On December 21, 2012, the City of Fenton acquired 52 undeveloped units in the Waters Edge Townhomes Condominium from the Genesee County Treasurer after a tax foreclosure sale. Pursuant to MCL 559.108, MCL 559.137 and the master deed, each of the units was assigned a percentage of value. Upon becoming a co-owner, by virtue of its acquisition of the units, the City of Fenton had a duty to comply with the condominium bylaws. Specifically, the condominium association took the position that MCL 559.165, MCL 559.169, the Master Deed and Condominium Bylaws required each owner of a unit to contribute to the expenses of administration, maintenance and repair of the common elements of the condominium according to the percentage allocated to each unit. Accordingly, the condominium association filed a lien for unpaid assessments after the City of Fenton had not paid assessments since December 21, 2012.
The City of Fenton denied responsibility for the payment of assessments arguing that it was only obligated to pay assessments on constructed units. Additionally, the city argued that it was not responsible for the payment of assessments as it involuntarily acquired the units from the Genesee County Treasurer. A 2014 ruling from the Michigan Court of Appeals held that a county treasurer was not obligated to pay assessments under the Michigan General Property Tax Act. However, the ruling did not address whether a subsequent owner of a foreclosed condominium unit was required to pay assessments after the condominium unit was conveyed by the county treasurer to a third party. Rather than litigating these issues, the City of Fenton agreed to pay the condominium association $200,000 in satisfaction of its claim for unpaid assessments. Additional information regarding this matter can be found here. Accordingly, Michigan condominium associations should monitor units that are subject to tax foreclosure to determine when the unit is conveyed by the county to a third-party for the purposes of collecting assessments.
Kevin Hirzel is the Managing Member of Hirzel Law, PLC and concentrates his practice on commercial litigation, community association law, condominium law, Fair Housing Act compliance, homeowners association and real estate law. Mr. Hirzel is a fellow in the College of Community Association Lawyers, a prestigious designation given to less than 175 attorneys in the country. He has been a Michigan Super Lawyer’s Rising Star in Real Estate Law from 2013-2018, an award given to only 2.5% of the attorneys in Michigan each year. Mr. Hirzel was named an Up & Coming Lawyer by Michigan Lawyer’s Weekly in 2015, an award given to only 30 attorneys in Michigan each year. He represents community associations, condominium associations, cooperatives, homeowners associations, property owners and property managers throughout Michigan. He may be reached at (248) 478-1800 or email@example.com.