What the association salvaged, and what the co-owner did not get

The Court of Appeals reversed one order — the trial court had directed the association's attorney to personally refund payments, and that went too far.

The co-owner's cross-appeals also failed. He sought treble damages under MCL 600.2919a and frivolous-claim sanctions under MCL 600.2591, and got neither: the association had a reasonable basis to sue given a genuine arrearage dating from 2012. So the association lost the money and avoided the penalty.

That is a meaningful line. Losing a collection case badly is not the same as having brought it frivolously, and Michigan courts are not treating a bad ledger as sanctionable in itself.

What produces a ledger a judge will not believe

The opinion does not itemise it, but the pattern in Michigan collection cases is consistent, and every item is preventable:

• Balances carried forward across a management transition without reconciliation. The new manager imports an opening balance; nobody can reconstruct what it consisted of.
• Late fees, interest and legal costs compounded into the assessment balance so that the principal owed cannot be separated from the charges on it.
• Payments applied to the oldest charges by default, so a co-owner who pays current assessments in full still shows perpetually delinquent, and the ledger implies non-payment that never happened.
• Charges with no authorising document. A fine with no hearing record, an administrative fee with no bylaw or resolution behind it.
• Ledgers that were reconstructed for the litigation rather than kept in the ordinary course — which is also the argument against their admission in the first place.

The board-level action item

Before authorising any foreclosure, ask for the ledger and read it as an opponent would. Specifically: can the association show, for each line, what the charge was, what authorised it, when it was assessed, and how each payment received was applied? If the manager cannot produce that in a week, the association is not ready to sue.

The asymmetry is severe. An association that wins a collection case recovers its assessments and, where the documents provide for it, its fees. An association that loses one on its records has funded the litigation, forfeited the arrears, and created a written judicial finding that its accounting is deceptive — a finding every other delinquent co-owner in the project will hear about.

The contrast case

In Farmington Square Condominium Association v Mitan, No. 366946 (11 August 2025), the association ran a collection case cleanly and took $24,086.10 in attorney fees and costs, with a remand to consider increasing the award for fees defending the appeal. The difference between the two outcomes is documentary hygiene, not legal strategy.

What to watch next

House Bill 5784 would, if enacted, require a segregated reserve account separate from the operating account and an annual written notice of the reserve balance. Neither would have saved this association, but both would push Michigan associations toward the kind of accounting that survives a trial.