The Cost of Collecting Delinquent Condo Assessments in Michigan
One of the most common questions Michigan condominium board members ask is simple and practical: How much will it cost the association to collect unpaid assessments?
The short answer is that, in many cases, a condominium association can recover most or all collection-related costs from the delinquent owner. However, that outcome depends on the master deed and condo bylaws, how the delinquency is resolved, and whether the board follows a consistent collection process. When delinquencies are not quickly resolved, boards may face financial issues that impact operations and property values.
This article outlines the condominium assessment collection process in Michigan, typical costs at each stage, when recovery may be limited, and best practices for boards seeking to minimize out-of-pocket expenses and streamline the collections process.
Michigan Condominium Assessment Collection Process and Costs
Michigan law allows condominium associations to collect assessments as both a personal obligation of the co-owner and through a statutory lien against the unit. These rights are grounded in the Michigan Condominium Act, including MCL 559.206 and MCL 559.208, as well as the master deed and bylaws.
Step 1: Initial Demand Letter
The collection process typically begins with an attorney-issued demand letter. This letter provides the unit owner with 30 days, plus an additional five business days for mailing, to pay the delinquent assessments or dispute the debt.
This initial step usually includes:
- Confirming ownership through a title review
- Conducting a bankruptcy search
- Reviewing the association’s accounting records for accuracy
Estimated Attorney’s Fees and Costs:
- $400 flat fee for attorney’s fees
- Approximately $25 to $50 in related costs
If the delinquency is disputed, additional verification and negotiation may add approximately $250 to $500 in legal fees.
Approximately 50% of delinquent accounts are resolved or enter into payment plans at this stage, making early enforcement both effective and cost-efficient.
Step 2: Notice of Lien
If the delinquent condominium assessments remain unpaid, the condo association may record a condominium lien against the unit under the Michigan Condominium Act to provide record notice of the lien.
This step generally includes:
- Preparing and mailing the notice of lien
- Recording the lien with the register of deeds
- Re-checking title, bankruptcy status, and account balances
Estimated Attorney’s Fees and Costs:
- $350 in flat attorney’s fees
- Approximately $25 to $50 for recording fees and postage
Approximately 30% of remaining assessment delinquencies are often resolved after the lien is recorded.
Step 3: Foreclosure
Depending on the governing documents, a Michigan condominium association may pursue:
- Foreclosure by advertisement
- Judicial foreclosure
- A lawsuit for a money judgment
Foreclosure by advertisement typically involves:
- Preparing statutory notices
- Coordinating posting and publication
- Conducting the foreclosure sale, usually within 30 to 45 days
Estimated Attorney’s Fees and Costs:
- $400 to prepare notices and coordinate posting and publication
- Approximately $100 to $200 to prepare the required foreclosure correspondence
- $750 to prepare foreclosure sale documents
- $700 to $800 in publication fees, sheriff’s fees, recording costs, and county transfer tax
If the association pursues judicial foreclosure or litigation, estimated attorney’s fees are typically higher, and the process takes longer, which is estimated to be as follows:
- $2,500 to $3,500 for uncontested matters
- Significantly more if the matter is contested
Approximately 20% of delinquent accounts proceed to foreclosure, litigation, or bankruptcy after the lien stage.
Michigan Condominium Associations Can Collect Collection Costs
Whether a condominium association ultimately pays any portion of these costs depends on:
- Whether the governing documents authorize recovery of legal and collection expenses
- How and when the delinquency is resolved
MCL 559.208 of the Michigan Condominium Act and most Michigan condominium documents allow recovery of attorney’s fees, costs, interest, and related charges. While recovery of attorney’s fees and costs is not guaranteed in any case, and the condominium association pays for attorney’s fees and costs as the matter progresses, Hirzel Law has approximately a 98% success rate of recovering the full amount of the delinquency, along with attorney’s fees and costs, through our collections process.
Waiver Requests and Fiduciary Responsibility
Delinquent owners sometimes request waivers of:
- Attorney’s fees
- Collection costs
- Late charges
- Interest
- Fines
Boards should approach these requests cautiously. While there may be limited circumstances where compromise makes financial sense, condominium boards have a fiduciary duty to the association as a whole. Waivers should be the exception, not the rule, and should never undermine consistent enforcement.
As a best practice, boards should:
- Adopt a formal, written collection policy
- Apply that policy consistently
- Prioritize recovery of all assessments and actual out-of-pocket attorney’s fees and costs so the condominium association is made whole
Waiving assessments or attorney’s fees and costs already paid by the association typically creates financial strain on the association and sets a bad precedent for collecting future assessments that the association relies on to operate.
When Condo Collection Costs May Not Be Recoverable
There are situations where full recovery is unlikely. For example:
- If a lender forecloses, the purchaser typically is not responsible for unpaid assessments beyond limited statutory amounts
- The association may pursue a money judgment against the former owner, but many owners who have been subject to foreclosure may not be collectible
- Former owners who lose their unit to foreclosure often cannot often satisfy a judgment
In these cases, boards should weigh the cost-benefit of continued collections against the likelihood of recovery. Writing off uncollectible debt may sometimes be the most financially responsible decision after initial collection efforts have proved unworkable.
Conclusion: Be Proactive to Reduce Risk
Delinquent assessments are an unavoidable reality for Michigan condominium associations. By acting early, confirming that governing documents authorize recovery of collection costs, and enforcing a consistent written collection policy, boards can improve recovery rates while reducing financial risk. When questions arise about collection procedures, waivers, or enforcement options, obtaining legal guidance early can help associations protect their finances and comply with Michigan law.
If your board needs help reviewing collection procedures or recovering unpaid assessments, Hirzel Law, PLC is here to help.
