michigan each year. She can be reached at (248) 397-6596 or firstname.lastname@example.org.