One thing that many aspiring home or condo owners in Michigan fail to take into consideration before joining a homeowner’s association is the very real and costly consequences of failing to pay their dues. According to Section 559.208 of the Michigan Condominium Act, a homeowner’s association may foreclose on a unit or home if a co-owner is 30-days delinquent on HOA fees and dues. As a member of the HOA, it is important that you understand your association’s responsibilities during the foreclosure process.
Per state law, your HOA must perform a foreclosure in the same manner as any traditional lender would. This means that the HOA must first serve notice of lien to the co-owner, thereby giving him or her the chance to repay past dues. The lien notice must meet certain requirements as well. Those include a legal description of the home or condo to which the lien is attached, the name of the co-owner on record and the total amounts due to the HOA at the time of the notice. Though your HOA can assess reasonable interest, costs, expenses and attorney fees related to foreclosure, it should not include these expenses in the total it lists on the lien.
An authorized representative of your homeowner’s association must draft the lien in recordable form. The HOA must then record a notice of the lien of the office of register of deeds in the county in which the community is located. The office will then serve the notice to the delinquent homeowner by first class mail and within at least 10 days of the intended date of foreclosure. At the foreclosure sale, your association has the right to bid on the home or unit and acquire, lease, hold, mortgage or convey it, so long as it does so on behalf of all co-owners.
The law does grant delinquent co-owners a six-month redemption period from the date of the sale. What this means is that if the co-owner repays all past dues, plus additional costs, within six months, he or she may redeem the property. However, the co-owner loses this right if he or she abandons the property, in which case, he or she only has one-month to recover the unit.
You should not use this article as legal advice. It is for educational purposes only.