New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

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ARCHIVE ARTICLE

David Byrne, Herrick, Feinstein

Herrick, Feinstein, Partner

David Byrne

 

The client’s tale. Debra, the owner of unit 6M in Seaside at North Island, a condo, had recently purchased unit 6N as well. She wanted to combine the two into a single living space. Debra applied to the board of managers, which approved her request. The space was combined.

Unfortunately, the board neglected to amend Seaside’s governing documents. Consequently, Debra received one common charge bill every month that lists her combined unit designation as 6M/6N. Several years later, Debra became ill, lost her job, and started to make sporadic, partial payments of common charges. These payments were applied to the account for 6M/6N. The board referred the matter to counsel, who asked the board for an account history. That shows a past due balance of $9,874 and the unit as 6M/6N.

Counsel wanted to file a lien for unpaid common charges against Debra’s units at the county clerk’s office. However, Seaside’s governing documents and the records of the municipality still reflected that 6M and 6N were separate units and, therefore, a separate lien would have to be filed for each unit. However, neither counsel nor the board could determine the separate amounts due for 6M and 6N because, although the delinquency charges can be divided between the two units, there was no method to allocate the payments made to the two individual units.

 

The lawyer’s take. Unless and until Seaside’s governing documents are amended, and a single unit called 6M/6N replaces the individual units 6M and 6N, the accounting and billing records for the two units must remain separate, and Debra should receive two separate bills each month. Her payments should be allocated in accordance with her instructions, if any. If Debra sends a single check for the units and does not provide any instructions on how the payment should be split between the two, the payment should be allocated in a reasonable manner related to the percentage interest of each unit. A more difficult solution would be to amend the governing documents of Seaside to remove units 6M and 6N, create new unit 6M/6N, and assign a new common interest to the combined unit.

 

Case closed. The board should require Debra to get permits from the municipality to combine the units and that a single tax lot number be assigned to the combined units.

 

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