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Empty Units in Foreclosure: A Lawyer Says Rent 'em Out — It's Legal!

Elliott Meisel in Board Operations on December 25, 2012

Upper East Side, Manhattan, New York City

Rent Empty Condo Units in Foreclosure
Dec. 25, 2012

However, since the bank was not foreclosing (and refused to do so, even after we offered to foreclose the condominium's lien and turn over all proceeds in excess of a specified sum to it), not taking any action would allow the unpaid common charges to continue indefinitely with no hope of recovery.

We recommended that the board enter the apartment with witnesses, document its condition, store any contents, get the apartment in shape to rent and lease it for a six-month term that then would continue month to month. Yet though we explained how we had done this successfully several times before — even generating substantial profits for other condominiums before the bank finally got around to foreclosing – the board declined to do so. 

Legal Lesson

Our proposal would have generated a rental of about five times the monthly common charges and allowed the condominium to recover its outstanding arrears with virtually no legal proceedings. The proposal was neither illegal nor fraught with unreasonable risk, since:

  • the tenant could not be deprived of his rights (as a foreclosure takes more than six months);
  • the absent owner would have to pay the arrears, rental costs, legal fees and other expenses upon which the condominium would vacate the tenant and return possession; and 
  • the bank had its first lien on foreclosure proceeds but not revenues that the condominium collected in the interim.

After several more years, the bank finally did foreclose, and the condominium was forever deprived of more than five years of common charges. Sometimes asking forgiveness, if necessary, is better than asking permission. 

 

Elliott Meisel is a partner at Brill & Meisel.

Photo by Carol Ott

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