Condominium associations rely on assessments to fund shared services, including building maintenance, landscaping, insurance, common utilities, and reserve planning. Board members are legally obligated to protect the condo association’s financial health, and part of that fiduciary duty is to ensure that every co-owner pays their share of the expenses in a timely manner. When some co-owners fail to pay, the unpaid assessments are absorbed by their neighbors through increased dues, postponed repairs, or reduced services. To prevent that result, the board must act. In many cases, collecting delinquent assessments requires collaboration with legal counsel to adhere to the governing documents and Michigan law. The Michigan Condominium Act, MCL 559.101, et seq., permits condominium associations to recover attorney fees and collection costs when authorized by contract or statute. However, courts do not automatically award them. Recovering those fees requires proper authority, documentation, and evidence.
A recent Michigan Court of Appeals decision, Farmington Square Condominium Ass’n v Mitan, unpublished per curiam opinion of the Court of Appeals, issued August 11, 2025 (Docket No. 366035), provides important guidance for Michigan Condominium Associations on the collection process. Specifically, the Court held that the condominium association was not required to pursue an eviction of the co-owner’s tenants to collect delinquent assessments, that the community association manager could authorize the filing of the lawsuit, and that the condominium association was entitled to recovery of attorney’s fees and costs for prevailing in the collection action. However, the Court held that the condominium association could not recover the legal fees billed by the paralegal, as the condominium association’s attorney failed to demonstrate that the paralegal time satisfied the requirements of MCR 2.626.
- Condo Associations are not required to evict tenants in District Court under MCL 559.212
In Mitan, the co-owner argued that the condominium association’s claims were barred under MCL 559.212, as the condo association had a legal remedy in the district court against the unknown tenants and occupants to evict them under MCL 600.5701(a), and could not bring a lawsuit in circuit court. The Court analyzed the Michigan Condominium Act, starting with MCL 559.212(5), which states as follows:
When a co-owner is in arrears to the association of co-owners for assessments, the association of co-owners may give written notice of the arrearage to a tenant occupying a co-owner’s condominium unit under a lease or rental agreement, and the tenant, after receiving the notice, shall deduct from rental payments due the co-owner the arrearage and future assessments as they fall due and pay them to the association of co-owners. The deduction does not constitute a breach of the rental agreement or lease by the tenant. If the tenant, after being notified, fails or refuses to remit rent otherwise due the co-owner to the association of co-owners, then the association of co-owners may do the following:
(a) Issue a statutory notice to quit for non-payment of rent to the tenant and shall have the right to enforce that notice by summary proceeding.
(b) Initiate proceedings pursuant to subsection (4)(b).
The Court also reviewed MCL 559.212(4)(b), which provides in pertinent part:
If the association of co-owners determines that the tenant or nonco-owner occupant failed to comply with the conditions of the condominium documents, the association of co-owners shall take the following action:
* * *
If after 15 days the association of co-owners believes that the alleged breach is not cured or may be repeated, it may institute on its behalf or derivatively by the co-owners on behalf of the association of co-owners, if it is under the control of the developer, an action for both eviction against the tenant or nonco-owner occupant and, simultaneously, for money damages against the co-owner and tenant or nonco-owner occupant for breach of the conditions of the condominium documents. The relief provided for in this section may be by summary proceeding. The association of co-owners may hold both the tenant and the co-owner liable for any damages to the general common elements caused by the co-owner or tenant in connection with the condominium unit or condominium project.
In analyzing the Michigan Condominium Act, the Court held that MCL 559.212(5) offers two options: either seeking to evict the unknown tenants and occupants through a summary proceeding under MCL 559.212(5)(a) or initiating proceedings under MCL 559.212(4)(b). MCL 559.212(4)(b) states that such proceedings are “an action for both eviction against the tenant or nonco-owner occupant and, simultaneously, for money damages against the co-owner and tenant or nonco-owner occupant for breach of the conditions of the condominium documents.” The Court held that the condominium association had the option to maintain the action in either the district court or the circuit court, as the circuit court generally has concurrent jurisdiction with the district court in equitable matters.
- The Condo Association’s Community Association Manager properly authorized the lawsuit
The co-owner also argued that the condominium association’s case was barred because the board of directors did not vote to authorize the filing of the lawsuit. The co-owner argued that MCL 450.1501 of the Business Corporation Act, MCL 450.1101 et seq., which provides that “[t]he business and affairs of a corporation shall be managed by or under the direction of its board”, required the board to authorize the filing of the lawsuit.
The Court noted that it strongly doubted that a condominium association is a “corporation” governed by the Business Corporation Act, as most condominium associations are organized as Michigan Nonprofit Corporations. However, the Court said that even if the condominium association was governed under the Business Corporation Act, MCL 450.1501 does not provide that a corporation’s board of directors must directly manage the “business and affairs” of the corporation. Rather, the Court held that corporations may act through agents. See Garey v Kelvinator Corp, 279 Mich 174, 191; 271 NW 723 (1937).
The record indicated that the condo association’s board of directors acted through a management company, which authorized the filing of the instant case. Moreover, Article X, Section 5 of the condominium bylaws stated that “[t]he Board of Directors may employ for the Association a professional management agent … to perform such duties and services as the Board shall authorize”, which allowed the board to delegate the decision to file a lawsuit to the management company.
