A Helping Hand for Cash-Strapped Residents

Coming up short. The list of capital projects for co-ops and condos never ends, but financing them isn’t easy, especially when there are residents who don’t have money at hand. Many buildings have dual populations — shareholders or unit-owners with significant income who will have no problem paying an assessment, and aging residents who may have tremendous equity in their apartments but not the cash to meet that obligation.

Win-win. Boards can satisfy both populations by thinking outside the box. We manage a condo on the Upper East Side that needed funds for a big capital project and imposed a significant assessment of several million dollars over six months. Not everybody had the ability to pay the assessment in such a short term, so the condo provided a 6% interest loan to those unit-owners to pay it off over a longer period of time. This had several benefits. The interest rate charged was less than that of a bank loan. The complications and soft costs of borrowing — which can be significant, especially in a condominium — were avoided. 

With our co-ops, we’ve tried a different approach where we go to conventional banks and try to work out discounted loans for shareholders. We’ve also reached out to family members to see if we could set up some kind of internal borrowing.

Big picture. The macro-concept here is that boards can create methods and systems to help people with limited incomes age in place. You do not want a situation where you’re forcing sales that may lower property values. And you don’t want to be litigating your neighbors for failing to pay assessments. You want your older population to be able to remain in the apartments they’ve lived in for the past 30 or 40 years.