Michigan HOA Assessment Limits

The assessment framework

Overview

Michigan sets no percentage cap on assessment increases. Assessment authority — and the limits on that authority — flow from the recorded condominium documents or covenants, not from any state statute. The condominium assessment lien stands junior to a recorded first mortgage.

Condominiums fall under the Michigan Condominium Act, Act 59 of 1978, MCL 559.101 through 559.276, with the core assessment rule at MCL 559.169 and the lien at MCL 559.208.^1,2 Regular increases work through the budget: the board sets assessments under the procedure in the governing documents, with no statutory ceiling and no owner ratification or veto step. Special assessments draw their authority and limits from those same documents. A co-owner generally cannot withhold payment — even over dissatisfaction with management — because MCL 559.169(4) bars exemption by nonuse, waiver, or abandonment.³

On the national spectrum, Michigan sits in the document-driven camp. California caps increases by statute. States in the UCIOA family — including Colorado, Minnesota, and Washington — use a budget-ratification model where owners can veto a proposed budget. Michigan does neither: the numbers belong to the recorded instruments and the board's fiduciary judgment. The sections below trace where that authority comes from, what limits actually bind, and how the lien and foreclosure mechanics work in practice.

Authority to levy and allocate assessments

For condominiums, assessment authority flows from the Michigan Condominium Act and the recorded condominium documents. MCL 559.169(3) requires that common expenses not specially assessed be charged against units "in proportion to the percentages of value or other provisions as may be contained in the master deed for apportionment of expenses of administration" — meaning the allocation formula is fixed by the master deed, not by statute.⁴ The power to set the dollar amount rests with the board through adoption of the annual budget, as the bylaws direct; the Act sets no rate. The association specially assesses limited common element expenses against the unit served, except where the condominium documents say otherwise.⁵

Non-condominium homeowners associations operate on a different footing. Michigan has no comprehensive HOA statute. A platted-subdivision HOA typically organizes as a nonprofit corporation under the Michigan Nonprofit Corporation Act, MCL 450.2101 et seq., and draws its assessment power from its recorded declaration of covenants, bylaws, and rules.⁶ Where the recorded documents do not grant assessment and lien authority, the association's collection options narrow accordingly. In both contexts, the operative point is the same: the allocation formula and the rate-setting mechanism come from the documents, not from a general statute.

Limits on regular assessment increases

Michigan imposes no percentage cap on regular assessment increases. There is no analog to California's statutory ceiling, and there is no budget-ratification or owner-veto step. The only limit on a regular increase comes from the condominium documents or the covenants, which may set a maximum annual increase, require a membership vote above a threshold, or leave the figure to board discretion within a fiduciary standard. Where the documents are silent on a cap, the board may raise regular assessments to whatever level the budget requires.

Two statutory guardrails operate around that discretion. First, the no-withholding rule: MCL 559.169(4) provides that a co-owner "shall not be exempt from contributing as provided in this act by nonuse or waiver of the use of any of the common elements or by abandonment of his or her condominium unit," so an owner cannot self-help by withholding assessments.⁷ Second, the financial-review requirement: MCL 559.157(2) requires an association of co-owners with annual revenues greater than $20,000 to have its books, records, and financial statements independently audited or reviewed by a certified public accountant each year, unless a majority of its members vote to opt out annually under MCL 559.157(3).⁸ An assessment levied outside the documents' procedure, or allocated contrary to the master deed, is exposed to challenge — and a board that deviates from its own governing-document procedure invites a quiet-title or wrongful-foreclosure defense.

Special assessments, the lien, and emergency assessments

Special assessments draw their authority and limits from the condominium documents. The Act does not define "special assessment" or "additional assessment," so the master deed and bylaws control when a board may levy one without an owner vote and when a membership vote is required. Unpaid assessments become a lien under MCL 559.208(1): assessed sums — together with interest, collection and late charges, advances for taxes or other liens, attorney fees, and fines — "constitute a lien upon the unit ... before other liens except tax liens ... in favor of any state or federal taxing authority and sums unpaid on a first mortgage of record."⁹ The lien is therefore junior to a recorded first mortgage.

Michigan grants no six-month super-priority lien of the kind Colorado provides, where the Colorado Common Interest Ownership Act gives the association limited priority for up to six months of common-expense assessments ahead of a first mortgage.¹⁰ The only priority twist in Michigan is recording order: a past-due assessment evidenced by a recorded notice of lien has priority over a first mortgage recorded after that notice.¹¹

Foreclosure proceeds "in the same manner as a foreclosure ... by advertisement or judicial action," with a redemption period of six months from the sale, reduced to one month if the unit is abandoned.¹² The association must record a notice of lien and serve it on the delinquent co-owner by first-class mail at least 10 days before beginning a foreclosure proceeding.¹³ Under MCL 559.158, a first-mortgage holder that takes title by foreclosing its mortgage is not liable for assessments that came due before it acquired title — which reinforces why the lien's junior position matters operationally.¹⁴ Emergency assessments are handled per the documents, which commonly let the board levy without a vote for emergencies or unanticipated deficits. Because the lien sits behind the first mortgage, timely recording and disciplined collection — not reliance on lien position — protect the association's cash.

