New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide



Chasing Arrears

Battling arrears. We run arrears reports twice a month—immediately after the grace period and at the end of the month. We try to catch problems very early on. Immediately after the grace period, we ping the resident. The resident gets text messages, an automated phone call and an email from our database with a copy of his or her ledger. The text also includes the link to the person’s ClickPay account. If residents reach out and let us know that they're facing difficult times, we try to create some kind of deal and notify the board as soon as possible. 

If someone hasn’t responded to our notices by the end of the month, we give the board the arrears report. At this point, contingent on how bad the situation is, we try to negotiate a feasible payment plan that will work for both the resident and the board. We don't want a situation where there's going to be a major exposure, a huge loss for the board. If we’re not getting any kind of communication from the resident, we will do some investigating. We want to see if there's a mortgage, because we certainly want to notify the bank. The co-op has a statutory lien, so if the resident were to default, the co-op gets paid first. So the bank will certainly put a little bit of pressure on that resident.

The other shoe. If we're not recovering maintenance fees, there’s going to be a legal proceeding. The board is going to try to terminate the proprietary lease and try to evict the shareholder, which will lead to a judgment and potentially a warrant. At that point we can then commence collection.

That’s an avenue the board doesn't necessarily want to go down, so we lean a lot into the relationships that we’ve built with a lot of our residents, independent of our relationship to the board. When we're interfacing with residents, we always try to be empathetic, because they could be dealing with a serious personal situation. 

No room for vendettas. We're trying to keep everybody happy but also need to get the money paid when it's owed. It's always a sticky spot. Navigating it successfully means getting residents to understand that there’s nothing personal. It is strictly business—what we must do for the financial health of the property.

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