We Have a Sheriff’s Deed, But Who Pays Association Assessments?

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The Michigan Court of Appeals recently held that a purchaser pursuant to a sheriff's sale was responsible for condominium association fees due from and after the date of the sale. In Wells Fargo Bank v Country Place Condominium Association, the bank acquired title by virtue of foreclosing its mortgage on a condominium unit and obtained a sheriff's sale deed. The condominium association filed a lien against the unit for non-payment of condominium assessments. Wells Fargo asserted it was not responsible for association fees until after the expiration of the redemption period. The Court noted that the question of when association fees were attributable to a foreclosing bank was an issue of first impression.

Under MCL 559.158, a foreclosing mortgagee is not liable for assessments chargeable to the unit that became due "prior to the acquisition of title to the unit..." The bank argued that a sheriff's deed to a condominium purchased at a foreclosure sale does not convey full title until the original purchaser's right of redemption expires, and therefore, it was not on the hook for association dues until after the redemption period expired.

The Court disagreed. "Acquire" means coming into possession or control of something, while "title" means the legal evidence of ownership in land. As a result of the sheriff's sale, Wells Fargo came into "possession or control of" title to the unit in the form of an equitable title that is capable of being sold or assigned. Therefore, Wells Fargo acquired title to the unit on the date of the sheriff's deed rather than the expiration of the redemption period, and consequently, was liable for condominium assessments from that point forward.

So, if you obtain a sheriff's deed to a condominium unit, you will need to pay those association dues coming due after the date of the sheriff's sale, even if the mortgagor still has the legal right to possess the property until the end of the redemption period.

 

 

Topics:  Appeals, Condominium Associations, Condominiums, Delinquent Assessment Dues, Foreclosure

Published In: General Business Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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