If you live in a condo, single-family home, or townhome that’s part of a common interest development in Michigan, you’re most likely responsible for paying dues and assessments to a condominium association (COA) or homeowners’ association (HOA). 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 liens and foreclosures in Michigan.
The Condominium Act (Mich. Comp. Laws §§ 559.101 through 559.276) governs COA activities in Michigan.
Michigan doesn't have comprehensive statutory scheme that regulates HOAs. But many 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 through 450.2151.)
The rules regarding the operation of the HOA, including those regarding assessments liens, can be found in the association’s governing documents, like the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
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 or special assessments (collectively referred to as “assessments”). Once a homeowner becomes delinquent on the assessments, a lien will usually automatically attach to that homeowner's property.
State law and 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:
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:
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?)
If you default on the assessments, the COA or HOA might foreclose. A common misconception is that the association can't foreclose if you're current with your mortgage payments. But an association’s right to foreclose has nothing to do with whether you’re paid up on your home loan.
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 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:
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.
If you’re behind in assessments and facing a COA or HOA foreclosure in Michigan, consider consulting with a local attorney to discuss all legal options available in your particular circumstances.