If you live in a condominium, single-family house, or townhome that is part of a common interest development in Michigan, you are most likely responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA) to cover the expenses of the community. If you don’t pay, in most cases the COA or HOA can get a lien on your property that could lead to a foreclosure.
Read on to learn more about COA and HOA foreclosures in Michigan.
Michigan COA Lien Laws
The Condominium Act (Mich. Comp. Laws §§ 559.101 through 559.276) governs COA activities in Michigan.
Michigan HOA Lien Laws
Most HOAs in Michigan are incorporated as nonprofit corporations and are subject to the state statutes that govern such corporations, which can be found in the Michigan Nonprofit Corporation Act (Mich. Comp. Laws § 450.2101 et seq.)
The rules regarding the operation of the HOA, including those regarding assessments liens, can be found in the association’s governing documents such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). (Find out more about what's in your HOA CC&Rs and other relevant documents in Nolo’s article Before Buying: How to Read the CC&Rs or Homeowners' Association (HOA) Documents.)
How COA and HOA Liens Work
Almost all COAs and HOAs have the power to place a lien on the property if the homeowner becomes delinquent in paying the monthly dues and/or any special assessments (collectively referred to as “assessments”) that are used to cover the costs associated with the association’s management. Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property from the time that the assessment came due.
Charges the COA or HOA May Include in the Lien
State law and/or the COA or HOA’s governing documents will usually set out the type of charges that may be included in the lien. For example, a COA in Michigan is permitted to include the following in its lien pursuant to state law:
- late charges for any past-due assessments
- collection costs
- advances made by the association for taxes or other liens
- fines in accordance with the COA documents
- interest, and
- reasonable attorney’s fees and costs (Mich. Comp. Laws § 559.208(1)).
To find out which charges an HOA in Michigan may include in its lien, check the association's governing documents.
A COA’s lien is prior to all other liens, except for:
- state or federal tax liens on the condominium unit, and
- a first mortgage of record (unless the mortgage is recorded after the COA records its lien) (Mich. Comp. Laws § 559.208(1)).
To find out the priority of an HOA lien, check the association’s governing documents. (Learn what lien priority is and what happens to a first mortgage in an HOA foreclosure in What happens to my mortgages if the HOA forecloses on its lien?)
COA and HOA Foreclosures in Michigan
If you default on the assessments, the COA or HOA can foreclose. A common misconception is that the association cannot foreclose if you are current with your mortgage payments. However, the association’s right to foreclose has nothing to do with whether you are current on your mortgage payments. (Learn more about HOA liens and foreclosure.)
A COA may foreclose its lien judicially or nonjudicially (Mich. Comp. Laws § 559.208(1), (2)). The foreclosure will be in the same manner as a foreclosure of a real estate mortgage, except to the extent the condominium documents provide otherwise (Mich. Comp. Laws § 559.208(2)). (Learn more about general foreclosure laws and procedures in Michigan.)
In order to foreclose, the COA must record the lien in the county in which the condominium is located and serve notice of the lien to the unit owner (by first-class mail, postage prepaid) at least ten days before initiating the foreclosure proceeding (Mich. Comp. Laws § 559.208(3)).
If the COA forecloses, the redemption period is:
- six months from the date of sale, or
- one month from the date of sale, if the property is abandoned (Mich. Comp. Laws § 559.208(2)). (Learn more about the right of redemption after an HOA foreclosure.)
To find out the specific notice and foreclosure procedures that the HOA must follow if you fall behind in payments, read the association’s governing documents.
What to Do if You Are Facing Foreclosure by a COA or HOA in Michigan
If you are facing a COA or HOA foreclosure, you should consult with an attorney licensed in Michigan to discuss all legal options available in your particular circumstances. (See our HOA Foreclosure topic page for articles on HOAs, possible options to catch up if you are delinquent in payments, how bankruptcy can help discharge dues, HOA super liens, and more.)