Michigan Condo Lien Foreclosure: 10-Day Notice, 6-Month Redemption

MCL 559.208(1), part of the Condominium Act of 1978, gives a Michigan association of co-owners an automatic lien for every unpaid sum assessed to a co-owner, and lets that lien be foreclosed "by an action or by advertisement by the association of co-owners in the name of the condominium project on behalf of the other co-owners." The lien outranks everything except state and federal tax liens and sums unpaid on a first mortgage of record, and it beats even a first mortgage if the association recorded its notice of lien before that mortgage was recorded. Recording order is therefore decisive for priority in Michigan, and it is the reason associations record notices of lien early rather than waiting for a large balance to build.

Before any foreclosure proceeding begins, MCL 559.208(3) requires a recorded notice of lien in recordable form, executed by an authorized representative of the association. It must state the legal description of the unit, the name of the co-owner of record, and the amounts due at the date of the notice "exclusive of interest, costs, attorney fees, and future assessments." That exclusion matters to a co-owner reading the document: the figure on the recorded notice is deliberately not the payoff. The notice goes to the register of deeds for the county where the condominium project sits, and a copy must be mailed first-class to the co-owner's last known address at least 10 days before the proceeding starts. Michigan sets no dollar threshold and no waiting period beyond those 10 days.

Because MCL 559.208(2) routes the association through the ordinary mortgage foreclosure machinery, the real procedural limits sit in chapter 32 of the Revised Judicature Act. MCL 600.3208 requires the notice of foreclosure to be published once a week for 4 successive weeks in a newspaper published in the county, and a true copy must be posted in a conspicuous place on the unit within 15 days after the first publication. MCL 600.3212(1) fixes what the notice must say, including the length of the redemption period and a warning that under MCL 600.3278 the borrower is liable to the buyer for damaging the property during redemption, plus a notice addressed to active duty service members. MCL 600.3212(2) bars the foreclosing party from publishing in a newspaper it or its agent majority owns. MCL 600.3216 puts the sale at public auction at the place of holding the circuit court in the county, between 9 o'clock in the forenoon and 4 o'clock in the afternoon, conducted by the sheriff, undersheriff or a deputy, to the highest bidder.

One condition catches associations that sue first. MCL 600.3204(1)(b) permits foreclosure by advertisement only if no action to recover the debt has been instituted, or the action was discontinued, or an execution on the judgment came back unsatisfied. MCL 559.208(5) and (6) let the association take a money judgment without waiving the lien and even combine damages and foreclosure in one action, but a live collection suit closes the advertisement route until it is dropped or the execution fails. Appointing a receiver does not close it, because MCL 600.3204(1)(b)(i) expressly says a receivership proceeding is not an action to recover the debt, and MCL 559.208(7) lets a court empower that receiver to take possession of a unit the co-owner does not occupy, lease it, and apply the rent.

Redemption is where Michigan runs shorter than its own default. MCL 600.3240(12) gives a general 1 year, but MCL 559.208(2) overrides that for an assessment lien with 6 months from the date of sale, or 1 month if the unit is abandoned. To redeem, MCL 600.3240(2) requires payment of the amount bid for the entire premises, interest from the sale date at the rate provided for by the mortgage, the sheriff's fee the purchaser paid, and $5.00 for care and custody of the money if it goes through the register of deeds. The purchaser records an affidavit stating the exact payoff and may name a designee to compute it, and that designee may charge up to $250.00. In a county with more than 750,000 and fewer than 1,500,000 residents, MCL 600.3240(14) makes the register of deeds compute the redemption figure on request, for a fee capped at $50.00 by subsection (15).

Two provisions quietly enlarge what a co-owner owes. MCL 559.208(8) keeps the co-owner, and any purchaser or successor to that interest, liable for assessments chargeable to the unit that come due before the redemption period expires, with interest, tax advances, costs and attorney fees. And MCL 600.3240(4) lets a foreclosure purchaser add to the redemption price any taxes, senior lien redemptions, insurance premiums and, named expressly in the statute, "condominium assessments, homeowner association assessments, community association assessments" it paid after the sale, provided it files an affidavit and the receipts with the register of deeds. A co-owner planning to redeem should pull those affidavits from the register of deeds file before assuming the winning bid is the number.

None of this reaches a conventional subdivision association. The Condominium Act speaks only of a "co-owner" in a "condominium project," and Michigan has never enacted a counterpart lien statute for homeowner or property owner associations. The Legislature's own drafting shows it: MCL 600.2807(2)(f) protects from judgment lien priority "A lien for unpaid assessments or charges due to a condominium association, homeowners' association, or property owners' association that arises from or pursuant to recorded restrictions that run with the land," which describes a contractual lien created by a recorded declaration rather than one created by statute. That has a practical consequence. MCL 600.3201 permits foreclosure by advertisement only for a mortgage "which contains a power of sale," so a Michigan subdivision association whose declaration grants no power of sale must file a judicial foreclosure in circuit court, which holds jurisdiction to foreclose under MCL 600.3101, and its redemption period is whatever MCL 600.3240 supplies rather than the 6 months the Condominium Act hands condominiums.

208(3) says "may not be commenced," and the co-owner's remedy is to challenge the sale in the circuit court for the county where the unit sits. 3204(1)(b). 208(5), combine damages with foreclosure under subsection (6), ask for a receiver to collect rent from a unit the co-owner does not occupy under subsection (7), and bid in at its own sale and then hold, lease, mortgage or convey the unit under subsection (4) unless the master deed or bylaws forbid it. 3278(5) lets that damages claim be joined with an action for possession.