12 Questions to Ask Before Buying a Condo in Michigan

These are the questions to ask before buying a condo in Michigan, built on the state's Condominium Act and its Condominium Buyer's Handbook.

Ask them before you sign, or at the latest before your inspection and attorney review ends. Each good answer should come from the documents, not from memory.

The twelve questions, in short:

1. Site condo or traditional condo
2. Read the master deed and bylaws
3. What the monthly fee covers
4. Reserve fund balance and minimum
5. Planned or approved special assessments
6. Unpaid assessments and open violations
7. Master policy versus your own policy
8. Rental and leasing rules
9. Pets, parking and use rules
10. Pending lawsuits against the association
11. FHA approval and lender eligibility
12. Your withdrawal window on new units

1. Is this a site condo or a traditional condo?

A Michigan condo can be a building of attached units or a site condo of detached single-family homes. The state's Condominium Buyer's Handbook says site condos must follow the Condominium Act, but the state does not review their documents for conformance with the Act. Either way, you own your unit and share the common elements with the other owners.

A clear answer names the type. It comes with the recorded master deed, the bylaws and the subdivision plan, which shows which areas are units and which are common elements. In a site condo, ask whether your unit is the house, the lot or only the ground under the house.

Hearing that it is just like a regular subdivision is the answer to question. A site condo still has condo documents, an association and assessments. Those rules bind you the day you close, whatever the street looks like.

2. What do the master deed and bylaws say, and can I read them before I sign?

The master deed and bylaws are the rulebook for a Michigan condo. The state's Condominium Buyer's Handbook says the master deed sets each unit's share of ownership. The bylaws spell out your rights and duties as an owner, and the subdivision plan maps the units and common elements. Recorded amendments count too.

A strong answer is the full set, with every recorded amendment and any board rules. It should arrive early enough to read before your inspection or attorney review ends. Buyers touring condos in Rochester, Rochester Hills and Oakland Township, where The Delia Group works, can ask for it as soon as an offer looks likely.

Being told the documents will come at closing is the red flag. By then, the time to walk away has passed. If the seller cannot produce them, the association or its management company often can, sometimes for a fee.

3. What does the monthly condo fee cover, and what will I pay for myself?

A condo fee pays your share of the association's budget, and what it covers varies widely from one Michigan community to the next. One fee may include snow removal, lawn care, exterior upkeep, water and the master insurance policy. Another covers little beyond the common areas. The budget, not the listing, tells you which.

Ask for the current annual budget and last year's actual spending. A good budget lists each line, from snow and landscaping to insurance, management and reserves. Then list what stays with you: utilities, the inside of the unit, and any part of the exterior the documents assign to the owner.

A fee far below similar communities nearby is not automatically a bargain. Low fees can mean thin reserves and a special assessment waiting to happen. Ask when the fee last went up, and why.

4. How much is in the reserve fund, and does it meet Michigan's minimum?

Michigan law requires every condo association to keep a reserve fund for major repairs and replacements. The state's Condominium Buyer's Handbook puts the minimum at 10 percent of the annual budget, on a non-cumulative basis. That floor is a minimum, not a plan. An older community with roofs and roads to replace may need far more.

A strong answer gives the reserve balance, this year's contribution and a reserve study. The study lists the big parts of the property and when each wears out. Compare the balance with the big items coming due in the next several years, such as roofs, paving and siding.

An association that meets only the minimum while its roofs and roads age is setting up special assessments. No reserve study at all is not a dealbreaker by itself, but it means nobody has put a price on the future.

5. Are any special assessments planned or already approved?

A special assessment is a one-time charge on top of the monthly fee. It pays for a repair or project the budget cannot cover. Michigan's Condominium Buyer's Handbook says that when roads or other shared areas need repair, the association decides each owner's share. An unpaid assessment can become a lien on the unit.

Ask in writing whether any special assessment has been approved, proposed or discussed, and read the last year of board minutes. A clear answer names the project, the amount per unit and the due dates. Settle in the purchase agreement who pays an assessment approved before closing.

A board that says nothing is planned while the minutes discuss roof bids is the red flag. Lenders watch this too: Fannie Mae treats a project as ineligible when a special assessment tied to a critical repair has not been resolved.

6. Does the seller owe any unpaid assessments or have open violations?

Michigan's Condominium Act lets a buyer get a written statement from the association. It shows any unpaid assessments, interest, late charges, fines, costs and attorney fees the seller owes. If the buyer does not ask for it at least 5 days before the sale, the buyer can become liable for those amounts.

Make the request in writing well before closing, through the title company or your agent. Get the answer in writing too. Ask the same question about bylaw violations, such as an unapproved deck or window, since a buyer can inherit those with the unit.

Relying on the seller's word that everything is paid is the mistake. MCL 559.211 protects a buyer who asked in time from amounts beyond the written statement, so skipping the request gives up that protection.

7. What does the association insure, and what do I need to insure myself?

The condo documents split the insurance between the association and each owner. In a common Michigan setup, the association insures the shared areas under a master policy. Each owner carries an HO-6 policy for the unit's interior, contents and liability. The exact line sits in the master deed and bylaws, and it varies by community.

Ask for the master policy's declarations page and its deductible. Then give the documents to your own insurance agent before closing. A strong answer tells you who covers interior walls, fixtures and upgrades, and who pays the master deductible after a covered loss.

Hearing that the association covers everything is the answer to check. Say the master policy has a large deductible and the bylaws assign it to the owner where the damage started. Then a burst pipe in your unit could put that bill on you.