Assessment limits and procedures in practice

A. Regular assessment increase procedure

Condominiums: The board adopts an annual budget under the bylaws, and the regular assessment follows from that budget. The allocation among units tracks the percentages of value in the master deed under MCL 559.169(3); no statute sets the rate or requires owner ratification.¹⁵ Non-condominium HOAs: The declaration and bylaws define budget adoption, notice, and effective date, with no governing statute beyond the Nonprofit Corporation Act's general corporate procedures.¹⁶

B. Special assessment procedure

Condominiums: Authority, notice, and any member-approval threshold are document-defined. The Act does not separately regulate special assessments, so whether the board can act alone or must obtain an owner vote turns on the master deed and bylaws.¹⁷ Non-condominium HOAs: Likewise document-defined, with the declaration controlling the purpose, cap, and any vote required.

C. Caps, ceilings, and override mechanisms

Condominiums and non-condominium HOAs: Michigan supplies no percentage cap, no statutory ceiling, and no override or ratification mechanism. Any cap is document-defined. The Act provides no owner-veto over the budget and no six-month super-priority lien; the assessment lien remains junior to a recorded first mortgage under MCL 559.208(1).¹⁸

D. Notice, documentation, and disclosure tied to assessments

Condominiums: Notice of an increase follows the documents, with no separate statutory notice period for assessments. The no-withholding rule — MCL 559.169(4) — bars owners from offsetting or withholding.¹⁹ The financial-review requirement under MCL 559.157 applies to associations of co-owners with annual revenues over $20,000, absent an annual majority opt-out.²⁰ On a sale, MCL 559.211 entitles a purchaser to a written statement of unpaid assessments; a buyer who does not request the statement at least five days before the sale closes is liable for the unit's unpaid charges.²¹ A separate reserve-fund duty applies: MCL 559.205 requires a reserve fund for major repairs and replacement of common elements, and Michigan Administrative Code R 559.511(1) requires the association to "maintain a reserve fund which, at a minimum, shall be equal to 10% of the association's current annual budget on a noncumulative basis."²² Non-condominium HOAs: The financial-review and statement-of-unpaid-assessments statutes are condominium provisions and do not apply; disclosure obligations are document-defined.

Recent legislative and judicial activity

4A. Recent bills

The main legislative action in Michigan involves a reserve-study bill — House Bill 5784 — pending in the House Committee on Regulatory Reform since April 2026. No current bill proposes to alter lien priority or create a comprehensive statutory HOA framework.

4B. Recent appellate rulings

The Michigan Court of Appeals issued one notable ruling on assessment enforcement in late 2023, holding that unproven allegations of financial mismanagement do not excuse a co-owner's failure to pay a properly authorized assessment.

4C. Active legislative debates

The principal active proposal is the reserve-study mandate in HB 5784, which the Community Associations Institute's Michigan Legal Action Committee supports. No current bill proposes to alter lien priority or to create a comprehensive statutory HOA framework.

National positioning and related coverage

Michigan sits in the document-driven third of a three-part national spectrum. The first group is the statutory-cap states, led by California, where Cal. Civ. Code § 5605(b) provides that "the board may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members."²⁶ The second group is the ratification-mechanism states in the UCIOA family — Alaska, Colorado, Connecticut, Delaware, Maine, Minnesota, Vermont, and Washington — where an adopted budget takes effect unless owners veto it. In Colorado, C.R.S. § 38-33.3-303(4) provides that the proposed budget "does not require approval from the unit owners and it will be deemed approved by the unit owners in the absence of a veto at the noticed meeting by a majority of all unit owners," after the board delivers a budget summary within 90 days of adoption.²⁷ Michigan sits in the third group: no percentage cap, and the assessment lien junior to a recorded first mortgage.

For multi-state operators, the practical implication is clear: in Michigan, read the limit out of the documents rather than the code, and the association cannot collect ahead of a first mortgage through a super-lien. Because Michigan has no general HOA statute, non-condominium communities depend on their recorded documents and the Nonprofit Corporation Act for assessment and collection authority.

Recommendations

• Read the documents first, then the statute. Michigan supplies no cap, so the operative limit on any increase lives in the master deed, bylaws, or declaration. Before levying or challenging an increase, confirm the document's allocation formula, any internal cap, and any member-vote threshold. Benchmark that would change this: enactment of a statutory cap, which no current bill proposes.
• Treat the lien as junior and collect early. Record a notice of lien promptly and pursue collection on a defined timeline rather than relying on lien position, since a first-mortgage foreclosure can wipe pre-existing delinquency. The threshold that would change this analysis: legislation creating a super-priority lien, which no current bill proposes.
• Run the CPA review unless a vote says otherwise. Associations of co-owners over $20,000 in annual revenue should perform the MCL 559.157 audit or review by default and document any majority opt-out vote. Reassess if revenues cross the $20,000 line.
• Commission a reserve study now. With HB 5784 pending and a 10% statutory reserve floor widely viewed as inadequate, condominium boards above the bill's size threshold should obtain a professional reserve study and adopt a funding plan ahead of any mandate. Trigger to escalate: committee reporting or passage of HB 5784.
• Pay-then-dispute for owners. Per Main Street Lofts v. Parodi, withholding assessments over alleged mismanagement is not a defense and risks foreclosure; owners should pay and pursue accounting or fiduciary claims separately and within the limitations period.

