One of the most common questions Michigan condominium boards and property managers face is whether a particular expense can be charged back to an individual co-owner rather than being paid by the association as a common expense.
The answer often depends on two things: what the Michigan Condominium Act permits, and what the condominium’s governing documents specifically authorize. While some costs can be assessed directly against a co-owner, others cannot unless there is clear authority in the master deed or bylaws.
Understanding the difference can help associations avoid disputes, collection challenges, and potential legal issues. This blog discusses several of the most common chargebacks encountered in condominium collection matters, including attorney fees, collection costs, damages to common elements, insurance deductibles, and fines.
What Gives a Michigan Condominium Association Authority to Charge Costs Back?
Every chargeback to a co-owner must rest on authority, not on the board’s sense of fairness. That authority comes from two sources working together: the Michigan Condominium Act and the condominium’s master deed and bylaws. The Act sets the outer limits of what an association may do, while the governing documents determine whether a specific charge is actually permitted in a given community. When neither source authorizes a charge, the association generally cannot assess it against the co-owner, no matter how reasonable the expense may appear.
Can a Condominium Association Charge Attorney Fees Back to a Co-Owner?
Many Michigan condominium bylaws contain provisions that allow the homeowners association to recover reasonable attorney’s fees and costs incurred in collecting delinquent assessments. These provisions often work in conjunction with Section 206 of the Michigan Condominium Act, MCL 559.206, which allows associations to recover costs and reasonable attorney fees when authorized by the condominium documents.
Common examples include:
- Initial demand letter fees
- Title search expenses
- Debt validation costs
- Notice of lien preparation costs
- Lien recording fees
- Foreclosure-related attorney fees
- Court filing fees
A homeowners association should not assume every legal expense is automatically recoverable. The governing documents may limit the types of fees that can be charged or require that fees be reasonable and actually incurred.
For example, in Highfield Beach at Lake Michigan v Sanderson, 331 Mich. App. 636, 954 N.W.2d 231 (202) the Michigan Court of Appeals held that MCL 559.206(b) does not create an independent right to attorney’s fees. Rather, attorney fees are recoverable only when the condominium documents expressly authorize their recovery. The Court held that attorney fees were recoverable because Highfield Beach at Lake Michigan’s bylaws expressly authorized the association to recover the costs of reasonable attorney fees when it successfully pursued an enforcement action. The decision reinforces that a condominium association’s ability to charge attorneys’ fees back to a co-owner depends on the specific language contained in its governing documents. Because collection charges are often included in a lien or foreclosure action, ensuring they are properly authorized is critical.
Charging a Co-Owner for Damage to the Common Elements
Another common charge-back involves damage caused by a co-owner, tenant, family member, or guest. These situations often arise in condominium communities because multiple individuals have access to units and common elements, and responsibility for damage must often be traced back to the source of conduct.
Many condominium documents provide that a co-owner is responsible for damage to common elements caused by the co-owner’s actions or the negligence of persons for whom the co-owner is responsible. When the master deed or bylaws contain such a provision, the homeowners association may have the authority to assess the cost of repairs directly against the responsible co-owner rather than spreading it across all co-owners as a common expense.
Common examples include:
- Damage to common hallways during a move
- Broken common-element doors, gates, or security equipment
- Landscaping damage caused by a resident or guest
- Water damage to common areas resulting from conditions originating within a unit
Boards should thoroughly document the damage, obtain repair invoices, and maintain records establishing the connection between the damage and the responsible co-owner. The ability to charge these costs back depends on both clear documentation of causation and specific authority in the governing documents. Taking these steps at the outset helps ensure that repair costs are properly allocated and improves the likelihood that the charge will be enforceable if collection action becomes necessary.
When Can an Association Charge an Insurance Deductible Back to a Co-Owner?
Many condominium associations maintain insurance policies covering portions of the condominium property. When a loss occurs, the association may be required to pay a deductible before insurance proceeds become available. Whether that deductible can be charged back to a particular co-owner largely depends on the governing documents and the circumstances of the loss.
Governing documents commonly allow a homeowners association to assess the deductible against a co-owner when:
- The loss originated within the co-owner’s unit or from the co-owner’s negligence
- The co-owner violated the governing documents, or the co-owner’s actions caused the association’s insurance claim
Because condominium insurance deductibles can be substantial, associations should review the specific deductible language contained in their documents before imposing the charge on a co-owner.
Imposing Fines for Rule Violations in a Michigan Condominium
Homeowners associations commonly impose fines for violations of the governing documents. Examples may include:
- Parking violations
- Pet-related violations
- Noise violations
- Failure to maintain the limited common elements
- Improper use of common areas
Unlike assessments, fines are not automatically enforceable simply because a board wishes to impose them.The association must have authority to levy fines under its governing documents, and it must follow the required procedures. Pursuant to MCL 559.206(c), violation fines may be imposed only after a hearing is scheduled and held.
An association may encounter challenges if the governing documents do not clearly authorize fines or if procedural requirements are not followed.
In Channel View E. Condo. Ass’n v. Ferguson, unpublished per curiam opinion of the Michigan Court of Appeals, issued February 25, 2021 (Docket No. 351888), the Court addressed a condominium association’s attempt to enforce fines against a co-owner for violations of the condominium documents. The court recognized that condominium associations may impose fines when authorized by the governing documents, but emphasized that such fines must be imposed in accordance with procedures set forth in those documents, including notice and an opportunity for the co-owner to be heard.
What Costs Cannot Be Charged Back to a Co-Owner?
A common mistake is assuming that any expense related to a co-owner can be assessed back to that individual. Problems frequently arise with:
- Late fees that are not authorized by the bylaws
- Administrative fees that are not authorized by the bylaws
- Charges imposed without following required procedures
If the authority is unclear, the association should contact legal counsel before adding to a ledger or pursuing collection.
Best Practices for Condominium Board Members and Property Managers
Before assessing any chargeback to a co-owner, boards and managers should:
- Review the master deed and bylaws
- Verify that the charge is expressly authorized
- Follow any required notice or hearing procedures
- Maintain documentation supporting the expense, including invoices and correspondence.
Supporting documentation should include photographs of damage, violation notices, board resolutions, contractor estimates, repair invoices, correspondence with the co-owner, and any insurance claim materials. A strong document is often the difference between a collectible charge and a disputed ledger entry.
Taking these steps can reduce disputes and improve the likelihood that the charge will be enforceable if collection action becomes necessary. Even when a charge seems reasonable from a practical standpoint, it cannot be imposed unless the governing documents provide clear authority.
Contact a Michigan Community Association Attorney
If your association has questions about whether certain costs may be assessed against a co-owner, or if you need assistance with collecting delinquent assessments, liens, or foreclosure matters, our experienced condominium collections attorneys at Hirzel Law are here to help. Contact us today to discuss your association’s collection and enforcement needs.
