How to Get Condo Deadbeats To Pay: One Board's Successful Strategy
May 16, 2014 — Some condo boards are struggling to pay their association’s bills, and are turning to legal machinations to get lagging apartment owners to pay their monthly common charges on time, or even at all. But one Long Island condominium is using a new strategy to collect from deadbeats: filing a lien against the unit, and then foreclosing on the lien.
Caryn Meyer, a lawyer with Cohen & Warren, legal counsel to the Windbrooke Homes condominium in Central Islip, says that by doing this way, you have a lien that supersedes all others except for the bank's and any tax liens.
Lien on Me
“The filing of a lien secures the debt owed to the condominium in the event of a bankruptcy filing,” says Meyer. “The lien is also a matter of record in the event an owner attempts to sell a unit without paying the common charge arrears.” If the bank forecloses on a unit and generates surplus money on the sale of the unit, the condo’s lien gives it first shot at the distribution of those funds.
If the condo moves forward with a foreclosure action, the end result is the public sale of that unit. If a third party buys the unit, he or she is required to close on it within 30 days. At that point, Windbrooke would recoup all arrears. If the condo takes the unit back instead, it can rent out the unit and collect arrears this way.
Foreclosure proceedings have begun on 20 Windbrooke units. “It inspires unit-owners to start paying common charges and to make arrangements to pay back what they owe in arrears,” says Meyer. “It’s going to take a little time.”
Adapted from "The Gambit" by Bill Morris (Habitat, May 2014)
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