Michigan Condo & HOA Law

With the condition of the real estate market throughout the State of Michigan and the rate of foreclosures constantly rising, it is imperative that prospective buyers and sellers keep their eyes open for real estate fraud. There are three types of major fraud for which to be on the look-out. One such type of fraud is home equity/identity fraud. A forged deed is recorded to give the appearance that the perpetrator has acquired ownership of the property. The perpetrator uses the equity in the property as collateral to borrow money. No payments are made on the new loan(s) and the true owner could face foreclosure.

Another type of fraud involves home renovation and mortgage fraud. Contractors offer to do home improvement work or lenders offer a special "low interest financing" but do not deliver what was promised. Homeowners are left with partially completed substandard construction, or a mortgage payment that is higher than expected.

Finally, real estate investment foreclosure fraud involves investors being lured into buying property that is supposedly facing foreclosure for pennies on the dollar. Quit claim deeds and other documents are forged to give the appearance that a property is being sold in order to avoid foreclosure. Be on the look out for these types of fraudulent situations. It is best to contact a knowledgeable attorney before buying or selling your home.

Posted by Robert Meisner at 4:05 PM | Permalink

Not long ago I heard from a treasurer of a condo association board who was frustrated because her association had never passed an operating budget before the beginning of the year. They finally adopted a proposed budget which did not include a retroactive collection of assessments for the current year. With the current year's budget, the president made a unilateral decision to advise owners that there would be a retroactive assessment. In complete frustration, the treasurer asked if one person could change the resolution of the board after it is passed.

The president alone, or any other board member for that matter, cannot make policy decisions for the association. Those decisions must be made by the board and the president only has authority to carry out the resolutions of the board. However, if the board members choose to allow the president to take these actions without their consent, they may be held accountable for the acts or omissions of the president. Board members must comply with the basic requirements of the condominium and corporate bylaws and if they require that a budget be established before the annual assessment is levied, then that must be done. In the case of our frustrated treasurer, the president was correct in recognizing that the bylaws require the board to adopt an annual budget so the late budget should cover the entire year.

Posted by Robert Meisner at 7:46 AM | Permalink

I recently heard from a co-owner who was concerned that her Association treasurer was not spending money wisely. The more she spoke I learned that the treasurer is the only officer to sign checks for the Association expenses, and furthermore, the owners do not receive statements as to how the money is being spent. She finished by asking if she should demand that the Board obtain a certified audit of the record books.

It is clear that her association lacks the basic financial protections. The Board has not complied with basic recording requirements. Condominium and community associations are best advised to have more than one person signing checks if the association does not have a professional management company. The expense of a certified audit is justified if the Board suspects that there has been unusual activity or that the Association funds or the size of the building requires a complete examination. Audits should be performed annually with a certified audit being performed at least once every five years.

Posted by Robert Meisner at 3:48 PM | Permalink

With the foreclosure climate as high as it is in the State of Michigan, many associations will be the highest bidder at its own sheriff=s sale; but board members and co-owners may be wondering what the next step is.

Normally, the co-owner whose unit as gone to a sheriff’s sale will have a six month redemption period to pay back all monies due and owing to the association together with interest as a result of the sheriff=s sale unless the unit is abandoned which results in a shorter redemption period. That, of course, depends upon the terms of the foreclosure sale and/or judgment obtained. After the redemption period expires, the Association has ownership of the units subject to any prior encumbrances on it but may have to seek a removal of the co-owner from the unit through court proceedings. One is best advised in general to consult with a condominium specialist in regard to one's best remedies.

Posted by Robert Meisner at 7:50 AM | Permalink