The Michigan Court of Appeals, in Harbor Watch Condominium Association v. Emmet County Treasurer
, No. 316858, held that a government agency is not liable for common expenses in condominium bylaws for the time period it owns the property during tax lien foreclosure redemption periods.
In February 2011 a judgment of foreclosure stemming from delinquent property taxes was entered using the procedures mandated by the Michigan General Property Tax Act (“GPTA”) against several condo units in the Harbor Watch Condominium Association (the “Association”). The Emmet County Treasurer was vested absolute title to all of the units foreclosed upon. During the one year redemption period, while the County remained the owner of the condos, the County did not pay any Association expenses, which totaled $97,366.09.
The Association argued that under the Association’s bylaws and the Condominium Act (MCL 559.101 et seq.
), which made no distinction between private and governmental owners; the County was liable for the unpaid fees.
The Court, however, disagreed. It first determined that the foreclosure was not a voluntary act by the County as it was mandated by the GPTA to foreclose on the property after the units were forfeited. The Court then held that because the GPTA prescribes the procedures a County must follow to dispose of foreclosed properties and because the funds earned after the sale of foreclosed properties must be disposed of for limited purposes, the County was not liable for the Association costs. The GPTA never contemplates a governmental unit paying condominium association fees nor does it even provide a mechanism by which a governmental unit can do so.
Thus, the Court held that a County is not liable for unpaid condo association costs accrued during its ownership throughout tax lien foreclosure redemption periods.