Michigan Condo Lawyers

Michigan Condominium Lawyers For Condo Collections

A Michigan condominium must collect condo dues from residents to provide essential services and fund the condo operations. The governing documents of a condominium association typically require all co-owners to pay condo dues. Whenever a co-owner fails to pay their condo dues, the other co-owners are unfairly forced to shoulder the burden of the condo association’s operating costs. Keeping up on condo association collections is essential for a well-run condo association. At Hirzel Law, our Michigan Condo Lawyers can help collect delinquent condo dues.

Michigan condo associations must be diligent in pursuing delinquent condo dues. An essential part of condo association collections is having a collection policy. As recommended by the Community Associations Institute, having a condo collection policy in place ensures that all co-owners of the condominium that become delinquent are treated fairly and that the condo collections process is efficient. Similarly, enforcing condo collection policies ensures that condo delinquencies do not continue to grow indefinitely. A high condo delinquency rate may impact the ability of the condo association to provide essential services. Similarly, a high condo delinquency rate may negatively impact property values as banks may not offer loans to potential purchasers if the condo’s delinquency rate is too high.

While condo associations can send payment reminder letters to collect condo dues, Michigan law does not permit non-attorneys, such as board members, to perform legal services on behalf of a nonprofit corporation, such as a condo association. Accordingly, it can be difficult for condo associations to collect delinquent condo dues without professional help. Therefore, if the initial payment reminders do not result in payment, a condo association should involve experienced condo lawyers to assist in collecting delinquent condo dues.

How to Collect Delinquent Condo Association Fees

While the process for collecting delinquent condo dues is ultimately governed by restrictive covenants and the condo’s collection policy, the typical process for condo collections is as follows.

1. The condo co-owner becomes delinquent by failing to pay their condo dues in a timely manner.
2. The condo association sends a reminder letter advising the co-owner that the payment is delinquent. Then, it will be turned over to the condo attorney for further action if the owner fails to pay their outstanding condo dues.
3. If the co-owner still fails to pay their delinquent condo dues, the condo association provides a ledger to the condo attorney that identifies the delinquent condo dues, going back to a zero balance along with interest and late fees.
4. The condo attorney sends an initial demand letter to the co-owner requesting payment of the delinquent condo dues. In many cases, the co-owner will enter into a payment plan with the condo association to pay the delinquent condo dues.
5. The condo attorney records a condo lien for delinquent condo dues until the delinquent condo dues are paid in full to ensure that the condo’s lien will not lose priority over other liens.
6. The condo attorney performs research as to whether the condo lien will prioritize other prior recorded interests against the property and provides a recommendation to the condo association as to the available options to collect the delinquent condo dues.
7. The condo association proceeds with foreclosure by advertisement of the condo association lien or filing a lawsuit seeking judicial foreclosure and a money judgment.
8. The condo association receives title to the condo if it submitted a credit bid at the condo association foreclosure sale or receives proceeds from the condo foreclosure sale to apply to the condo association delinquency. Alternatively, the condo association obtains a money judgment and collects on the money judgment until the delinquency is paid in full.

While the above process for condo association collections is common, keep in mind that every condo collection case is different, and Hirzel Law creates a plan for each matter based on the facts and circumstances of that case.

Is A Bank Required To Pay Condominium Assessments After It Forecloses On A Condominium Unit?

If a co-owner’s mortgage lender forecloses on them, is the lender then obligated to pay the co-owner’s assessments? Yes and no. The lender will not be responsible for any delinquent assessment payments prior to the time the bank foreclosed on the unit. After the bank forecloses, though, it takes on the debts and liens associated with the property accruing after foreclosure. Thus, it will be responsible for any assessments due from the date of the sheriff’s sale going forward. For more information on lenders’ obligations to pay assessments, read our article: What is the bank’s obligation to pay assessments under the Michigan Condominium Act after a foreclosure?

Can Condominium Associations Recover Attorney’s Fees for Collecting Delinquent Condo Dues?

MCL 559.206 of the Michigan Condominium Act authorizes Michigan condo associations to recover the costs of the proceeding and reasonable attorney’s fees and costs incurred because of an alleged default by a co-owner permitted by the condominium legal documents. In most instances, the restrictive covenants, master deed restrictions, and condominium bylaws allow the condo association to recover attorney’s fees and costs incurred in collecting delinquent dues.

Provided that the attorney’s fees and collection costs are usually added to the unpaid condo assessment, condominium associations should be attentive in taking steps to collect delinquent condo dues without delay.

How Will Condo Associations Stay Informed of Collection Issues?

