Michigan Condo & HOA Law

With the circumstance of economic conditions being what they are in the State of Michigan, many condominium and community associations are concerned about their ability to collect monthly or periodic assessments. Bankruptcies and foreclosures are at an all time high in the state of Michigan with Chapter 7 and Chapter 13 filings growing at an annual rate of 10%(1) , and the State rating third in the nation in foreclosures(2). Even though economic times are tough, condominium and community associations, like any other corporation, must maintain their cash flow, which is accomplished by collecting monthly assessments from their co-owners. The most effective way of doing this is through a methodical, and sometimes, an aggressive assessment collection policy.

Many condominium and community association board members are reluctant to pursue an aggressive collection policy with their neighbors when they know their neighbors may be experiencing an economic crunch. While our firm can certainly understand their angst in making bad situations worse for their neighbors, the bottom line is that the board of directors has a fiduciary duty to make sure the “corporation” is able to continue operations, and if the board does not pursue a methodical, aggressive collection policy they may be creating a bad situation for all of their neighbors.

It is our firm’s advice to condominium and community associations to seek counsel from a knowledgeable condominium and community association lawyer who can guide them through the murky waters of assessment collection during economically troubled times.