Caveats

• Main Street Lofts v. Parodi is an unpublished per curiam opinion. Under Michigan practice it is persuasive, not binding precedent; cite it for its reasoning, not as controlling authority.
• HB 5784 is at the introduced/referral stage only. It is not law, its terms may change in committee, and it would amend only MCL 559.205 (reserves), leaving the assessment lien, lien priority, and financial-review provisions untouched.
• This page addresses Michigan statutory and document-based rules. It provides regulatory intelligence, not legal advice; specific disputes turn on the individual governing documents and facts, and require review by Michigan community-association counsel.
• The $20,000 financial-review threshold and the 10% reserve floor are current as of verification. Both derive from provisions that have been amended over time, so confirm the live text before relying on them.

Footnotes

1. Mich. Comp. Laws § 559.169, Assessment of co-owners; common expenses ↩
2. Mich. Comp. Laws § 559.208, Unpaid assessments; lien ↩
3. Mich. Comp. Laws § 559.169(4), no-withholding rule ↩
4. Mich. Comp. Laws § 559.169(3), proportional assessment by master deed percentages ↩
5. Mich. Comp. Laws § 559.169, limited common element assessments against unit served ↩
6. Mich. Comp. Laws §§ 450.2101 et seq., Michigan Nonprofit Corporation Act ↩
7. Mich. Comp. Laws § 559.169(4), no-withholding rule; owner cannot self-help by withholding assessments ↩
8. Mich. Comp. Laws § 559.157, Financial statements; annual audit or review requirement; majority opt-out ↩
9. Mich. Comp. Laws § 559.208(1), assessment lien; priority; junior to first mortgage of record ↩
10. Colo. Rev. Stat. § 38-33.3-316, Colorado Common Interest Ownership Act, limited six-month lien priority ↩
11. Mich. Comp. Laws § 559.208, recording-order priority; notice of lien recorded before first mortgage ↩
12. Mich. Comp. Laws § 559.208, foreclosure by advertisement or judicial action; six-month redemption period ↩
13. Mich. Comp. Laws § 559.208, notice of lien; record and serve by first-class mail at least 10 days before foreclosure ↩
14. Mich. Comp. Laws § 559.158, first-mortgage holder taking title by foreclosure; not liable for pre-acquisition assessments ↩
15. Mich. Comp. Laws § 559.169(3), annual budget adoption; unit allocation by master deed percentages; no owner ratification required ↩
16. Mich. Comp. Laws §§ 450.2101 et seq., Michigan Nonprofit Corporation Act; general corporate procedures govern non-condo HOA budgets ↩
17. Mich. Comp. Laws § 559.169, special assessment authority and vote threshold document-defined; Act does not separately regulate ↩
18. Mich. Comp. Laws § 559.208(1), assessment lien; no statutory cap, no super-priority; junior to recorded first mortgage ↩
19. Mich. Comp. Laws § 559.169(4), no-withholding rule; bars offsetting or withholding on sale or notice ↩
20. Mich. Comp. Laws § 559.157, financial-review requirement; associations with annual revenues over $20,000; annual majority opt-out ↩
21. Mich. Comp. Laws § 559.211, statement of unpaid assessments; purchaser's right on sale; liability if not requested five days before closing ↩
22. Mich. Comp. Laws § 559.205; Mich. Admin. Code r. 559.511(1), reserve fund for major repairs; 10% of current annual budget minimum on noncumulative basis ↩
23. H.B. 5784, 103d Leg., Reg. Sess. (Mich. 2026) (introduced Apr. 14, 2026; referred to House Committee on Regulatory Reform; pending) ↩
24. H.B. 5019, 102d Leg., Reg. Sess. (Mich. 2023) (predecessor bill introduced Sept. 2023; Community Associations Institute Michigan Legal Action Committee support noted; died without enactment) ↩
25. Main Street Lofts Condo. Ass'n v. Parodi, Nos. 362990, 362991, 363727 (Mich. Ct. App. Nov. 21, 2023) (per curiam) (unpublished) ↩
26. Cal. Civ. Code § 5605 (West), regular and special assessment limits; member-approval requirement ↩
27. Colo. Rev. Stat. §§ 38-33.3-303(4), -316, Colorado Common Interest Ownership Act, budget-ratification veto mechanism and limited six-month lien priority ↩