Many condominium associations require legal aid throughout the year. Remember, Hirzel Law offers a Premium Service Plan for Michigan condominium associations that features an online collection portal. The collection portal allows a condo association to view demand letters, the current status of collections, standardized condo forms, and more. Additionally, our condominium lawyers can produce monthly status letters for clients upon request for the condominium association to account for the status of its collections at board meetings.

Condo Lawyer or Condo Association Collection Agency: What to Look for in Deciding How to Pursue Condo Association Collections.

1. Fees. The Condo Lawyers at Hirzel Law charge flat fees for many of its condo association collections services.  As indicated above, in many cases, reasonable flat fees, hourly attorney’s fees and costs may be charged back to the delinquent owner if permitted by the condo association’s restrictive covenants.  The attorney’s fees and costs are charged on a monthly basis. Client satisfaction is paramount at Hirzel Law.  In the unlikely event that a condo association is dissatisfied with the progress of its condo associations collections, the condo association can leave at any time without having to pay additional charges. In contrast, we have reviewed some Condo Association Collection Agency contracts that require a condo association to pay additional fees if they terminate their relationship with the Condo Association Collection Agency.  While some Condo Association Collection Agencies advertise that they do no charge fees unless they collect, this is not always the case.  Accordingly, it important to carefully review a Condo Association Collection Agency contract to understand how often the condo association will be updated on the fees incurred and if there are additional fees that will be owed if the condo association becomes dissatisfied and terminates the Condo Association Collection Agency because condo association collections are not progressing.
2. Licensing Requirements. In Michigan, a lawyer is required to obtain a law degree, which typically requires at least three (3) years of training in law school, after completing college, in addition to passing the bar exam and a separate ethics exam.  In contrast, a person may obtain a license to operate a Condo Association Collection Agency if they are 18 years old, have a high school diploma or the equivalent of a high school education, they have 6 months of experience in collection accounts and they have passed the state licensing exam.
3. Risk. When deciding whether to use a Condo Lawyer or a Condo Association collection agency, a condo association should do research to determine how often the Condo Lawyer or condo association collection agency has been sued and how often their condo association clients have been sued as a result of the collection methods employed.  This is something that can typically be determined through a google search, but a condo association should always ask the Condo Lawyer or condo association collection agency about how many times they have been sued and how often their clients are sued for collection related issues.  If a condo association is forced to defend claims related to debt collection practices, it may greatly increase the overall legal expenditures of the condo association.

4. Scope of Services. Condo lawyers are permitted to practice law and can perform a wide range of collection methods, such as sending a demand letter, recording a condo association lien, providing legal advice on the different options to collect delinquent condo association dues, foreclosing on a condo association lien, obtaining a money judgment, or collecting a money judgment.  Also, it is not uncommon for a delinquent co-owner to also be in violation of other restrictive covenants, such as architectural rules, and a condo lawyer is well suited to handle these types of “mixed issues” and can provide one stop shopping for all of the condo association’s legal needs. In contrast, a condo association collection agency is not permitted to practice law and is precluded from taking certain collection actions.  MCL 339.915a prohibits a condo association collection agency from engaging in a wide variety of collection activities, including providing legal advice or engaging in the practice of law.  Similarly, if a delinquent owner has violated other provisions of the restrictive covenants, a condo association collection agency would not be able to directly handle this matter unless it engaged a condo lawyer.

The Right Michigan Condo Lawyers for Your Condo Association Collection Needs

Hirzel Law represents condo associations in condo association collections throughout the State of Michigan. At Hirzel Law, our condo lawyers are here to get results and relieve your condo association of the debt collection burden. Our cutting-edge thinking keeps us on top of the latest trends in condominium law. As a result of our exceptional legal skills, the attorneys at Hirzel Law have garnered numerous awards from Best Lawyers, the Community Association Institute’s College of Community Association Lawyers, Leading Lawyers, Michigan Top Lawyers, and Super Lawyers. Our Michigan Condo lawyers are known for client education and highly responsive customer service.

Contact Our Condo Lawyers for Help with Condo Association Collections

Collecting delinquent condo association dues is not fun for condo associations, but it is necessary to provide required services. At Hirzel Law, PLC, our Michigan condo lawyers can help your condo association resolve its condo association delinquency issues. We stand by our clients, offering the highest quality legal representation and promptly responding to our clients’ needs.

Contact Hirzel Law online or call 248-986-2921 (Farmington) or 231-486-5600 (Traverse City) or 616-319-9964 (Grand Rapids office) to see how our Michigan condo lawyers can collect delinquent assessments on your Michigan condo association’s behalf.

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