This past October, within the span of 10 days, the court of appeals issued two decisions about unpaid condominium association dues. There have also been recent discussions about condominium fees in the ICLE community. It seems to me that these recent opinions and discussions could indicate a rise in unpaid condominium assessments in Michigan, in keeping with the still generally poor economy. As a result, lawyers may be handling more of these cases, as condominium associations turn to litigation to attempt to obtain payment.
If you find yourself involved in a condo assessment case, be sure to review this case from the Sixth Circuit (originating in the Eastern District of Michigan, by the way), also decided within that same 10-day period. In that case, the Sixth Circuit held that an obligation to pay an assessment to a condominium association was a “debt” under the Fair Debt Collection Practices Act (FDCPA), 15 USC 1692a(5). Now, in addition to the requirements of the Condominium Act in MCL 559.208, a lawyer representing a condo association must become familiar with the requirements of the FDCPA. Those requirements include issuing a “mini-Miranda” warning to the debtor and sending a validation notice within five days of an initial communication with the debtor about the debt. Failing to comply with the requirements of the FDCPA could subject a lawyer or law firm to civil liability, including costs and attorney fees.
Steve Harms, ICLE contributor and author of Handling the Collection Case in Michigan, recommends sending the validation notice at the outset of any attempts to collect past due condominium assessments. You can include the requirements of the validation notice as well as the mini-Miranda language in that initial communication with the condo owner. That way, you can check off at least two of the FDCPA’s requirements, and then focus on not running afoul of any of the prohibitions in the FDCPA while trying to get payment from the debtor.
For a more detailed explanation of the FDCPA’s requirements, take a look at chapter 3 of Steve’s book.