When a Condo Buyer Isn’t Human …

Certain sections of condominium bylaws chronically prove inadequate and pose ongoing problems for condominium boards when an “entity” (that is, a trust, LLC, or corporation) has or seeks ownership of a unit, or when a unit is owned by someone not residing in either New York City or New York State. For example, if the condominium has to bring a legal action, who does it serve with papers? If the owner of the unit is somebody living out of state, how do you get jurisdiction quickly and at a reasonable cost? Who do you contact to get access to repair or inspect the unit? Finally, what do you do when the owner has no U.S. bank accounts and has fallen into arrears? In such cases, how does the board collect on a money judgment in arrears situations, especially if a bank has priority in lien on the unit itself?

The solution is to amend your bylaws, specifically the sales and leasing provisions, to require additional information before the board issues a waiver. Since every condo purchase or sale requires the issuance of a waiver (unless, of course, the condo decides to actually purchase the apartment and block the sale), demanding the following information will codify your rights and head off any legal challenges to your request:

1. The unit owner.whether an entity or a nonresident, has to provide the name and contact information of a local person who is acting as the owner’s designated agent, preferably someone located in New York City, though anywhere in New York State is acceptable. The easiest way to accomplish this is to require completion and filing of a Designation of Agent form that identifies the agent, provides full contact information, requires consent of the agent to the designation, and requires the owner and the agent to sign before a notary public. This form should be in effect for no more than five years, after which a new Designation of Agent form must be filed, even if the information is the same.
2. Empower the board of managers to impose, at its discretion, either a common-charge security deposit or a personal guaranty. If the unit-owner is a foreign entity or individual that doesn’t have liquid assets in the United States, the board at least knows the security deposit will cover the common charges while it pursues collection and lien enforcement. But if your bylaws don’t allow for a security deposit, this requirement is difficult to enforce.
3. The unit-owner, whether an entity or a nonresident, must provide contact information for someone local who can authorize or provide access to the unit when needed. Things happen in buildings, especially leaks, which require management, staff, and contractors to get access quickly. Plus, it should be required that this contact information has to be updated on an annual basis.