A common misconception among delinquent condominium co-owners is that once a condominium lien is recorded against their unit, there is nothing they need to do about it if they do not intend to sell or refinance their property. Unfortunately, this assumption is incorrect and can lead to significant financial consequences.
Under the Michigan Condominium Act, unpaid condominium assessments create a statutory lien against the unit, which allows a condominium association to ultimately foreclose on the property if the delinquent balance remains unpaid. This authority comes from MCL 559.208, which provides Michigan condominium associations with an effective legal mechanism to recover unpaid assessments. The Michigan Condominium Act allows condominium associations to foreclose on the lien either by foreclosure by advertisement or by judicial foreclosure. This article outlines the step-by-step process for foreclosing a condominium lien in Michigan under MCL 559.208.
Michigan Condominium Lien Foreclosure Process
Before foreclosing a condominium lien, the association must first comply with the statutory requirements contained in the Michigan Condominium Act.
Preparing the Notice of Lien
The first step in the foreclosure process is preparing the notice of lien. Michigan law allows condominium associations to collect unpaid assessments through a statutory lien against the unit. These rights arise under the Michigan Condominium Act, including MCL 559.208, as well as the condominium’s master deed and bylaws. Under MCL 559.208(3), the notice of lien must include:
- The legal description of the condominium unit
- The name of the co-owner(s) of record
- The amount due to the condominium association as of the date of the notice
Although condominium associations are often entitled to recover interest, attorney fees, costs, and future assessments, these amounts should not be included in the total amount listed in the notice of lien. The notice of lien must also be signed by an authorized representative of the condominium association and prepared in recordable form. An authorized representative may include the association’s attorney or a member of the board of directors.
Recording the Notice of Lien
After the notice of lien has been prepared, it must be recorded with the register of deeds in the county where the condominium unit is located. Recording the condominium lien creates public notice that the condominium association has a claim against the property for unpaid assessments and helps protect the association’s rights if the unit is sold or refinanced.
Mailing the Notice of Lien to the Co-owner
Once the notice of lien has been recorded, the condominium association must send a copy to the delinquent co-owner. Under MCL 559.208(3)(c), the notice must be mailed by first-class mail with postage prepaid. The notice must be mailed at least ten days before the condominium association can initiate a foreclosure action.
Methods of Foreclosing a Condominium Lien
After the required ten-day notice period has expired and the balance remains unpaid, the condominium association may proceed with foreclosure. Under MCL 559.208(1), a condominium lien may be foreclosed in one of two ways:
- Foreclosure by advertisement
- Judicial foreclosure
Foreclosure by Advertisement
Foreclosure by advertisement is a non-judicial foreclosure process, meaning the condominium association does not need to file a lawsuit before selling the property.
Preparing the Foreclosure Notice
If foreclosure by advertisement is used, the condominium association must prepare a notice of condominium lien foreclosure sale that complies with Michigan law. Under MCL 600.3212, the foreclosure notice must include several specific pieces of information, including:
- The names of the parties to the lien
- The date the lien was recorded and the county where it was recorded
- The amount claimed to be due on the lien as of the date of the notice
- Legal description of the condominium unit that is subject to foreclosure
- The date, time, and location of the sheriff’s sale
- The length of the redemption period that will apply after the sale
- The name of the entity that is foreclosing the lien
Preparing the notice carefully is important because foreclosure by advertisement is a statutory process. If the required information is missing or incorrect, the foreclosure may be challenged.
Publishing the Foreclosure Notice
After the foreclosure notice is prepared, it must be published in a local newspaper. Under MCL 600.3208, the foreclosure notice must be published once each week for four consecutive weeks in a newspaper published in the county where the property is located.
Posting the Foreclosure Notice
In addition to publication, the foreclosure notice must also be posted on the property. Under MCL 600.3208, a copy of the notice must be posted in a visible place on the premises within 15 days after the first publication. Many condominium association governing documents include an additional requirement that the association must notify the co-owner that the association will be pursuing foreclosure by advertisement and advise the co-owner that they are permitted to request a judicial hearing by bringing suit against the association.
Conducting the Sheriff’s Sale
After the publication and posting requirements are satisfied, the property is sold at a sheriff’s sale. Under MCL 600.3216, the sale must be conducted by the county sheriff or deputy sheriff at public auction. Following the sale, the purchaser receives a sheriff’s deed, which is subject to the co-owner’s right of redemption.
Judicial Foreclosure
Judicial foreclosure involves filing a lawsuit asking the court to order the sale of the condominium unit to satisfy the unpaid assessments.
Filing a Complaint in Circuit Court
The judicial foreclosure process begins when the condominium association files a complaint in circuit court in the county where the property is located. The complaint typically asks the court to:
- Confirm the validity of the condominium lien
- Determine the amount owed to the association
- Enter judgment allowing the property to be sold
The lawsuit may also request a money judgment against the co-owner for unpaid assessments, attorney’s fees, and other costs permitted by the condominium documents.
Serving the Delinquent Co-Owner
After the complaint is filed, the delinquent co-owner must be served with the summons and complaint. Service must be completed in accordance with the Michigan Court Rules governing service of process in civil cases. Once served, the co-owner has the opportunity to respond and contest the foreclosure action.
Court Proceedings and Judgment
If the co-owner contests the lawsuit, the matter proceeds through the court process. This may include motions, hearings, or settlement discussions. If the court determines that the condominium lien is valid and the assessments remain unpaid, the court will enter a judgment of foreclosure authorizing the sale of the property.
Foreclosure Sale
Following the court’s judgment, the property will be scheduled for a foreclosure sale conducted by the sheriff. Similar to foreclosure by advertisement, the unit is sold at public auction to the highest bidder.
Redemption Rights After Foreclosure
Even after the foreclosure sale occurs, the delinquent co-owner still has the right to reclaim the property during the redemption period. Under MCL 559.208(2), the redemption period is generally six months, unless the property is determined to be abandoned, in which case the redemption period may be shortened to one month.
To redeem the property, the co-owner must pay:
- The foreclosure sale price
- Applicable interest
- Assessments that became due during the redemption period
Upon payment of the redemption amount, the redeeming party is issued a certificate of redemption. The certificate of redemption is recorded with the register of deeds, and the sheriff’s deed recorded at the foreclosure sale becomes void.
Be Proactive When Enforcing Michigan Condominium Liens
By following the procedures outlined in MCL 559.208 and the related foreclosure statutes, the association can recover unpaid assessments while protecting the financial stability of the community. Acting promptly and ensuring compliance with statutory requirements can help minimize disputes and improve the likelihood of recovery. When questions arise regarding condominium lien enforcement or the foreclosure process, obtaining legal guidance early can help associations navigate the process and ensure compliance with Michigan Law. If your board needs assistance with recording or foreclosing a condominium lien, Hirzel Law, PLC, is here to help.
