Third Court of Appeals Decision Finds Foreclosing Lender Liable for Condominium Assessments from the Date of the Foreclosure Sale

In Fannie Mae v Lagoons Forest, the Michigan Court of Appeals again held in a published opinion that a foreclosing lender is liable for unpaid condominium assessments from the date of the mortgage foreclosure sale, not from the date of expiration of the redemption period.  

In its decision, the court construed MCLA §559.158, which limits the liability of a foreclosing lender or its successors and assigns to assessments accruing after acquisition of title with MCLA §559.211, which provides that a purchaser of a condominium unit who fails to request a statement of unpaid assessments from an association 5 days before sale is fully liable with the seller for all unpaid assessments.  The court held that the more specific MCLA §559.158 controlled over the more general MCLA §559.211; a foreclosing lender’s liability is limited to post-foreclosure assessments despite the fact that a foreclosure sale might be construed as a conveyance.

The court also rejected Fannie Mae’s claim for damages for slander of title, finding that the association did not act with malice (an essential element of a slander of title claim) and that there was an arguable basis for the association’s position given the conflicting circuit court opinions on the mattter.

© Steve Sowell 2018