- Recovering Attorney’s Fees under the Michigan Condominium Act
Finally, the co-owner challenged the validity of the attorney’s fees, paralegal fees, and costs awarded to the condominium association. The Court started its analysis with MCL 559.206(b), which states as follows, “In a proceeding arising because of an alleged default by a co-owner, the association of co-owners or the co-owner, if successful, shall recover the costs of the proceeding and reasonable attorney fees, as determined by the court, to the extent the condominium documents expressly so provide.” The court held that Article XVIII, Section 2 of the condominium bylaws and MCL 559.206(b) authorized the award of legal fees, but performed a separate analysis of the following four challenges to the $24,086.10 amount awarded by the trial court:
- The award included a $287 amount for paralegal fees, notwithstanding that there was no documentary evidence indicating that the paralegal satisfied MCR 2.626 and Article I, Section 6 of the Bylaws of the State Bar of Michigan;
- The $24,086.10 amount was excessive in a case involving a $785 per month lease;
- The $24,086.10 amount includes more than $4,000 of attorney fees that were incurred before August 24, 2021, when Mitan first became a party to this case; and
- The trial court agreed with Mitan at the evidentiary hearing that the Association’s requested fees should be reduced by $85.50, yet it charged him for $2,153.50 in fees related to the evidentiary hearing itself. Only the first challenge has merit.
In addressing the first issue, the Court held that fees for paralegals can be awarded unless evidence is submitted to demonstrate that the paralegal meets the qualifications under MCR 2.626 and Article I, Section 6 of the State Bar of Michigan Bylaws. MCR 2.626 states as follows:
An award of attorney fees may include an award for the time and labor of any legal assistant who contributed nonclerical, legal support under the supervision of an attorney, provided the legal assistant meets the criteria set forth in Article 1, § 6 of the Bylaws of the State Bar of Michigan.
Article I, Section 6 defines who qualifies as a paralegal eligible for recovery. It requires that the person who performs substantive legal work delegated by an attorney, work that would otherwise be performed by the attorney, and not primarily clerical or secretarial. In addition, the paralegal must meet one of the following criteria:
- Graduated from an ABA-approved legal assistant program and holds a baccalaureate degree
- Holds a baccalaureate degree in any field plus at least two years of in-house legal assistant training.
- Holds an associate degree in the legal assistant field plus at least two years of in-house legal assistant training.
- Holds an associate degree in any field and graduated from an ABA-approved legal assistant program plus at least two years of in-house legal assistant training.
- Has a minimum of four years of in-house legal assistant training.
The Court held that since no documentation was submitted regarding the paralegal’s credentials, the award of paralegal’s fees was reversed, and the award of legal fees was reduced. Accordingly, when condominium boards are interviewing a community association attorney, they should ask whether the law firm has paralegals that meet the above requirements that perform collections and hire a firm that is familiar with the evidentiary standards to collect not only attorney’s fees and costs, but also the standards that apply to recovering paralegal fees as well.
Concerning the second challenge, the court noted that the co-owner had litigated the case for three years, numerous motions had been filed by the co-owners, and that the association had to respond to various issues raised by the co-owner. The court stated that … “while it is true that the case initiated by the Association was relatively straightforward, it eventually became complex and substantial, primarily because of Mitan’s own conduct in expanding the scope of the proceedings.” Accordingly, the court upheld the amount of attorney’s fees even though the original case involved a small amount of damages.
Concerning the third challenge, the Court stated that the $24,086.10 award includes attorney fees that were incurred before the co-owner first became a party to the case after the first amended complaint was filed. However, there is no language in Article XVIII, Section 2 of the bylaws or MCL 559.206(b) limiting the award of attorney fees and costs to those incurred only when the co-owner defendant was a party to the case. Rather, the condominium bylaws specifically stated that the condo association may “recover the costs of the proceeding,” and MCL 559.206(b) similarly states that the Association may “recover the costs of the proceeding”, not just costs when an owner is a party to the proceeding.
Concerning the fourth challenge, the Court held that the fact that the co-owner obtained a minimal downward adjustment at the original evidentiary hearing does not constitute an argument that all the attorney’s fees and costs incurred in relation to the evidentiary hearing should be waived. Finally, in relying on Dearborn West Village Condominium Assoc v Makki, unpublished per curiam opinion of the Court of Appeals, issued January 3, 2019 (Docket No. 340166), the appellate court held that the trial court has the discretion under the condominium bylaws and Michigan Condominium Act to award the appellate attorney fees and costs that were incurred to defend the appeal.
Best Practices for Condo Associations to Recover Legal Fees in Collections
As evidenced by the Mitan case, condominium associations can significantly improve their ability to recover legal fees in collection matters by following these best practices:
- Make sure the condo bylaws clearly allow recovery of legal fees. If your master deed or condominium bylaws do clearly allow recovery of attorney’s fees and costs, you should work with a community association attorney to amend them. Without this language, a court may refuse to award attorney’s fees even if the condominium association wins a lawsuit. Courts will enforce governing-document fee provisions and statutory rights under MCL 559.206(b), even when litigation becomes extensive.
- Understand what qualifies as recoverable paralegal time. Not all staff work can be billed as “legal support.” Only substantive legal work performed under attorney supervision is recoverable. Ensuring that you have a community association attorney who is familiar with fee requests and has paralegals who meet the State Bar of Michigan’s qualifications is important.
- Condominium Associations Can Recover Attorney’s Fees and Costs on Appeal. If a delinquent co-owner fails an unsuccessful appeal, the condominium association may be able to recover the fees incurred by defending a successful result. The condominium association should not assume these costs must be absorbed by the community and request attorney’s fees and costs if they prevail on appeal.
If your condominium association needs assistance with collecting unpaid assessments or implementing any of the above best practices, please contact Hirzel Law, PLC.