A Nudge Can Help Collect Condo Arrears

In early October, Gov. Andrew M. Cuomo granted another extension of the grace period for condo unit-owners who have fallen behind on their common-charge payments – this time, through Nov. 3.

Ryan Houck, an attorney at the law firm Smith Buss & Jacobs, understands boards’ frustrations. “Basically, what we’re doing is we’re filing these (collection) actions now,” he says. “It’s better to do it sooner rather than later, because there’s going to be such a backlog with the courts when they do start operating on a normal standard.”

Condo boards can file liens and begin civil actions to go after unit-owners who are in arrears, but the residents will not be considered in default until after Nov. 3. That doesn’t mean it’s pointless to start the process before the grace period expires. Houck points out that notifying the unit-owner that the board is beginning the proceedings can sometimes be a nudge in the right direction.

“Perhaps that gets them a little scared, wakes them up – they decide to pay some of the arrears,” he says. “Perhaps that gets them to at least generate a phone call and try to reach some kind of settlement agreement. But if serving the papers does not result in communication from the defendant, there’s nothing really more you can do right now to push it forward.”

Unit-owners who fall behind on their common charges may see a lien as impetus to admit to the board that they have suffered a pandemic-related hardship. “With respect to foreclosure actions,” Houck says, “the city register’s office will send a copy of the notice of lien, hoping that we’ll get a phone call to our office where (the unit-owner) will want to enter into some kind of payment agreement. They tell us their hardships, and then we reach out to the board and say, ‘This is what they’re willing to pay in addition to ongoing use and occupancy.’ If we get no contact, then we’ll move forward with the lien foreclosure complaint, and it will be (filed) with the court when it does open up for business.”