8. Can I rent out my condo in Michigan?

Only if the condo documents allow it. Michigan's Condominium Act requires an owner who plans to rent to tell the association in writing at least 10 days before presenting a lease. The owner must also hand over a copy of the exact lease. Tenants must follow the condo documents, and every lease must say so.

Read the leasing section of the bylaws for minimum lease terms, rental caps or waiting periods. Ask how many units are rented now. The state handbook notes the association can change its rental rules, but a change does not undo a written lease signed before it took effect.

Buying with a plan to rent later, without reading the leasing rules, is the costly gamble. Rules can tighten after you buy, and an amendment can block a plan that worked on closing day.

9. What rules will limit how I use the unit, such as pets, parking or changes?

Condo bylaws and board rules can limit pets, parking, smoking, exterior changes, decorations and even landscaping. Those limits bind every owner and tenant, and they can be stricter than city rules. In a Michigan condo, the documents are where you find them, not the listing or the seller's habits.

A strong answer quotes the actual rule. How many pets, and what kinds? Which parking spaces go with the unit? How do owners get approval for doors, windows, decks or other outside changes? If you have a pet now, confirm in writing that it fits before you sign.

Hearing that nobody enforces that rule is not reassurance. Boards change, and a new board can enforce a rule the old one ignored. A violation you inherit at closing becomes your problem, not the seller's.

10. Is the condo association involved in any lawsuits?

A lawsuit involving the association can affect your costs and your loan. Fannie Mae's Selling Guide treats a project as ineligible when the association is part of a pending lawsuit about safety, structure, habitability or functional use. It makes exceptions for minor matters, such as neighbor disputes or claims covered by insurance.

Ask the association or management company in writing, and read recent board minutes. A clear answer names the case, what it is about, who brought it, and whether insurance is handling it. Your lender's condo questionnaire will ask the same thing, so it is better to know first.

A board that answers no comment, or a seller who has never heard of a case in the minutes, is a reason to slow down. A construction defect suit can mean repairs, assessments and loan trouble for as long as it runs.

11. Is the condo FHA-approved, and will a lender finance it?

A condo project's approval status decides which loans you can use. HUD's online search lists FHA condo projects by state, county and city, with each project shown as approved, expired, rejected or withdrawn. Fannie Mae accepts FHA loans in projects on that list and applies its own project standards to conventional loans.

Look up the project on HUD's condo search before you write an offer, and have your lender start its condo review early. Fannie Mae's guide, for example, looks for no more than 15 percent of units 60 or more days behind on assessments.

An expired FHA approval on a project you love is not a dead end, but it narrows your loan choices. Finding out after the offer, when the appraisal and loan deadlines are running, is the costly version of that surprise.

12. If I buy a new condo from a developer in Michigan, how long do I have to back out?

Michigan's Condominium Act gives a buyer of a new unit from a developer 9 business days to back out without cause or penalty. The clock starts when you receive the required documents and ends early if the unit is conveyed. The documents include the recorded master deed, the purchase and escrow agreements, the state handbook and a disclosure statement.

Mark the date you get the documents and count business days. Use the window to read the disclosure statement and master deed with an attorney. Ask who controls the board. The state handbook says the developer appoints it at first, and owners gain seats as units sell.

Signing a waiver of the withdrawal period to speed things up is the move to question. The Act allows a waiver only under set conditions, and giving up those nine days gives up your one free exit.

Where Each Answer Lives

Question	Document or source to request
Site or traditional condo	Master deed and subdivision plan
Master deed and bylaws	Recorded documents and all amendments
Monthly fee	Current budget and last year's actuals
Reserve fund	Reserve balance and reserve study
Special assessments	Board minutes and a written answer
Unpaid assessments	Association's written statement
Insurance	Master policy declarations page
Renting	Leasing section of the bylaws
Pets and use rules	Bylaws and board rules
Lawsuits	Written answer and board minutes
Financing	HUD condo search and lender review
New construction	Disclosure statement and purchase agreement

A checklist to bring to the association or management company before the attorney review period ends.

Frequently Asked Questions

What is section 57 of the Michigan condominium Act?

Section 57, found at MCL 559.157, covers the association's books and records. Co-owners and their mortgage lenders can examine them. An association with annual revenue over $20,000 must have them audited or reviewed by a CPA each year, unless the members vote to opt out.

What does Fannie Mae require for condo reserves?

For a full project review, Fannie Mae's Selling Guide looks for an association budget that funds replacement reserves at no less than 10 percent of the budget, or a reserve study showing adequate funded reserves. That is a lender test, separate from Michigan's own minimum for associations.

Do you pay taxes on a condo in Michigan?

Yes. Under the Condominium Act, each unit is taxed as its own separate parcel of real property, and the common elements are not taxed as a separate whole. A condo you live in as your main home can also qualify for Michigan's principal residence exemption, which removes up to 18 mills of school operating tax.

What does an assessment mean on a condo?

An assessment is each owner's share of the association's costs. It is billed as a regular fee, with special assessments added for larger projects. The master deed sets each unit's percentage of ownership, and the state handbook notes the association may place a lien on a unit when an assessment goes unpaid.

Talk to The Delia Group before you buy a condo

The Delia Group is a Rochester, Michigan real estate team working with buyers and sellers in Rochester, Rochester Hills, Oakland Township and across Oakland County. Buyers looking at condos and site condos can talk through which documents to request and when. Buyers comparing Rochester realtors or the best real estate agents in Rochester can start there.

This article is general information for Michigan condo buyers, not legal or tax advice. Your community's master deed, bylaws and insurance setup, and each lender's condo rules, vary by project and change over time. Confirm your own situation with a real estate attorney or a tax professional.