When buying a condominium in Michigan, one crucial question often arises: Who is responsible for unpaid assessments—the seller or the buyer? Michigan law, specifically MCL 559.211, does provide some protection for buyers, but a recent case from the Michigan Court of Appeals, Holcomb v. Harbour Pointe Condo. Ass’n, makes clear that this protection only goes so far. It does not extend to future assessments that have not yet been incurred at the time of sale.
Understanding MCL 559.211
MCL 559.211 of the Michigan Condominium Act governs the handling of unpaid assessments at the time a unit is sold. It states that all unpaid charges—assessments, interest, late fees, fines, costs, and attorney fees—must be settled either through the sale proceeds or by the buyer, unless those debts are subordinate to taxes or a first mortgage. Importantly, a buyer can avoid personal liability for these charges by requesting a written statement from the association listing any unpaid amounts. However, this request must be made at least five days before closing. If no request is made, the buyer assumes responsibility for any outstanding debts related to the unit, regardless of whether they were disclosed.
The Holcomb Case: A Clarification on Future Assessments
In Holcomb, the plaintiffs purchased a condo unit that had unpaid assessments. Before closing, they received a ledger from the association showing the current balance, along with a handwritten note referencing two remaining assessment installments. After the sale, the association billed them for those remaining installments. The buyers argued that because these future payments weren’t clearly detailed in the payoff information, the association had violated MCL 559.211. The Court disagreed. It found that the statute only requires disclosure of amounts due at the time of sale—not amounts that would become due afterward. It emphasized that a seller cannot be held liable for charges assessed after the property has changed hands. Additionally, the court noted that there was no evidence the Holcombs had formally requested the payoff statement under MCL 559.211. Without that request, they remained liable for all unpaid amounts, including any that were not disclosed.
What This Means for Buyers and Associations
For buyers, Holcomb reinforces the importance of formally requesting a payoff statement before closing. Without it, buyers take on full liability for any unpaid assessments—even those they didn’t know about. However, even with a proper request, future assessments (those billed after closing) remain the buyer’s responsibility. For condominium associations, the ruling provides clarity. They are not required to estimate or disclose future assessments in a statutory payoff letter. Their obligation is limited to stating what is currently due. Still, for the sake of transparency, associations should clearly distinguish between current obligations and those scheduled for future billing to avoid confusion or disputes.
Conclusion
The Holcomb decision affirms a narrow interpretation of MCL 559.211. The statute protects buyers from being blindsided by past or current debts tied to the condo unit—but it does not shield them from future assessments. For both buyers and associations, this ruling highlights the importance of clear communication, proper documentation, and compliance with statutory procedures during the sale of a condominium. When questions arise about financial obligations—especially in transactions involving installment-based or special assessments—consulting with legal counsel remains the best way to protect your interests. Here are a few takeaways for community association boards and managers:
- Associations are not required to include future assessments in payoff statements under MCL 559.211.
- Buyers are liable for all future obligations that arise after closing, even if related to assessments first levied while the seller owned the unit.
- To limit exposure, purchasers should always request a formal payoff statement in compliance with the statute.
- Associations should ensure that payoff statements clearly reflect only those amounts currently due and avoid making statements that could be construed as binding estimates of future obligations.
This case underscores the importance of proper due diligence during the purchase process and careful attention to the procedural requirements of MCL 559.211.
