Our Guide to Past Dues, Late Fees & Liens
For the most part, you’ve always been good about paying your condo assessments. However, the last few months have been tight and you’ve fallen behind. Once you get back on your feet and start to repay your past due balance, you notice that your overall balance isn’t going down like you’d expect. This is because your condo association will tack on late fees to any unpaid balance. Also, depending on how big your unpaid balance is, the condo association might have sent your account into collection and in that case, there will be attorney fees/costs added to your account as well.
When you start paying down your balance, you might be surprised how your payments are applied to your account. The payment is first applied to the outstanding attorney fees/costs, then to the outstanding late fees, and only once those have been fully repaid will your payments apply toward the owed condo assessments. Remember that until your balance is paid in full, you will continue to incur late fees each month.
Check out this example ledger sheet of a typical dues payment schedule. Notice when the payments in March start to fall behind and how quickly the past due balance builds.
Some people might think that assessments are more of a suggestion than a requirement. If that’s how you feel, our advice is to read your condominium documents. Also pay attention to any notices you receive from the condo association, the condo association’s management company, or the condo association’s attorney. If your assessments are past due and there has been no effort to repay, a lien is automatically placed on your condominium by law under the terms of the Michigan Condominium Act. The condo association will then record the lien with the register of deeds. This action makes the world aware that your condo assessments have not been paid. This means that the lien will show up when anyone searches title to your property. A condominium lien is no different than a mortgage and can be foreclosed upon in the same manner as a mortgage. If you fail to pay your condo assessments, the condo association or someone else could buy your property at a foreclosure sale and you could lose title. Liens are expensive–for you. It is within the rights of your condo association to charge you for the legal services of drafting the lien and proceeding with a lawsuit to foreclose on the lien. After all, it wasn’t their fault that you decided to not pay your association fees.
We have seen so many instances where people fall behind with payments and ignore the late payment notices from the association and its attorneys. DO NOT IGNORE THESE NOTICES! If you’re in this situation we suggest reaching out to your condominium association (or its attorneys if you have received a letter from one) to see if there is a repayment plan that could work for you. Sometimes the association just wants to be paid. It may be willing to write-off some of the fees associated with your tardiness. However, condo associations do not have to write-off any late fees or legal fees/costs and many will not negotiate. Therefore, it is wise to get ahead of the situation before it snowballs.
If your condominium has co-owners with unpaid assessments and it needs help getting them paid, we suggest reaching out to us for a consultation. We can help with best practices, drafting of demand letters, drafting of liens, and navigating the foreclosure process. The attorneys here at Tilchin & Hall have decades of experience helping Michigan Condominium Associations stay on-top of their assessment collections. Let us help you get the results your desire.
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