Q&A: How to Recover Unpaid Dues From a Condo Sponsor

Q: At an eight-unit condo building in Brooklyn, the sponsor failed to pay the homeowners association dues for unsold units, as required under law, and he stopped responding to emails and calls after he transferred control of the building to the board. The dues are about $30,000, plus interest. Other than filing a lawsuit, and incurring more expense, is there a way to get the sponsor to pay the dues with interest?

A: This kind of situation is especially difficult for a small building, where the financial burden of unpaid common charges can have a large impact on the unit-owners, replies the Ask Real Estate column in The New York Times. But the office of the New York State attorney general, which regulates condominiums, says that such problems “can be resolved, relatively simply, if unit-owners organize and act quickly.”

So, yes, there are ways to pursue the unpaid dues that are less costly than filing a lawsuit.

A condominium board can file a complaint with the Real Estate Finance Bureau of the state attorney general’s office. The bureau “can be a valuable resource for condominium unit-owners who believe they have been wronged,” says Julie Schechter, a partner at the law firm Fox Rothschild. She adds that the complaint form is free online, and boards should be as specific as possible and include all relevant documents. 

Ask the bureau to enforce the sponsor’s payment obligations for the unsold units, and to pursue the sponsor’s principals personally for the amounts owed, advises Aaron Shmulewitz, a partner at the law firm Belkin Burden Goldman. The condominium can also file liens against each of those unsold units for the amount that is owed. Liens are an effective tool because they prevent the sponsor from closing on the sale of the units unless the owed amounts are paid to the condominium.

A condo board can file a notice of lien with the City Register office in its borough, and does not need to hire a lawyer to do so. Make sure the notice contains the condominium’s name and address, the number of units, the municipal block and lot number, and the amount owed. A lien is valid for six years.

“Both of these methods are simple, quick and cost-effective," Shmulewitz says, "and they avoid the huge time and expense involved in a lawsuit."