new york general business law
New York - New Jersey Law Blog
- Collection of Condominium Common Charges in New York Revisited
Condominium boards and managers are often frustrated by unpaid common charges. Once a unit owner falls more than sixty days behind in his or her common charge payments, it is recommended that this problem be turned over to the condominium association's attorneys to resolve.
A variety of legal methods can be used by a condominium association's attorneys to attempt to collect common charge arrears. Which method or combination of methods will be best for a particular situation will vary.
Regardless of which method or methods are used, the first step in the process is sending a Thirty Day Notice of Debt Collection to the unit owner. One benefit of sending a Notice of Debt Collection prepared by an attorney is that it conveys the seriousness of the common charge arrears to the unit owner. In addition, it provides the unit owner with an opportunity to examine the breakdown of the amount he or she owes. This may expedite an amicable resolution to the matter, as sometimes owners do not read their monthly common charge statements and do not realize they are in arrears. It may also motivate an owner to make an inquiry regarding a particular charge her or she wanted answered before paying it.
In the event payment is not made within the thirty day period provided under the Notice of Debt Collection, the next step is filing a common charge lien against the unit pursuant to NY Real Property Law Section 339-aa. Common charge liens are security interests similar to mortgages. Like a mortgage, a common charge lien is filed in the property records of the Office of the County Clerk where the unit is located. A properly filed lien provides notice to the world that the common charges are owed and in most cases will prevent the sale or refinance of a unit until the common charges owed by the unit owner are paid. In addition, a common charge lien can be foreclosed like a mortgage. That is, a condominium association can start a foreclosure action that will result in an auction sale of the unit with the auction proceeds being used to pay off the common charge arrears.
Unfortunately, common charge lien foreclosure actions can drag on for several years, and the condominium's lien will be subordinate to any mortgages filed before it. This puts condominium associations in New York at a great disadvantage compared to other states where a certain period of common charges (e.g., six month's worth) will take priority over mortgages on the unit. Therefore, attorneys representing condominium associations in NY should ascertain whether there are mortgages against the unit and the value of the unit and then consult with their clients in order to determine whether a lien foreclosure action makes sense before proceeding.
Even if the condominium association's attorneys evaluate the situation with their client and conclude that a lien foreclosure does not make sense, they should still file a common charge lien against the unit. As well as making the unit unsaleable, filing the lien will make the condominium association a "secured creditor" under Federal Bankruptcy law. Having the status of secured creditor will generally allow for the recovery of amounts due at the time. This will ultimately result in a higher percentage of the common charges being repaid to the condominium association if the unit owner files for bankruptcy protection.
For the past few years, rather than going the foreclosure route, I have generally recommended that condominium associations sue unit owners in arrears in Civil Court for money judgments. This is much faster and less expensive and can still result in an auction sale of the unit. It also provides the condominium association with access to other assets such as bank accounts and wages to satisfy the common charges arrears once a judgment is entered.
Taking this a step further, I have recently begun recommending that lawsuits for money judgments be filed with the Small Claims Part of the Civil Court. While the amount of the recovery is limited by the $5,000.00 jurisdictional limit of the Small Claims Part, it is much quicker and less expensive than regular Civil Court. Rather than litigating for months or years, your attorney can literally spend a few hours in court at a hearing where a repayment agreement with the delinquent unit owner can often be negotiated. If negotiations with the unit owner fail, your attorney can present your case to an arbitrator who renders a binding decision (and judgment if you prevail), which your attorney will receive in the mail within a few days of the hearing date--quick justice indeed!
Lastly, a little known, but attractive, method to collect common charge arrears is available where a unit owner rents his or her unit to a tenant. Real Property Law Section 339-kk authorizes condominium associations to collect rent payments directly from the tenants of unit owners in arrears. This is accomplished by sending a notice to the tenants pursuant to the statute. Since a tenant's monthly rent for a unit is usually several times the amount of the common charges for the same unit, if the tenant obeys the notice the arrears are usually paid off within two or three months. Unfortunately, the statute does not provide the condominium association with any legal remedy against the tenant if he or she disregards the notice. This flaw in the statute can be remedied by putting language in a condominium association's lease application, which authorizes the condominium association to sue a unit owner's tenant directly.
It is evident that Real Property Law Section 339-kk, which authorizes condominium associations to collect rent payments directly from the tenants of unit owners, and Real Property Law Section 339-aa, which authorizes lien foreclosures, both need to be amended by the legislature in order to give them more teeth. As written, these statutes require creative lawyering to get results, which leaves many condominium associations operating under tight budgets with chronic arrears problems. A few minor revisions to these statutes would dramatically increase their effectiveness, and I hope to petition the NY State Legislature to effectuate these changes in the not so distant future. - New York City Pet Laws Affect Boards And Dog Owners In Cooperatives And Condominiums
Many New York City cooperative and condominium owners consider their pets to be members of their families. At the other end of the spectrum are people who may have violent allergic reactions when they come into contact with dogs, or who just prefer not to share their common living space with someone else's four-legged friend. The boards of directors of cooperatives, and the boards of managers of condominiums, weigh these competing interests and try to enact and enforce pet policies and rules that best serve the residents of their buildings while also taking into account applicable laws.
The focus of most pet policies and rules enacted by cooperative and condominium boards is dogs. Some of the more common rules require dogs to be kept on leashes while in common areas, prohibit dogs in elevators, limit the number of dogs per apartment and limit the size of permitted dogs. In most cases, a majority vote by a board is sufficient to amend these rules and policies, and to completely prohibit dogs.
Enforcing policies and rules relating to dogs is often more difficult than passing them. To a large extent, this is due to Section 27-2009.1 of the Administrative Code of the City of New York, which is commonly known as the "Pet Law." The Pet Law was originally passed by the New York City Council in 1983 to prevent landlords from trying to use "no-pet" clauses in Rent Stabilized leases as a pretext for commencing eviction proceedings against tenants with below market rents who coincidentally had pets. In basic terms, the Pet Law prohibits landlords from enforcing "no-pet" clauses in leases against tenants who have "openly and notoriously" harbored a pet for a period of three months or longer.
A significant body of case law involving various courts' interpretations of the Pet Law has evolved in the cooperative and condominium context. Based on this case law, it is clear that the Pet Law applies to cooperative proprietary leases and house rules. More specifically, if a cooperative's board of directors fails to commence legal action to remove a dog from a shareholder's apartment that his been kept "openly and notoriously" in violation of the cooperative's policies or rules for three months or longer, then the cooperative board will usually be prevented from removing the dog pursuant to the Pet Law.
There are many cases where courts have interpreted the meaning of "openly and notoriously." Each case is fact specific, but in broad terms the courts have held that as long as one member of a building's staff is aware that someone is harboring a dog in his or her apartment, then such knowledge is imputed to the building's board and the "openly and notoriously" requirement of the Pet Law is satisfied.