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Litigation 9: Court finds condo association cannot seek foreclosure solely because of unpaid fines.

In this case, in 2001 plaintiff conveyed a condominium unit to defendant. In September 2005, plaintiff informed defendant that he had violated the condominium bylaws by not completing construction within 12 months and that a hearing would be held on September 30, 2005, that could result in a fine of $1,000 a month. The hearing was rescheduled at defendant’s request, but he did not attend the rescheduled hearing. Plaintiff’s board of directors imposed an escalating fine schedule: $100 a month from November to January 2006, $500 a month from February 2006 to April 2006, and $1,000 a month after March 2006. Plaintiff informed defendant of the fine schedule via letter.

AUTHORITY TO LEVY FINES

The Condominium Act provides associations various relief in the event of a default by a co-owner, including the levying of fines.

It is plaintiff’s position that under its bylaws fines against owners can be treated as condominium assessments, and any unpaid assessments constitute a lien on the unit. Thus, after defendant failed to pay any of the fines or complete construction of the home, in May 2010 plaintiff filed a lien against defendant’s property for nonpayment of assessments. An amended lien was filed in 2017, for $137,800 in unpaid assessments. It is undisputed that this amount is comprised solely of the unpaid fines.

In October 2016, plaintiff initiated a lawsuit seeking judicial foreclosure on defendant’s unit to satisfy the lien.

AUTHORITY TO FORECLOSE

Defendant argued that plaintiff does not have authority to foreclose on his property solely because of unpaid fines.

This issue turns on the distinction between assessments and fines. This distinction is important because the bylaws (which mirrors the Condominium Act) only grant plaintiff the authority to foreclose assessments liens. Under the bylaws, unpaid fines do not become liens and, even if they did, the bylaws do not grant plaintiff authority to foreclose liens that consist only of fines. The Condominium Act also refers to assessments and fines as distinctive terms.

Condominium units are assessed amounts to cover maintenance, repair, management and other common expenses incurred by the association. In contrast, the purpose of fines is to punish owners for violation of the condominium documents.

COURT

The court agreed with plaintiff that under this provision that if an individual member or co-owner causes costs or damages, plaintiff may collect that amount as an assessment. However, plaintiff does not identify any costs or damages that it incurred because of defendant’s failure to timely complete construction. The court concluded the fines levied against defendant may not be treated as assessments and therefore plaintiff did not have authority under its bylaws to file a lien against defendant and seek foreclosure.

Assistance with Condo Association Disputes

Resolving condo association disputes in the most efficient and cost-effective manner is best for both parties. Aldrich Legal Services can help parties reach an agreement through negotiation or through an alternative dispute resolution option.

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FAMILY LAW 83: A trial court can terminate a parent’s rights and permit a stepparent to adopt a child.

A trial court has discretion to terminate a parent’s rights and permit a stepparent to adopt a child when the conditions of MCL 710.51(6) are met. MCL 710.51(6)(b) requires the petitioner to establish that the other parent had the ability to visit, contact, or communicate with the children, and substantially failed or neglected to do so for a period of two years.

PROBATE 53: The trust agreement included an Incontestability Provision.

A settlor’s intent is to be carried out as nearly as possible. Generally, in terrorem clauses are valid and enforceable. However, a provision in a trust that purports to penalize an interested person for contesting the trust or instituting another proceeding relating to the trust shall not be given effect if probable cause exists for instituting a proceeding contesting the trust or another proceeding relating to the trust.

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However, the trial court concluded that these matters should, in fact, be in the province and the jurisdiction of the Family Division and in that respect, having issued a personal protection order, the Court stated it would terminate the personal protection order after the parties present documentation of the initiation of the divorce proceedings.

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