Michigan Ct. Says HOA Assessment to Fund Construction Defect Litigation was Invalid

This case involved a dispute between a homeowners association (“Association”) and husband and wife owners of a condominium (“Owners”) over the validity of a $3,000 assessment levied on all owners to fund a construction defect lawsuit that the Association’s board of directors decided to pursue against the developer of the project. The Owners contended that the assessment by the Association was improper and after paying a portion of the assessment, refused to pay the balance. The Association then recorded a lien against the Owners’ condominium and subsequently filed the initial lawsuit seeking foreclosure of the lien, money damages, costs and attorney fees. The Owners admitted non-payment of a portion of the assessment, but argued that the special assessment of the $3,000 to fund the litigation was invalid under the Association’s Bylaws.