Should You Update Your Condominium or HOA Lien for New Assessments?
When a condominium or homeowners association (HOA) in Michigan imposes a new assessment, a common question arises: does the existing lien need to be updated to reflect the new charges? The answer depends on several factors, including the type of assessment and the provisions outlined in the association’s governing documents.
In most cases, condominium liens in Michigan cover both past and future assessments. However, for significant special assessments, it’s advisable to update or amend the lien. Below is an overview of how this applies to both condo and HOA liens in Michigan.
Condominium Liens in Michigan: Do You Need to Update for New Assessments?
In Michigan, a condominium lien typically secures both past-due and future assessments, provided the assessments are part of the association’s regular budget or can reasonably be anticipated. As such, when a new assessment is levied, the existing lien may automatically cover future charges unless the governing documents specify otherwise.
However, for substantial special assessments—such as a major capital project like a $100,000 roof replacement—it’s generally recommended to file a new or amended lien to reflect the updated amount.
Why Should You Amend or Update the Lien?
1. Priority and Security: A lien ensures the association’s claim to the property is protected. Updating or amending the lien to reflect the correct amount is essential to maintain the association’s priority in case of foreclosure or a sale of the property.
2. Public Notice: An updated or amended lien publicly notifies third parties—such as title companies, potential buyers, and lenders—of the new financial obligations. This is particularly important during real estate transactions.
3. Avoid Title Disputes: If the lien is not updated, title companies or prospective buyers may be unaware of the larger amount owed, which could lead to complications during the closing process.
Example: A $100,000 Roof Assessment
Suppose your condominium association imposes a $100,000 special assessment for a new roof. Even if the original lien covers future assessments, filing a new lien is advisable to ensure the public record reflects the full amount due. This will help prevent confusion at closing and ensure the lien accurately represents the updated amount owing.
HOA Liens in Michigan: Do You Need to Update for New Assessments?
For homeowners associations, whether a lien automatically secures future assessments depends on the language of the association’s governing documents (such as the bylaws or covenants). If the documents explicitly state that liens cover future assessments, then the lien will encompass new charges as they arise. However, if the governing documents do not address future assessments, the association may need to file a new or amended lien to reflect any new obligations.
When Should You Amend or Update the HOA Lien?
- Review Governing Documents: Start by reviewing the HOA’s governing documents to determine if liens automatically cover future assessments. If they do not, a new or amended lien may be required for new charges.
- File a New Lien for Large Special Assessments: For major one-time assessments, such as a $50,000 street repair or a community clubhouse renovation, it is usually best to file a new or amended lien to ensure the financial obligation is properly recorded.
Conclusion
In Michigan, condominium liens generally cover both current and future assessments. However, when significant special assessments are imposed—such as a $100,000 roof replacement—it is advisable to update or amend the lien to reflect the new amount. For homeowners associations, whether future assessments are automatically covered by the lien depends on the governing documents. In cases of large special assessments, filing a new or updated lien is often necessary.
To ensure compliance and protect your association’s financial interests, it’s always wise to consult experienced legal counsel before making any decisions regarding lien updates. Hirzel Law, PLC is here to help you with the guidance and support you need.
Sarina Saravi obtained her Bachelor of Arts degree with a specialization in Criminology and a minor in Sociology with High Distinction from the University of Toronto in 2018. She continued her academic journey at Michigan State College of Law where she pursued her Juris Doctorate (J.D.) degree and graduated Cum Laude in 2023. During her time at MSU College of Law, Ms. Saravi was a diligent student and actively engaged in various roles and responsibilities. She served as a Research Assistant, contributing to legal research that pushed the boundaries of knowledge in the field. Her commitment to academia extended to her roles as a Teaching Assistant for both Research, Writing, and Advocacy, and as an Advocacy Teaching Assistant, where she helped nurture the next generation of legal minds. Beyond her professional commitments, Ms. Saravi is deeply committed to giving back to her community. She volunteered at Expungement Fairs, organizing two events, one with Legal Services of Eastern Michigan in July 2021, and another with the MSU Law Criminal Defense Association in January 2023. Her dedication to helping individuals with legal matters demonstrates her unwavering commitment to justice. She may be reached at (248) 986-2290 or ssaravi@hirzellaw.com.
