Michigan • Reserve study / underfunding
Is your Michigan condo's reserve underfunded — and does the state require funding?
A reserve study can read as reassuring while quietly showing your Michigan building is years behind on saving for its roof, elevators, or façade. What matters is how funded the reserves actually are — and what Michigan requires.
The short answer
Michigan does not require a reserve study and requires the association to fund it. A reserve fund is required (MCL 559.205), but the rule floor is only 10% of the annual budget — far below 'fully funded,' and the bylaws must warn it may be inadequate. A thin reserve is the most common reason a special assessment lands later, so the study-versus-actual-balance gap is the number that matters. CondoSignal reads your reserve study and budget against Michigan's rules. Free.Michigan at a glance
Reserve study
Not required
No state mandate
Reserve funding
Required
Funded to the study
Super-lien
None
None — the association lien is junior to tax liens and to a first mortgage recorded before the lien notice
Resale disclosure
Cancellation right
None — Michigan has no statutory resale rescission (new construction gets a 9-day right)
What Michigan requires
A reserve fund is required (MCL 559.205), but the rule floor is only 10% of the annual budget — far below 'fully funded,' and the bylaws must warn it may be inadequate. Whether a thin reserve is merely risky or actually out of compliance depends on that rule — which is the first thing to establish.
Why underfunding becomes an assessment
No statutory cap or notice rule — the master deed/bylaws control, and there's no statutory disclosure of pending specials at resale. The 'percent funded' figure in the study, compared to the actual reserve balance, tells you how exposed you are.
What it means for collection and resale
Michigan is not a super-lien state (MCL 559.208), so associations absorb more bad debt. No statutory resale-certificate regime; request the budget, reserves, master policy, and a statement of unpaid assessments directly.
Your rights in Michigan
As a Michigan owner, your reserve information and any approved special assessments should appear in the association's budget and resale disclosures (none — michigan has no statutory resale rescission (new construction gets a 9-day right)). None of this is legal advice — confirm against the current statute and a licensed professional in your state.
What to check
- Find the reserve study's 'percent funded' figure.
- Compare the recommended contribution to what's budgeted.
- Confirm whether Michigan mandates reserve funding — it does, so underfunding may be a compliance issue.
- Check the remaining life of the roof, elevators, and façade.
- Note Michigan has no super-lien, so owner delinquencies fall straight onto the budget.
- Look for a reserve catch-up or a recent special assessment.
- Check the study's date — an old study understates today's costs.
Sources
- MCL § 559.205 — reserve fund(High)
- MCL § 559.208 — assessment lien (no super-lien)(High)
- Mich. Admin. Code R 559.511 — 10% reserve floor(High)
Educational only — not legal, financial, or engineering advice. Confirm against the current statute and, where it matters, a Michigan-licensed professional.
Related guide
Michigan reserve studies — the full guide →This page answers what to do right now. For how reserve studies works in Michigan — the law, the process, and what to check before you buy or sell — read the full state guide.
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“The board approved a $15,000-per-unit special assessment for façade repairs, payable over 12 months.”
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