How Much Does It Cost to Collect Delinquent Condominium Assessments in Michigan?
How much money will it cost your Michigan condominium association to collect delinquent assessments? The short answer is…hopefully nothing, provided the association’s governing documents allow collection costs to be charged back to the delinquent owner.
Most Michigan condominium bylaws and master deeds permit associations to recover the costs of collection, including attorney fees, from the unit owner in default. As long as those fees and costs are properly added to the outstanding balance and paid in full, the association can recoup its expenses. However, not every delinquent account resolves without financial risk.
This article outlines the typical condominium assessment collection process in Michigan, the associated costs, circumstances where recovery may be limited, and best practices for minimizing out-of-pocket expenses.
For more information on condominium assessment enforcement, visit Hirzel Law’s Condominium Collection Practice Area:
https://hirzellaw.com/practice-areas/condominium-law/condocollections/
The Michigan Condominium Collection Process and Typical Costs
Initial Demand Letter
The collection process typically begins with an attorney-issued demand letter providing the unit owner with 30 days plus five business days to pay the outstanding balance or dispute the debt.
This step typically includes:
- Reviewing title to confirm the owner of record
- Conducting a bankruptcy search to identify any automatic stay
- Reviewing the unit’s accounting records for accuracy
Typical fees at this stage range from $300 to $500. If the debt is disputed, the association must provide verification before collection can proceed, which generally adds $325 to $500 in fees.
Approximately 50% of delinquent accounts are resolved or enter into payment plans at this stage.
Additional guidance on condominium collections can be found in Hirzel Law’s broader Condominium Law Practice Area:
https://hirzellaw.com/practice-areas/condominium-law/
Notice of Lien
If the delinquency continues, the association may proceed with recording a notice of lien under Michigan law.
This step typically involves:
- Preparing and mailing the notice of lien
- Recording the lien with the county register of deeds
- Re-reviewing title, bankruptcy status, and accounting records
The letter enclosing the notice of lien usually provides the unit owner 10 to 14 days to resolve the balance.
Additional costs generally range from $300 to $500, and approximately 30% of remaining delinquencies are resolved at this stage.
Associations should ensure their governing documents clearly authorize lien enforcement. Boards and managers can find practical governance guidance in Hirzel’s Handbook for Michigan Condominiums:
https://hirzellaw.com/mihandbook/
Foreclosure or Court Action
The remaining 20% of delinquent accounts typically proceed to foreclosure, bankruptcy, or litigation.
Depending on the association’s governing documents and the specific circumstances, a Michigan condominium association may pursue:
- Foreclosure by advertisement
- Judicial foreclosure
- A lawsuit seeking a money judgment
Foreclosure by advertisement typically includes:
- Preparing foreclosure notices
- Coordinating required publication and posting
- Preparing sale documents and conducting the foreclosure sale
A foreclosure sale may occur within 30 to 45 days after submission of the foreclosure notice.
Typical fees and costs for foreclosure by advertisement range from $1,800 to $2,250.
If the association pursues judicial foreclosure or a money judgment:
- Uncontested cases generally range from $2,500 to $3,500
- Contested cases can result in significantly higher costs
Even after a judgment is entered, additional publication, posting, and sale expenses still apply.
Cost Considerations for Michigan Condominium Associations
Whether an association incurs out-of-pocket expenses depends on:
- Whether collection costs are chargeable to the delinquent owner
- How and when the outstanding balance is resolved
In some cases, boards may agree to accept less than the full balance to resolve an account. Unit owners frequently request waivers of:
- Attorney fees
- Collection costs
- Interest
- Late charges
- Fines
To ensure consistency and fairness, associations should adopt a formal written collection policy addressing how waiver requests are handled. For help drafting or reviewing collection policies, associations may consult experienced Michigan condominium attorneys:
https://hirzellaw.com/practice-areas/condominium-law/
When considering whether to waive any portion of a delinquent balance, boards should focus first on amounts that are not actual association expenses, such as interest, late charges, or fines. Assessments should never be waived, and actual collection costs should only be waived in limited, justifiable circumstances.
[1] Link to A Co-owner Filed Bankruptcy, What Now? – The Michigan Community Association Law Blog
When Collection Costs May Not Be Recoverable
There are circumstances in which a Michigan condominium association may be unable to recover all collection costs.
For example:
- If a mortgage lender forecloses, the purchaser at the foreclosure sale is generally not responsible for the prior owner’s unpaid assessments
- The association’s remaining option may be to pursue a money judgment against the former owner
Because owners who have been foreclosed upon often lack the means to satisfy a judgment, it may be more economical for the association to write off the balance rather than incur additional legal expenses that may never be recovered.
Best Practices for Managing Delinquent Assessments in Michigan
Although boards have a fiduciary duty to collect assessments, they must also ensure that collection efforts are financially sound and aligned with their governing documents.
Michigan condominium associations should:
- Confirm governing documents clearly authorize recovery of collection costs
- Consider amending bylaws or master deeds if cost recovery provisions are unclear
- Adopt and consistently enforce a written collection policy
- Clearly communicate that delinquent owners are responsible for actual collection costs, including foreclosure expenses
- Avoid waiving real expenses without legitimate justification
